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The Irish market is really beginning to interest me in a morbid sort of way.

Does anyone know what percentage of mortgages are fixed rate as opposed to variable?

What is offered as a fixed rate for 25 years?

Will much of the existing borrowing be protected from the forthcoming ECB rises because people are on fixed rate mortgages?

Edited by newbie

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The Irish market is really beginning to interest me in a morbid sort of way.

Does anyone know what percentage of mortgages are fixed rate as opposed to variable?

What is offered as a fixed rate for 25 years?

Will much of the existing borrowing be protected from the forthcoming ECB rises because people are on fixed rate mortgages?

I don't know what the breakdown is but I hear the majority of FTB's are fixing.

25 years? - That's only for the very wealthy. :lol: 35 is more common now.

Edited by Flash

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I don't know what the breakdown is but I hear the majority of FTB's are fixing.

25 years? - That's only for the very wealthy. :lol: 35 is more common now.

So the projected rate rises per se will not bring about forced sales.

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So the projected rate rises per se will not bring about forced sales.

Nobody that I know has a fixed mortgage, they can't afford it. Many can't even afford the coming 3% variable rate.

Todays economist print edition again repeating the coming pain for Ireland:

http://economist.com/agenda/displaystory.c...y_id=E1_VVRSDNP

"In Ireland and Spain home prices are the most overvalued in the zone; worse, the bulk of mortgages are at variable rates. Elsewhere, most mortgage rates are fixed. A rise in ECB rates from 2% to 3.5% seems modest, yet it implies a rise in mortgage interest payments (assuming a rate one percentage point above the central bank rate) of 50%. Irish and Spanish borrowers have taken on so much more debt in recent years that their extra payments would correspond to an increase in interest rates in the early 1990s from 10% to 15%—enough to cause considerable pain.

If rising interest rates hurt these economies by much more than those of Germany, France and Italy, there will be nothing the ECB can do to lessen homebuyers’ misery. Its job is to set rates for the whole of the euro area. Having enjoyed the benefits of Europe’s “one size fits all” policy when money was cheap, Ireland and Spain are about to suffer the cost."

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So the projected rate rises per se will not bring about forced sales.

OTOH we have a crazy level of completions here, approx 80K per annum.

That's 80K forced sales anyway, not too bad :)

Which when you look at it maybe explains the resurgence of the queuing for off-plan developments. The builders and agents are clearly doing something (not sure what - incentives, media stuff) to whip the buyers into a frenzy now so they can offload the next couple of years' completions early, before the rates go up too much.

I don't remember seeing anything like the queuing out at Adamstown since a couple of years ago - things have gone back on the boil again here.

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I used to think that Ireland was going down first in Europe.

Then I thought the UK would be precede it.

I'm back to thinking Ireland goes first. It is just too small a market to weather this madness.

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"In Ireland and Spain home prices are the most overvalued in the zone; worse, the bulk of mortgages are at variable rates. Elsewhere, most mortgage rates are fixed. A rise in ECB rates from 2% to 3.5% seems modest, yet it implies a rise in mortgage interest payments (assuming a rate one percentage point above the central bank rate) of 50%. Irish and Spanish borrowers have taken on so much more debt in recent years that their extra payments would correspond to an increase in interest rates in the early 1990s from 10% to 15%—enough to cause considerable pain.

If rising interest rates hurt these economies by much more than those of Germany, France and Italy, there will be nothing the ECB can do to lessen homebuyers’ misery. Its job is to set rates for the whole of the euro area. Having enjoyed the benefits of Europe’s “one size fits all” policy when money was cheap, Ireland and Spain are about to suffer the cost."

The ECB cannot be held responsible for the boom (and coming bust) in Ireland and Spain. The ECB's remit is to target core inflation and stabilised growth across the Eurozone.

This is no big deal: the governments of Ireland and Spain had plenty of tools at their disposal to target the property market, e.g.:

- fiscal policy over transactions, capital gains, rental incomes, second homes etc.

- regulation of private rental properties

- regulation of mortgage lending

- planning regulation

The countries that have taken sensible approaches to the above areas have not had property booms. Simple as that. There is no EU wide law saying that member states must allow banks to lend to anyone with a pulse at 11 x salary. If they'd wanted to stop the madness, they could have easily done so. But no, they were more interested in believing their own hype.

Celtic Tiger my @rse!

frugalista

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  • 336 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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