PRSI rates linked to mortgage rates

josh8267

Registered User
Messages
95
I suspect most people who are pushing for a lower Mortgage Rates do more harm than good .unless the address why Banks have higher risks on lending in Ireland,

Most never take into account the Government/Political Driven underline reasons why Banks will always need higher rates in Ireland ,

First up is the changes made to the Pay Related Social Insurance system back around 1985/6 which is still the system used to support workers who lose there jobs in almost all EU Countries where Mortgage interest rates are lower,

Back in 2008 a very good friend of mine had to let people off,He ran a labor intensive low margin business , What upset him Most letting good employees go who had high Mortgages to pay , Back in the early 1980 they ran into the same problems but with the pay related social Insurance systems in place people let go were in a position to keep there mortgages paid out of the Social Insurance system in place back them,

Pay related Social Insurance Employers/Employees payroll deductions are close to 20 % of pay roll up until the Usc came in,

An Employer/ employees getting the same from state as people who never worked


If you take the time and look at Other EU Countries pay related social insurance systems you will soon see why Mortgage rates will always be higher in Ireland ,
 

RedOnion

Frequent Poster
Messages
4,597
If you take the time and look at Other EU Countries pay related social insurance systems you will soon see why Mortgage rates will always be higher in Ireland ,
I'm intrigued. I've never seen this before.
Are you saying that in other countries, if someone is made redundant, that their social insurance pays part of their mortgage?
 

peemac

Frequent Poster
Messages
785
Pay related Social Insurance Employers/Employees payroll deductions are close to 20 % of pay roll up until the Usc came in,

An Employer/ employees getting the same from state as people who never worked


If you take the time and look at Other EU Countries pay related social insurance systems you will soon see why Mortgage rates will always be higher in Ireland ,
The Pay related social taxes in other EU countries paid by companies are substantially higher than here - EU average is 21%. Here its 10.75%

Main reason for higher rates is the massive legal costs and delays involved in evicting someone who doesn't pay. In many EU countries its done and dusted with property on the market within 6 months if no arrangement is made.
 

josh8267

Registered User
Messages
95
The Pay related social taxes in other EU countries paid by companies are substantially higher than here - EU average is 21%. Here its 10.75%

I know what I am going to say will not go down well on askaboutmoney,

Employees/ Employers need to be paying the EU average social Insurance rates and in return get the benefits when things go wrong,

In Ireland in the last downturn people at the beginning of there working lives with the highest Mortgages finished up out of work (last in first out)

In Germany in most cases it is the other way round, employer/employee who have built up enough Pay related social taxes will opt to go and still get paid by Employer ,
( Around 30% of employees/employers social taxes is ringed fenced to be reclaimed if need be)

I have family in Austria who are self employed the system over there for the self employed is they pay close to a employer/employee,social insurance,
The upside is the get tax relief on building up an emergency fund ,
 
Last edited:

josh8267

Registered User
Messages
95
The Pay related social taxes in other EU countries paid by companies are substantially higher than here - EU average is 21%. Here its 10.75%

Main reason for higher rates is the massive legal costs and delays involved in evicting someone who doesn't pay. In many EU countries its done and dusted with property on the market within 6 months if no arrangement is made.
Lets say I go along with the system in place in many EU Countries which allowed the fast eviction of someone who doesn't pay in six months,

In a downturn There will be lots of evictions of people in Ireland not seen in other EU Country's because of the Changes made in Pay related social insurance back in 1985/6 we moved away from what was standard in EU back then,

I myself worked from 1968 until 2016 the only time I was on layoff was in the downturn in 1984 for around eight months, I and many more like me could still pay our Mortgage because I still got around 75% of my wages on layoff,

I suspect back in 1984 most on layoff would have defaulted on some of there Mortgage repayments if they were getting the present rate of unemployment Benefit ,

Which brings us to the main reason Interest rates are/will be higher in Ireland than other EU Countries

Even if everyone payed every penny the could out of there unemployment Benefit in the last Downturn Mortgage Interest rates would still be higher than the Rest of the EU because our Default rates would be higher

Giving Working people who lost there jobs the same level of benefit as a person who had a free house and expecting them not to defaults on there Mortgage repayment are not living in the real World,

I know it will be hard for the smug to understand there is a connection between the Irish pay Related Social Insurance Benefit Rate and high Mortgage Interest rates,

I suspect Two earner income family's paying a Mortgage are hit very hard if one becomes unemployed under the present Irish Pay Related Social Insurance Benefit is not linked to former employment salary since 1985/6

I think Brendan needs to do a case study /Comparison of Irish people ability to pay there mortgage out of pay related social insurance against other EU Countries with lower interest rates in the last downturn,

It would be nice if Brendan and others Who are campaign for lower Mortgage Interest rates had a look at the Irish Pay related social insurance system in causing working people who find themselves out of work through illness /short time working /job losses defaulting on mortgages because of the Irish system,
I suspect Defaulting on Mortgages and taking a long time for the loans to be repaired in a downturn will keep Mortgage rates high in Ireland and keep providers out of the Irish Market,
 
Last edited:

peemac

Frequent Poster
Messages
785
European system allow for all sorts of agreements. So once you are upfront with issues and come to an agreement, you are fine.

But I certainly agree that Pay Related unemployment benefit should be available of a short period with a reasonable cap.
 
Top