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Mortgage Lenders To Impose Spate Of Rate Hikes

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Lets analyse this,

no rate change by EU Central Bank for last 14 odd months but lenders in Ireland are increasing rates on average 0.6%, emphasis on lenders are free to hike their rates as they please...hahaha, are we going to see here something similar?

Bring it on, I say.

Mortgage lenders to impose spate of rate hikes

300,000 mortgage holders will be hit with rises within weeks

By Charlie Weston

Tuesday July 20 2010

A STRING of lenders are going to hike interest rates on mortgages within weeks, the Irish Independent has learned.

Up to 300,000 people will be hit by the increases by the end of August.

This move follows EBS's announcement last Friday that standard variable rates for new and existing customers will jump by 0.6pc in early August.

Families face paying an extra €100 a month in repayments on a €300,000 mortgage. This works out at €1,200 a year.

Now AIB, Bank of Ireland, Permanent TSB and Irish Nationwide are expected to raise their rates by around 0.5pc, with indications yesterday that most of the increases will be introduced by the end of August.

Permanent TSB and EBS have now upped their variable mortgage rates twice in the past year -- pushing up rates by 1pc.

Most other lenders have only moved once, and are now preparing to act quickly to push up their variable rates again.

Earlier this month, the European Central Bank (ECB) left its key interest rate unchanged for the 14th month in a row. But mortgage lenders are free to hike standard variable rates whenever they want to, irrespective of what the ECB does with its rate.

And once this next round of mortgage-rate hikes is completed, lenders are set to go again before the end of the year.

This would mean rates would have risen by 1.5pc in total this year.

A family with a €300,000 mortgage would see monthly repayments shooting up from €1,227 at the start of this year to €1,470 by December. That works out at an increase of €243 in monthly repayments, or almost €3,000 over a full year.

A jump of €3,000 represents more than a month's salary for a single-income family on €43,500 a year.

Hikes will not impact on those with tracker mortgages, which can only move when the ECB raises its rates. But up to 300,000 homeowners, out of a total of 792,000 residential mortgages, are on standard variable rate mortgages.

Spokesman for the Independent Mortgage Advisers Federation, Michael Dowling, said: "Other lenders will follow EBS before the month is out."

Mr Dowling added that the lenders that had received injections of capital from the State had told the EU that they would push through increases totalling 1.5pc in standard variable rates this year.

The EU is assessing the restructuring plans of AIB, Bank of Ireland, EBS and Irish Nationwide to see if they breached rules on state aid within the EU.

"Once this latest round of increases is out of the way there will be another round of rises to take the overall increase to 1.5pc before the year is out," he added.

Chief executive of the Consumers' Association Dermott Jewell said mortgage lenders were preparing to hit homeowners with a "a rollout of mortgage rises".

He accused banks and building societies of trying to lessen the impact of the bad news by announcing a series of small increases, separated by a few months each time, rather than one big rise.

Immediate

Contacted yesterday, Permanent TSB, AIB, Bank of Ireland, Irish Nationwide, KBC Homeloans and Ulster Bank all said they had no immediate plans to hike standard variable rates, but stressed that the rates were under constant review.

However, the Irish Independent understands that at least four lenders -- AIB, Bank of Ireland, Permanent TSB and Irish Nationwide -- are set to move quickly to raise their mortgage rates.

Karl Deeter, of Irish Mortgage Brokers, said these lenders were set to hike rates within weeks.

Frank Conway of the Irish Mortgage Corporation said lenders were taking their cue from each other and once one moved on rates, others followed.

In the past, banks have tried to deny plans for immediate interest rate hikes -- but then increased their rates within weeks.

http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-lenders-to-impose-spate-of-rate-hikes-2264937.html

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This move follows EBS's announcement last Friday that standard variable rates for new and existing customers will jump by 0.6pc in early August.

Families face paying an extra €100 a month in repayments on a €300,000 mortgage. This works out at €1,200 a year.

Is that Irish maths?

0.6% of €300k is €1800. €150 per month.

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Guest Steve Cook

When rate start to rise, this will be the final nail in the coffin of HPI.

It really will be game over at that point

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We can only hope...

I particularly like this line:

Families face paying an extra €100 a month in repayments on a €300,000 mortgage. This works out at €1,200 a year.

No shit Sherlock... Guess that's how you get the big bucks in the world of journalism, being able to do complex sums like that.

Honestly, when did everyone in the world get so stupid that they couldn't multiply 100 by 12 on their own?

[/rant]

:)

Edit: And just seen the post above about the monthly figure being wrong anyway! Love it!

Edited by Oh Give Me A Home

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Wonder who will be the first in the UK RBS Lloyd's Northen Rock ?

I'd be surpised if it was one of the bailed-out banks. I reckon the industry as a whole are just waiting for someone to break ranks and start raising their rates. The 1st and 2nd bank to do this will take a big hit in terms of negative media publicity but the rest will follow suit in the hope of getting in under the radar. Guaranteed.

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I just still wonder why after the last mess people would still take out a variable rate mortage?

You will always be open to the banks extorting money from you.

halifax and lloyds are making their money up buy charging large amounts for overseas transfers of monies, even if the accounts are both in your name. 19.50 gbp the halifaz are charging. Disgracefull.

I have been speaking to a few expats in different places about this and it appears all bank have gone about this in one way or another.

So much for being part of the EU, why should you be charged for moving your money in your own accounts within the EU?

Be it in interest or in charges the banks will always come out on top. B)

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I just still wonder why after the last mess people would still take out a variable rate mortage?

You will always be open to the banks extorting money from you.

halifax and lloyds are making their money up buy charging large amounts for overseas transfers of monies, even if the accounts are both in your name. 19.50 gbp the halifaz are charging. Disgracefull.

I have been speaking to a few expats in different places about this and it appears all bank have gone about this in one way or another.

So much for being part of the EU, why should you be charged for moving your money in your own accounts within the EU?

Be it in interest or in charges the banks will always come out on top. B)

You can be lucky with fixed rate deals, but the banks follow their projected rates closely before setting up a fixed rate and they almost always win as against variable rate customers over time. So, if you can stand the change in rates the SVR is historically the cheapest taking into account set charges for fixed deals!

The SVR's have already been creeping up, despite no change to the base rate.

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When rate start to rise, this will be the final nail in the coffin of HPI.

It really will be game over at that point

Not so. Those who can afford to pay more will, those that can't will have it paid for by the government.

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http://uk.finance.yahoo.com/news/cheaper-mortgage-costs-not-passed-to-borrowers-tele-af01ac27a01b.html?x=0

Cheaper mortgage costs not passed to borrowers

Myra Butterworth, 11:35, Tuesday 20 July 2010

Banks are failing to pass on the cheaper cost of borrowing to home owners as their profit margins reach a 20-year record high.

The widest margins on fixed rate mortgages come despite the rates being offered to home owners dropping to the lowest level in seven years.

It stems from swap rates the rate which lenders use to price their fixed rate mortgages - dropping faster than the falls in the cost of mortgage paid by borrowers.

Experts warned that the trend is likely to wane as lenders continued to repair their balance sheets, damaged by the credit crisis.

Melanie Bien, director of mortgage broker Private Finance, said: Lenders are keen to repair their balance sheets, rather than chase the volume of lending that they did in the past. Instead of offering the most competitive rates, undercutting the competition, they would rather improve their margins.

For hard-pressed borrowers, this looks like shameless profiteering when mortgage rates have so little connection to money market rates.

The average three year fixed rate mortgage costs 5.15 per cent, with the margin over swap rates reaching 3.38 per cent, the highest level since records begin in 1988, according to the research by personal finance website Moneyfacts.

At the same time, the average five year fixed rate mortgage costs 5.56 per cent, with the margin over swap rates reaching 3.11 per cent.

Michelle Slade, a spokesman for Moneyfacts.co.uk, said: Competition has returned to the mortgage market, but while rates are at their lowest levels in seven years the margins taken by lenders continues to increase.

The mortgage market remains disjointed from the swap rate market, which has traditionally been the barometer of fixed rate mortgages.

Until banks and building societies repair their balance sheets, its highly likely these increased margins are here to stay.

Mortgage lending has been given a boost following the abolition of Home Information Packs.

It rose 15 per cent to £13.1 billion in June, up from £11.4 billion the previous month, according to the Council of Mortgage Lenders.

Paul Samter, economist at CML said: There are signs of house prices stabilising and more properties coming onto the market following the abolition of home information packs. This may improve liquidity in the market, but transaction levels are subdued and likely to remain so while access to credit remains constrained.

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When rate start to rise, this will be the final nail in the coffin of HPI.

It really will be game over at that point

yep

doesn't seem that far

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I just still wonder why after the last mess people would still take out a variable rate mortage?

Probably because, as non economists, they reason that if they bet against the professionals, who hold the cards and set the terms, they will probably lose.

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http://uk.finance.yahoo.com/news/cheaper-mortgage-costs-not-passed-to-borrowers-tele-af01ac27a01b.html?x=0

Cheaper mortgage costs not passed to borrowers

Myra Butterworth, 11:35, Tuesday 20 July 2010

Banks are failing to pass on the cheaper cost of borrowing to home owners as their profit margins reach a 20-year record high.

The widest margins on fixed rate mortgages come despite the rates being offered to home owners dropping to the lowest level in seven years.

It stems from swap rates the rate which lenders use to price their fixed rate mortgages - dropping faster than the falls in the cost of mortgage paid by borrowers.

Experts warned that the trend is likely to wane as lenders continued to repair their balance sheets, damaged by the credit crisis.

Melanie Bien, director of mortgage broker Private Finance, said: Lenders are keen to repair their balance sheets, rather than chase the volume of lending that they did in the past. Instead of offering the most competitive rates, undercutting the competition, they would rather improve their margins.

For hard-pressed borrowers, this looks like shameless profiteering when mortgage rates have so little connection to money market rates.

The average three year fixed rate mortgage costs 5.15 per cent, with the margin over swap rates reaching 3.38 per cent, the highest level since records begin in 1988, according to the research by personal finance website Moneyfacts.

At the same time, the average five year fixed rate mortgage costs 5.56 per cent, with the margin over swap rates reaching 3.11 per cent.

Michelle Slade, a spokesman for Moneyfacts.co.uk, said: Competition has returned to the mortgage market, but while rates are at their lowest levels in seven years the margins taken by lenders continues to increase.

The mortgage market remains disjointed from the swap rate market, which has traditionally been the barometer of fixed rate mortgages.

Until banks and building societies repair their balance sheets, its highly likely these increased margins are here to stay.

Mortgage lending has been given a boost following the abolition of Home Information Packs.

It rose 15 per cent to £13.1 billion in June, up from £11.4 billion the previous month, according to the Council of Mortgage Lenders.

Paul Samter, economist at CML said: There are signs of house prices stabilising and more properties coming onto the market following the abolition of home information packs. This may improve liquidity in the market, but transaction levels are subdued and likely to remain so while access to credit remains constrained.

highlighted key bits.

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This move follows EBS's announcement last Friday that standard variable rates for new and existing customers will jump by 0.6pc in early August.

Families face paying an extra €100 a month in repayments on a €300,000 mortgage. This works out at €1,200 a year.

Is that Irish maths?

0.6% of €300k is €1800. €150 per month.

What you say is true for an IO mortgage - their figure must be for a repayment mortgage.

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I just still wonder why after the last mess people would still take out a variable rate mortage?

You will always be open to the banks extorting money from you.

halifax and lloyds are making their money up buy charging large amounts for overseas transfers of monies, even if the accounts are both in your name. 19.50 gbp the halifaz are charging. Disgracefull.

I have been speaking to a few expats in different places about this and it appears all bank have gone about this in one way or another.

So much for being part of the EU, why should you be charged for moving your money in your own accounts within the EU?

Be it in interest or in charges the banks will always come out on top. B)

There is no charge for incoming transfers from the EU as long as it is sent in euros and not GBP.

See http://ec.europa.eu/internal_market/payments/crossborder/index_en.htm

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  • 258 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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