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Permanent Building Soc In Ireland Hikes Fixed Rates By 3%

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I predict this will soon be the same in the UK.

We are already seeing banks hike mortgage rates irrespective of the BOE. The base rate has lost any relevance especially as Merv will not raise rates until it is way too late and everyone knows this.

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Well that brings back memories, my first mortgage in 1970 was at 8.75% and we thought that was a bargain then. Well it was, after what happened in the following years. :D

It's a bargain when your borrowing 2.5x salary and not 5x salary. Where's Eric Pebble.

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It's a bargain when your borrowing 2.5x salary and not 5x salary. Where's Eric Pebble.

Well everyone I knew then as myself borrowed on 3.5x salary never heard of 2.5x salary or joint mortgages.

The low IRs the last decade were the cause of the massive HPI.

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Well everyone I knew then as myself borrowed on 3.5x salary never heard of 2.5x salary or joint mortgages.

The low IRs the last decade were the cause of massive HPI.

Your not as old as I thought you were then ;) my dad borrowed 12k at 2.5x his house is now worth 550k though I doubt he'd find a buyer anytime soon (375k feels about right) and he's 73!

Tracker mortgage rates are being ramped up, I'm seeing BoE BR + 3.69% - keeping base rates low now just makes these deals teasers.

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So this has implications for the UK?

Of course it does. If America has a good day on the stock market the UK usually follows. We are connected to Ireland through our unhealthy pact with America. Global arbitrage will work it's way into our rates.

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Wow!

That's called completely giving up on new mortgages to focus on the wholesale rape of existing borrowers. And since these poor people are in negative equity, they have nowhere to go.

This should be a frightening reminder that interest risk is real and that recent 'affordability' criteria have been catastrophically wrong.

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Wow!

That's called completely giving up on new mortgages to focus on the wholesale rape of existing borrowers. And since these poor people are in negative equity, they have nowhere to go.

This should be a frightening reminder that interest risk is real and that recent 'affordability' criteria have been catastrophically wrong.

Right, I said, wow too.

There's only two ways to make money in the mortgage business like you said. On one side of the coin, is attaining new business, or the other, squeeze existing borrowers. Ouch!

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This hike is so dramatic it just made me Lol. On your 'average' Irish home of 500,000 Euros, at 5.75% the monthly payment is a painful 3,125.00 Euros a month.

At 8.75% it grows to 4,058.00 Euros a month.

I can't even imagine how many Irish are going t get the shock of their life when their 5 year term is up and they go to refinance. Although I wonder what the variable is at..

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The reason I posted it is simple. If it can happen in ROI it can happen here. I can remember mortgage rates at 15%.

I can remember that too, bought my forst house at 13.5% I think it was was at 1.6 x salary

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It is a very interesting find.

Given the new focus on liquidity, mortgage rates are going to increasingly be set about 225 basis points (roughly the average net interest margin at banks) above where banks can borrow money for the same term.

It is cheap for banks to borrow money from their depositors. It is expensive for them to borrow in wholesale markets. What is happening in Ireland is that retail are withdrawing their deposits and moving their money to safer banks. The increased reliance on wholesale funding by Irish banks is pushing up mortgage rates.

It is worth noting that mortgage rates have very little to do with administered rates. A bank offers a 5 year fixed rate mortgage at about 225 bps above where it can raise 5 year money. The impact of administered rates, QE etc on a bank's average 5 year cost of funds decreases as a banking system becomes less sound.

A funding crisis for UK banks will have the same impact on mortgage rates. It will be interesting to see what happens here when the SLS has to be repaid .....

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The reason I posted it is simple. If it can happen in ROI it can happen here. I can remember mortgage rates at 15%.

I don't think mortgage rates were ever 15%. Definitely over 12 but I don't remember 15.

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A funding crisis for UK banks will have the same impact on mortgage rates. It will be interesting to see what happens here when the SLS has to be repaid .....

I'm guessing it won't have to be repaid it will just be extended.

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The Bof E bank base rate was 15% in Oct 89 - I think mortgage rate went up to 16% at one point but I am having difficulty finding historic rates.

Sounds about right I bought my frst house in late 1989 and I think it was 13.5% with a special offer

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The Bof E bank base rate was 15% in Oct 89 - I think mortgage rate went up to 16% at one point but I am having difficulty finding historic rates.

I do remember that day well. I was at a wedding in Dublin and was diving out of the reception every so often to hear the news bulletins. It was the day that sterling fell out of or was ejected from the ERM. Base rate was at 15% but only for the afternoon. If it had stayed there God knows what mortgage rates would have been.

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What are savings rates like in Ireland ?

Worth putting a few Euros into their banks (not too much !) ?

You can get about 2.5% if you lock money away for about a month or higher from the main comercial banks. The seriously troubled like Anglo Irish were offering higher rates. But as they are nearly all state guaranteed now I suppose one is as good or as bad as the other. Remember though that the banks automatically deduct deposit interest retention tax (DIRT) at source for the government. This can be either 27 or 30 percent of interest gained, depending on whether it is a short or long term loan. It seems to be a moot point as to which is which, but I think anything over a year attracts the higher rate

Most of the political parties are sopping up to the negative equity brigade for the election though and are not that interested in savers. One party ,Fine Gael, is proposing to abolish mortgage interest relief for new buyers, but increase it for people who bought between 2004-2008 because of their "unfair" mortgage burden!

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  • 311 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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