Meeting with political parties on Monday to discuss interest rates their policies on interest rates

Brendan Burgess

Brendan Burgess

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The Fair Mortgage Rates Campaign is having a meeting as follows

Monday 8th February
Time 2.45 pm
Venue: Buswell's Hotel

We have invited the main political parties to present their policies on mortgage rates.

We will be setting out the objectives of the Fair Mortgage Rates Campaign.

We would like some borrowers to attend and tell us their experiences. A major objective will be that lenders should offer existing customers the same rates available to new customers. As KBC is the biggest offender in this regard, we would welcome a few KBC borrowers to attend and tell their story.

We will be inviting the media as well.

This is your chance to actively do something to help the campaign to bring down mortgage rates. If you can attend, please start a Private Conversation with me or email me brendan at this website.

Brendan
 
I have attached the Briefing we will be discussing at our meeting later today. Here is a summary of our demands:


Summary

The increasing competition in the mortgage market will bring down the rates for borrowers who are free to switch - those borrowers who have a Loan to Value of less than 80% and a Loan to Income of less than 3.5. We encourage those who can switch to do so and thus put further pressure on the lenders to reduce rates.

The main focus of our political campaign is to protect those who cannot switch lenders and we ask the political parties to commit to the following:

1. Existing customers should have a right to avail of the rates available to new customers with the same Loan to Value – this would ensure that existing customers with low loan to values would benefit from competition.

2. A ceiling should be set on variable mortgage rates of 4% above the ECB rate – this would protect the most vulnerable – those borrowers who have LTVs in excess of 90% and those customers of lenders who are no longer seeking new business.

These are very minimum and very reasonable demands. A rate of 4% is still double the average rate in the rest of the Eurozone. These measures should not deter to new entrants into the Irish mortgage market. A rate of 4% fully allows for the lenders' objections that Irish rates must be higher to allow for the difficulty in repossessing houses.
 

Attachments

  • General Election Briefing from Fair Mortgage Rates Campaign.docx
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Brendan Burgess said:
2. A ceiling should be set on variable mortgage rates of 4% above the ECB rate – this would protect the most vulnerable – those borrowers who have LTVs in excess of 90% and those customers of lenders who are no longer seeking new business.
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Seems like a very generous margin to me. With base rates at 0 .05% a rate of 4.05% is still very expensive and only 20 basis points below the 4.25% that which KBC are charging some svr customers.
 
demoivre said:
Seems like a very generous margin to me. With base rates at 0 .05% a rate of 4.05% is still very expensive and only 20 basis points below the 4.25% that which KBC are charging some svr customers.
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The new subprime lender will be substantially over this for their high-risk products, though.
 
WorstPigeon said:
The new subprime lender will be substantially over this for their high-risk products, though.
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Hi WP - Lenders would be allowed to apply to the Central Bank for permission to exceed the ECB+4% ceiling. This would allow for an orderly sub-prime market to continue and develop.

Brendan
 
A report from Charlie Weston on the meeting here:

TDs urged to bring in new cap on home loan rates


We had a very good discussion with Michael McGrath of FF, Alan Farrell of FG and Pearse Doherty of Sinn Féin. The Labour Party told me that they were unable to get any of their candidates to give up canvassing to attend the meeting. They sent along a researcher. When I invited him to tell us the Labour Party policy on the issue, he said that he was just there "to take notes".

6 borrowers told the meeting how the high rates affected them. Their contributions were very moving and they left none of the candidates in any doubt that this was a serious issue.

Brendan
 
noproblem said:
Did I read somewhere that FF are making this a priority? Cannot find a link
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Was it this article in the Indo by Niall O'Connor

Fianna Fail insists it will 'beat' banks into slashing variable rates for mortgage holders


"Fianna Fail has insisted it will introduce measures to "beat" banks into slashing variable rates for mortgage customers in a move that has placed the party on a collision course with the Central Bank.


During a press conference on housing today, Fianna Fáil senator Darragh O'Brien said he disagreed with Governor Philip Lane's claims that banks cannot be compelled into rate reductions, adding: "Phillip Lane isn't the oracle"."

I have asked the 4 main parties to send me their policies on the issue
 
Brendan Burgess said:
W
During a press conference on housing today, Fianna Fáil senator Darragh O'Brien said he disagreed with Governor Philip Lane's claims that banks cannot be compelled into rate reductions, adding: "Phillip Lane isn't the oracle"."
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Politicians still trying to tell the Central Bank what to do. We have learned nothing.
 
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FWIW, I think the Fair Mortgage Rates Campaign should be applauded for proposing a statutory mortgage cap to provide a degree of legal protection for those borrowers that are not in a position to switch lenders to avail of more competitive rates rather than pushing for price fixing powers to be granted to the Central Bank or some other State agency.

If that impedes the growth or profitability of sub-prime lending, well, so be it.

I personally think it would be preferable if the statutory cap was determined as a % over average market rates (either new variable lending rates or average rates on all outstanding home loans), as opposed to a % over the ECB refi rate. However, that's really just a detail.

It's a pity none of our political parties have taken this position on board and that FF and SF are still pushing for price fixing powers to be granted to the Central Bank. In my opinion, that approach would be ineffective at best.
 
Well done on organising yesterday Brendan and the resulting coverage. Very disappointed (but not surprised) at FG outlook and complete lack of input/interest from Labour.
 
Sarenco said:
I personally think it would be preferable if the statutory cap was determined as a % over average market rates (either new variable lending rates or average rates on all outstanding home loans), as opposed to a % over the ECB refi rate.
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Both Sinn Fein and FF want to give the Central Bank the power to control mortgage rates. They think that giving them the power would be enough to encourage the lenders to cut rates.

I think it was Michael McGrath who outlined the different ways in which this could be done:

1) An absolute cap on rates
2) 25% more than the average rate
3) I can't remember what the third option was.

Brendan
 
The median rate on all outstanding mortgages in Ireland is currently around 2.8% (pretty much in line with the median rate across Europe).

If we followed the French example of capping rates at 133% of the average rate on all outstanding mortgages in the preceding quarter, then mortgage rates here would currently be capped at around 3.7%.

I think there is a lot to be said for adopting that approach but unfortunately that is not what is being proposed by FF or SF. Giving the Central Bank a power that they won't exercise is obviously pointless and it may scare off potential new entrants to the market.
 
What about changing the current outrageous repossession model as part of the debate. It has to be a part of the solution. Up to 6 years with no payments for Home repossessions. Landlords collecting rents and not paying them over for similar periods. This type of thing does not go on where there are low Interest rates. What is Michael McGrath's position on this.
There is no political party shouting stop on this in fact the opposite. I wonder why?.
If it might not be a vote winner don't do anything about it.
 
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