Carrot/stick
Registered User
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It's a general indication of the amount people are overpaying on their mortgage.
For example, if you have a mortgage of €250k , you are paying around 1.5% more than the eurozone average, which is €3,750 or about €300 a year.
Brendan
Yeah pretty sure, it was back in 2005. I had a friend who was working with an irish bank at the time and when i told him at the time he absolutely dismissed it as well saying it wasn't possible.Are you sure about that rate of 1.75% in 2005?
That was well under the yield on French government bonds at the time.
I stopped working in France and settled in Ireland so I have no idea what the interest rates are now.Hi C/S
That is extraordinary. In 2005, the ECB rate was 2%.
Not only were you able to borrow for less than that rate, but you were able to fix at that for 25 years.
In Ireland trackers were issued from as little as 0.5% above ECB or 2.5%. More generally, they were about 0.8% or 2.8%.
Deposit rates were not much lower, so I have no idea how a French bank was able to lend to you at that rate.
I would agree that, in general, Ireland and the UK, appear to pay higher prices for most things. Not sure why.
But we had a period of tracker madness in Ireland where mortgages were issued at stupidly low prices. That included the time when you took out a fixed rate mortgage at 1.75%.
If a French bank issues a fixed rate mortgage at 1.75% for 25 years, it would have been potentially a huge loss maker.
If I understand it correctly, in France, if you don't pay your mortgage, the lender does not have to go to court. They can just sell your house from under you. I suspect that arrears are very low.
I don't know what the interest rates are now in France
By the way, do you know what the mortgage rate in France is now?
Brendan
Data on historical interest rates on new lending is readily available on the French central bank website, and a rate of 1.75% makes no sense, given that monthly average rates on new lending never dropped below 3.48% in 2005.
Hi Red
Which would have made the average mortgage rate in France higher than the mortgage rate in Ireland in 2005 which is exactly what I would have expected.
I do remember arguing with the banks, EBS in particular, that mortgage rates were too high in Ireland and that, as a mutual, they could reduce them. I am not good with dates, but that was probably around 2000. They denied it and said that the higher rates were needed to fund growth. But then when BoSI came into the market , they all cut their rates.
So Nick's point is probably true up to around 2003 but it's not true for the period 2003 to 2009/10 when they started raising mortgage rates again as the competition pulled out.
I can't explain how Nick got such a good deal from the French in 2005. It makes no sense. I could understand a fixed rate of 1.75% as a teaser for a year or two, but not for 25 years.
Nick - I know you said fixed rate - you didn't mean fixed margin by any chance? ECB +1.75% would have been about right.
Brendan
The fact of the matter is that the Irish consumer (and business person) have always paid way in excess of the Eurozone average for credit; end of.
So now you're changing the parameters of debate I see! This discussion is about mortgage rates.save tracker mortgages
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