undersupply Posted March 2, 2006 Share Posted March 2, 2006 €250m hike in loans but house price boom goes on Brendan Keenan HOUSE prices will continue to power ahead despite a billion euro hit on the cost of mortgages this year, it was predicted yesterday. Today, the European Central Bank will add another €250m to the country's home loans bill when it raises interest rates by a quarter percentage point. Economists say there is more to come, with rates increasing from yesterday's 2.5pc to 3pc by the end of the year. But a new report yesterday said even that will not stop house prices rising by an average €25,000 this year. Today's increase will add over €30 a month to a typical 25-year, €250,000 loan. But with the ECB keen to get interest rates up to a more "normal level", further rises are forecast for later in the year. The next rise, of the same amount, is expected around June. If the euro area economy continues to perform well, another one is likely by year-end, and there could even be further hikes in 2007. Total Irish mortgages passed the €100bn mark for the first time in January. If the predicted rate increases arrive, they will cost borrowers a total of €1bn in higher monthly repayments this year. But even this will barely slow the Irish housing boom, the chief economist at IIB Bank, Austin Hughes, claimed. In a new report on the property market, he said higher wages and the payout of some €5bn in SSIA money will enable home buyers to cope with dearer mortgages. He agreed they would still come as a shock to many borrowers. "Before last December's rate rise, the previous ECB hike was in October 2000. So a whole generation of Irish borrowers may be unfamiliar with the consequences of rising monthly repayments." Existing home owners will also be comforted by a forecast 8pc rise in the price of houses this year, which would be slightly more than the gain in 2005. "Even after deducting the mortgage, the average Irish household will have €270,000 in property wealth by the end of this year," Mr Hughes said. "Anyone who bought a typical house in 2001 will have seen the value of their property rise by some €110,000. The rise in interest rates will have an unwelcome effect on inflation. When added to a rise of some €20bn in new mortgages this year, it could push inflation in 2006 close to 3.5pc. Quote Link to comment Share on other sites More sharing options...
Randall Herbert Posted March 2, 2006 Share Posted March 2, 2006 Aside from Blarney, tourism, theme pubs and Guinness. What exactly does Ireland export to the World in order to underpin its real GDP? Seems like they are all cutting each others lawns these days? Quote Link to comment Share on other sites More sharing options...
CaptainClamp Posted March 2, 2006 Share Posted March 2, 2006 (edited) Aside from Blarney, tourism, theme pubs and Guinness. What exactly does Ireland export to the World in order to underpin its real GDP? Seems like they are all cutting each others lawns these days? Software, pharmaceutical manufacturing, other manufacturing (eg there's a huge Intel plant in Leixlip). Financial services (i.e. our tax dodging money laundering services). Probably some edibles, fish, dairy, magic mushrooms and the like. IRA terrorism expertise to Colombia. Edited March 2, 2006 by CaptainClamp Quote Link to comment Share on other sites More sharing options...
AteMoose Posted March 2, 2006 Share Posted March 2, 2006 (edited) doesnt ireland operate alot of the worlds hedge funds? Edited March 2, 2006 by moosetea Quote Link to comment Share on other sites More sharing options...
CaptainClamp Posted March 2, 2006 Share Posted March 2, 2006 Aside from Blarney, tourism, theme pubs and Guinness. What exactly does Ireland export to the World in order to underpin its real GDP? Seems like they are all cutting each others lawns these days? More accurately we are all building each others' houses. 25% of the workforce is in construction, seemingly. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.