KBC rates in Belgium vs KBC rates in Ireland

So you did the math and came to the conclusion that your posts are redundant, now, as usual, it's time to throw out the baby with the bath water. Face the facts, borrowers are been ripped off in this Country by dysfunctional banks with the backing of government. ( with a small G ) and as for childishness; your last post sums it all up.
 
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I always thought KBC was bailed out by the Belgian Govt via it's Belgian parent and not the Irish Govt. Did it transfer loans to NAMA. People should remember that for many of the Irish banks (Ulster, BOSI) a fair chunk of the cost of bailing them out was carried by taxpayers in other countries

In terms of interest rate differences between countries, there is an interesting table here. To me it clearly shows that the better the economy is in a particular country, the better chance you have of getting a lower rate.

http://europe.deposits.org/home-loan-rates.html
 
Sarenco.

You state Banks here are not making profits?

From what I see , magically BOI and AIB are now turning circa 1 Billion profit ?
I just can,t figure how BOI and AIB can so quickly return to such figures without creative accounting or just plain bluff?
I have a sneaky suspicion we are being re-re -re conned?
 
And the same banks that were in place in 2004-8 should be making profits now why? I know it sounds somewhat naïve but should not they be more like public utilities now?

When the banks lend to consumers to buy cars, or they give credit to small businesses, the banks are only indirectly involved, i.e., their credit does not affect car prices or the success of that business they lend to, right? However, when banks issue their mortgages, they directly participate in asset inflation. They give 100% mortgages - prices inevitably go up. They “assess” customers to be able to service mortgages in 5X multiples of their incomes, prices go up. In my area alone house prices declined since last year by about 30-40K since the advent of new lending rules, credit availability does affect house prices. So why could not we have had these rules all along?

Furthermore, banks use houses themselves as collateral, so they should have had vested interest in correctly pricing these assets, why did not they? The consumers who bought houses at inflated prices lost a lot of money paying deposits, and or ended up with piles of debt. This money is all gone now. What did the banks lose? If they have nonperforming mortgages or low-yield trackers – because of their own decisions in 2004-8 not those of consumers only, it takes two to tango – surely now they balance their books by having high SVR or low deposit rates, right? Do they lose in the same way like when a person loses money? Of course not, they would have been in the red and required recapitalization then.

Yet in this and other threads people provide rational explanations for banks’ current pricing strategies as if 2004-8 never happened, as if that house bubble were a natural disaster, exogenous shock and had nothing to do with what the banks did at that time. I don’t get it. Banks have minimal profits now, but why should it be otherwise, this is perfectly normal. I lost all my savings in 2008 relying on BOI’s appraiser, I stupidly trusted the bank to price the collateral correctly, and so far the BOI lost nothing on my behalf. And their insistence on extracting 4.5% from me so that they remain profitmaking is something that I find difficult to accept. So you know, when other people estimate the rates based on the costs of funds plus impairment losses in Ireland, I would love to see something like "minus house bubble levy" or something.

After all is said and done however, and whatever the reason, economic or contractual or whatever, Ireland is divided between people who pay 1-1.5% and people who pay 4-5% for their houses, and I don’t think there is any other country in the EU like that, and it bothers me that our TDs don’t find it important enough to address it.
 

Mortgagors in Ireland are also "divided" between those that bought during the bubble and those that bought before and after the bubble. The relevant mortgage rate alone does not give you the full picture.

I do, however, agree that those that are not in a position to refinance their home loans are deserving of a degree of legal protection and I have made my suggestions in this regard elsewhere on here.
 
Sarenco: Mortgagors in Ireland are also "divided" between those that bought during the bubble and those that bought before and after the bubble. The relevant mortgage rate alone does not give you the full picture.

Sure. A fuller, not the full, picture perhaps is there are three groups. it is still very simplistic of course, but: One, people who bought during the boom and are on trackers. Second, people who bought at regular prices after the boom and are on SVR. Three, people who bought during the boom and are on SVR. The first group can say, yeah, we overpaid but at least we won the tracker lottery. Second can say we pay extraordinary SVR rates but at least we bought for half the price, so we can live with it. Third group - what is the silver lining? I cant be the only one in the third group, I know quite a few people with the similar predicament and I get angrier and angrier with every day of this "economic recovery". What to look forward to? I contributed to the "recovery" with my taxes and lower pay like everybody else, where is my silver lining in it all? Minister Noonan and Co are not listening, or perhaps they think there are only two groups as described above so people can move on.

But my point in the previous post was not only this, but the amazement that the costs of stupid economic decisions by the supposed experts in the field - banks - cost nothing to them and are simply transferred to their customers. I, personally, could have accepted it all if the bank and I shared the costs, after all I lost everything and the bank nothing on my behalf, I could have moved on if they simply lowered their bloody rate.
 

Fair enough but it's not entirely true to say that the crash did not have a cost for our banks. Bank shareholders were almost completely wiped out and a large number of bank staff and executives lost their jobs and/or suffered significant pay cuts.

I'm curious why you took out a variable rate mortgage as opposed to a tracker during the boom. Was there a particular reason for this?

The one comfort, I suppose, you have is that the State will materially subsidise your mortgage repayments (by way of mortgage interest relief) until the end of 2017 (from which point your capital repayments should be more a more significant portion of your overall payments).
 
Sarenco, as it happens, I already replied why SVR and not a tracker in this thread: KBC reduces rates for new customers only - not for existing customers. I am not trying to be smart after the fact, this is how it was explained then.

When I was approved for a mortgage, the BOI said I could choose between fixed and tracker. When I found a house and did the paperwork, the tracker disappeared somehow and the choice was between SVR and fixed. And the bank officer explained SVR and tracker were very similar. It was all verbal of course so I cant sue or something. But it felt commonsensical at the time. And I also do not understand why their own appraisal of collateral (house) that I relied on and paid for, does not factor in at all. After all, it was not 2006 or 7 when it was not clear, but 2008 when even I knew prices were going down, but I really was assured by BOI, I thought they knew something I did not. I know, not very clever, but it was BOI, not some subprime lender.

The one and only comfort will be over in 2017. And I would not want taxpayers to keep subsidizing beyond 2017 even if it were considered, ideally I would have liked to see the bank "self-impose" its own TRS or sorts for people like me by lowering their SVR, this is what I meant by meeting in the middle.
 
Ah, understood. Yes, by mid-2008 property prices had already fallen substantially (although we now know that they had a lot further to fall before bottoming out in 2012/13) and most banks had withdrawn their tracker offerings (apologies, I understood you had bought during the bubble period - by 2008 the bubble had well and truly burst).

MIR will continue until 31 December 2017. By that stage, principal repayments will make up a greater proportion of your total payments.

Incidentally, I agree with your general point that variable rate mortgages, as we understand them in this part of the world, are inherently unbalanced in favour of the lender. In the US, adjustable rate mortgages (ARM) are common whereby the rate can only be adjusted by the lender at set intervals (typically every 5 years). If a borrower does not like the adjusted rate, they are free to try and refinance with another lender.

I appreciate that many here are sceptical about BOI's motives (with good reason perhaps) in trying to get borrowers to move to fixed rate mortgages but I think it would be preferable from a societal perspective if fixed rate mortgages became more commonplace.

Would you consider fixing your mortgage rate to reduce your repayments?
 
Sarenco said:
No, I didn't state that.
Click to expand...
Ok you did say {minimal profits} so sorry I misquoted you.

I do not think 1 billion is minimal , nor do I see how Basket case Banks can so quickly turn to even (minimal) profit without something hookyish in their accounting ,or else they are overcharging ?
Methinks its both !
 
Well, the stated pre-tax profits of the covered credit institutions are very modest when expressed as a percentage of their capital - and PTSB has yet to move into profit.

All three covered credit institutions publish detailed financial statements and analysis on a semi-annual basis. These provide details of increases in their net interest margin, write-back of provisions (as losses on non-performing loans are not as bad as initially anticipated due to increasing property prices), details of cost reductions (largely reductions in staff costs) and reductions in their cost of capital. The numbers are very transparent.
 

You did a superb job highlighting the fact that many SVR mortgagees can't move, and that therefore so-called competition won't do anything for them. Bravo for that.

But then you were posed a leading question -- was it set up beforehand? -- asking what could be given to the banks as a sweetener for dealing with such people more reasonably. You accepted the premise that somehow a sweetener was due, or necessary, which surely it is not. From my reading of the interview, it seemed to come from some sort of aspiration on the part of the broadcaster toward apparent but surely fake balance. (It's a particularly infantile manifestation of RTE and BBC broadcast styles... but enough of that for now.)

The sweetener that you eagerly suggested was making it easier for banks to repossess. This gives credence to the well-spun line that there is a natural and inevitable link between ease of repossession and sky-high interest rates. This has never been authoritatively argued or established with actual costs.

Classic corporate PR: when you have no reasonable defence, you muddy the waters with extraneous issues. This clearly is what the banks and their apologists are at, and I'm afraid it seems they got you on this one.
 

Sarenco, in my sad case unfortunately I bought at the boom price still, in late Aug 2008 (it was still pretty much the same as in Jan). So it is that "third" group, boom price+SVR. Prices were in decline elsewhere so I asked the mortgage officer at the BOI at the time about it and he said they would send their appraiser to make sure the price was right, the price was apparently "right" and then it moved very quickly, we bought, and in Sep prices dropped significantly in my area also. And one cannot sue appraisers for negligence, their duty is to the bank. Weird. I still cant get my head around why they failed to see it then, has to be systemic assumption that prices can only go up, dunno. It was very stupid decision on my part, certainly, but the BOI people acted like they knew something I did not, I thought maybe it was a more desirable location than elsewhere or something.

I would have considered fixing the mortgage with BOI but 3.75% is still way too high considering very cheap credit markets. A friend of mine in the states refinanced at 1.65% fixed for 20 years, with RBoS I think. Presumably BOI and US banks can access the same money markets, and the property market was bust in that state also and even if one accounts for the ease of repossessions there, the average of 4-4.5% in Ireland is still way too high. No matter how one looks at it, it should not be over 3%. And the second issue because of all this grief that the BOI brought on me I seriously consider moving to the UK, so fixing may not be a good idea at the moment.
 

Ah, no - by September 2008 asking prices (never mind selling prices) for property nationwide had fallen back almost 13% from peak asking prices in June 2007 (per Daft). While property prices certainly had a long way further to fall, you definitely bought post-bubble.

Because you bought in 2008, you will actually get mortgage interest relief for over 9 years (MIR normally expires after 7 years) so that's a fairly substantial additional subsidy.

The bank appoints its appraiser for their own purposes - the appraiser is not your agent so why would they have any liability to you?

I don't understand why any possible move to the UK would have anything to do with your decision whether or not to fix your mortgage rate. Are you thinking of selling?

The US mortgage market is quite different to our own (as mortgages are almost all securitised in the US) but the nationwide average for a 20 year fixed-rate mortgage in the US is well over 3% so your friend is getting an exceptional deal. Mortgages in Ireland are primarily funded by customer deposits and not by wholesale money.

It seems to me that you bought your house post-bubble, are availing of extended MIR and are in a position to materially reduce your mortgage rate. Not the worst position in the world.
 
Sarenco, in Aug 2008 the price was only 5% below the peak in July 2007, certainly not 13%. The contract was signed in August which makes the average price 9% below according to this daft estimation: https://www.daft.ie/report/alan-mcquaid, but in September the price dropped dramatically, to 15% or so. Mind you, these are average prices with significant intervals around them depending on the area I guess, so even 9% average would account for 5% in my case.

I believe that 5% below the peak price constitutes the "boom" price, considering that most estimations include 2004-8 period as the boom period, with 20% plus and minus off the peak price in boom price bracket. Therefore, the majority of people on tracker mortgages who bought during the boom, i.e., 2004-8, paid less than or the same for their houses as I did AND they they pay less now because of cheap trackers. I hope you understand my position, there is no silver lining at all. Even though I paid over 20% in deposit, I am still over 90% LTV and cannot switch. And I have 2 colleagues in very similar situation.

I also think I misunderstood the logic behind appraisal, if there is any. EA is against a buyer, his interest is in selling at higher price. I get it. The bank's interest is in appraising the collateral correctly - house itself is a collateral - because that collateral would go on its books for decades. Is it not? If a buyer goes under, it is in a vested interest of the bank to make sure that appraisal is correct, so that the buyer does not overpay otherwise the bank ends up with an asset that is less than its loan. i think it is reasonable to expect the bank and the appraiser to be on your side because it is in their interest, unlike EA. I get it that the banks might have been too optimistic in 2006-7, and that nobody could have foreseen the severity of the crisis, but there is no way they could not have seen it by mid 2008, the data were there. And there is no way the appraisal was correct if the price at which it was appraised in early August was more than 10% over the price for similar properties less than a month later, in September. It is like they did not care. My own impression from ten or so data points (houses) was that prices were in decline. The bank had 10,000s data points, clearer picture. In the end, I was convinced by the bank and its appraisal and decided I was missing something and the bank knew something I did not. Stupid, I know. But I always had an account with BOI since student days and sort of trusted them. In retrospect, pity I did not know about this forum, I became quite savvy reading various threads now alas too late.

My point was also that the customer pays for appraisal him or herself, it is somewhat weird that the appraiser is not liable to the person who pays for his services in good faith. If the purpose of appraisal is not to correctly appraise the price at the time, the customer should be told explicitly so that one can arrange her own appraisal.

I don't know how exceptional that US deal is, perhaps average would have included subprime borrowers, hence 3%. But that person has very similar income, deposit, actuarial risks, so I would have considered myself in the same bracket. Even if not 1.65, but 3% fixed for 20 years - I would have refinanced at that in Ireland. I often discuss this issue with colleagues from other countries because frankly it bothers me a lot, and it is gets embarrassing to admit how much they charge us here. And certainly, if 4.5% remains, and I cannot refinance with another bank, the whole thing becomes pointless so I would have to sell and look for greener pastures.
 
Sarenco, and another point. I certainly support your ideas about imposing caps of some kind expressed elsewhere but not sure how one can translate these ideas into actual governmental policy if they are not listening. I take it "Sarenco" is not minister Noonan's alias. Then the only solution is to inhibit Noonan dreams like in The Inception movie and plant the idea of caps on SVRs, I can't really see anything more realistic
 
Sarenco,

The minimal profits ( 1 billion euro ) that AIB and BOI posted, are not the actual profits the bank made last year, a lot of the gross profit was diverted away to bad debt provisions etc so that the tax liability at the end of the year would be lower.
 
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