Ivan Yates: "We bailed out the banks..."

IdesofMarch said:
Now such costing would obviously put upwards pressure on variable rates, but variable rates are falling due to Government realising that there was price gouging going on at a systemic level in Irish mortgage lending
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No, the primary reason that mortgage rates are falling is due to competition for market share between lenders.

The Government, thankfully, resisted calls from some quarters to introduce price-fixing into our mortgage market.
 
Sarenco arrives, I was wondering when. The competition was sparked by a primarily state owned bank (AIB) been forced to reduce variable rates by Government . There is no real competition in Irish banking even Tesco bank is getting out.
 
IdesofMarch said:
The competition was sparked by a primarily state owned bank (AIB) been forced to reduce variable rates by Government .
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How did they force them to do that?
My recollection is that AIB more or less told the Government and the Finance Committee to F-Off when they were taken to task about interest rates.
 
IdesofMarch said:
The competition was sparked by a primarily state owned bank (AIB) been forced to reduce variable rates by Government
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Nope.

The pricing of any product or service is primarily driven by input costs and market participants trying to gain or retain market share. Politicians and pressure groups may wish to take credit for the recent falls in mortgage rates but fundamentally this is the result of market forces at play.

Which is exactly as it should be.

The idea that there is no competition in the Irish mortgage market is not supported by the facts.
 
Purple said:
How did they force them to do that?
My recollection is that AIB more or less told the Government and the Finance Committee to F-Off when they were taken to task about interest rates.
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Optics, they did exactly what their single shareholder at the time told them to do.
 

Sorry, Sarenco not in this case, maybe BB will enlighten you to how politics works in the Country. With regards to competition currently there are state owned banks currently competing with other state owned banks, some competition.
 
IdesofMarch said:
Optics, they did exactly what their single shareholder at the time told them to do.
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You can believe that if you want. I don't.

The fact remains that new mortgage rates have consistently fallen over the past 12 months in the absence of any of the direct intervention in the mortgage market that many commentators and politicians were promoting.

Why?

Competition. Plain and simple.
 
Was there not competition in the market place 5 years ago or did it only start in the past 12 months?
 
From late 2015


As the banking sector has contracted, the dominance of the two pillar banks, Bank of Ireland and Allied Irish Banks, is again apparent. This lack of competition is leading to high costs for customers in terms of interest rates and fees and charges. It is also inhibiting product innovation.

According to the most recent report ‘Costs of Doing Business in Ireland’ from the National Competitiveness Council, compared to the European average, “New business interest rates are 60% higher for loans up to €1 million and are 81% higher for loans above €1 million. In 2014, loans of over €1 million are 81% more expensive in Ireland.” There is also clear evidence that this is replicated in the personal finance market with high standard variable mortgage rates and excessive fees and charges.


The case rests mlord
 
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Direct intervention maybe but it wouldn't be the first thing something was done indirectly with the banks a chat over a round of golf, a meeting with no minutes...
 
Thank God I am not alone, someone else who understands just how things really happen in the Emerald Isle.
 
IdesofMarch said:
The case rests mlord
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What case? That there were less participants in the mortgage market in 2015 than was the case in 2005? Nobody is disputing that.

I think it is quite extraordinary that effective new business mortgage rates are now very close to average Eurozone rates when you consider our extraordinarily high level of non-performing loans.

Banks aren't charities - they are quite obviously competing for market share with a profit motive and that's what is driving down mortgage rates. As consumers we should be delighted that the price-fixers lost the argument.

Nothing to do what with chats on the golf course. It's simply market forces at work.
 
I say there was plenty of chats around the golf course in the good auld days relating to the setting of variable mortgage rates and just how much the banks could gouge out of the unfortunate borrower. If all the variable mortgage rates set by the various banks were effectively the same; there is no competition.

Do you not remember the queues to have a round with Seany, come on.
 
Do I have sunstroke or is it starting to feel like 2008 again.........

Off topic but does anyone know what a 100% mortgage is???
 
IdesofMarch said:
Do you not remember the queues to have a round with Seany, come on.
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Eh, Anglo never offered residential mortgages so I don't know why Seanie would have been colluding in the fixing of mortgage rates as per your fantasy.

In any event, lenders' variable rates varied quite significantly - both before and after the crash.
 
Ehhh, wrong again Sarenco. Here is a headline that refutes your false news.


Anglo Irish now doing residential mortgages to get value


Before 2011 they packaged residential mortgages as term loans as we all know.
 
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