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More pain on way as home loan rates to rise again

HOMEOWNERS are facing bigger bills after top members of the European Central Bank called for a new interest rate hike within weeks.

They want another rate rise of 0.25pc as early as next month, or a larger-than-expected 0.5pc increase in August.

Either move would lead to big rises in home loan repayments for borrowers.

Underscoring the pressure on homeowners, the country's biggest bank, AIB, yesterday said it was raising its variable home loan rate by 0.25pc to 4pc from today.

Most lenders have now raised their rates following the last rise from the European Central Bank at the beginning of June.

A new increase in July would bring to four the number of rises suffered by mortgage holders in the past seven months.

Two more quarter percent rises were expected before the end of the year, taking the ECB base rate to at least 3.25pc.

Up to now, it was expected the ECB would hold off raising rates again until the autumn. But there are indications that the next 0.25pc rise could come as soon as July, as central bankers battle to keep inflation across the eurozone under control.

Axel Weber, who represents the powerful German Bundesbank on the ECB's board, said the bank should turn vigilance into action and raise interest rates further because of rising inflation.

He was supported by Finnish representative Erkki Liikanen, who said the ECB would act when needed, a clear signal that rates are set to rise, possibly as early as next month.

Dublin-based IIB Bank economist Austin Hughes said that apart from inflation in the eurozone, Mr Weber and Mr Liikanen were also concerned about the fate of the euro, which fell against the dollar yesterday.

The earliest the ECB can raise rates is early July. Meanwhile, a report out today is understood to reveal that houses prices here have risen by a staggering 300pc in the past 10 years.

The ESRI/Permanent TSB housing report is also likely to show that Dublin house prices are now on average more than €100,000 dearer than properties in the rest of the country.

There was also evidence yesterday that the drip-drip of interest rate rises since last Christmas is putting a huge strain on household budgets.

But consumers were warned there were no easy solutions, and to think carefully before opting for choices such as interest-only mortgages. These products can slash monthly repayments but there were warnings that an interest-only mortgage is a ticking timebomb.

This is because the borrower is not actually paying off any of the borrowed money, just the interest charges incurred on that loan.

In the meantime, further interest bills build up.

Consumers' Association chairman Michael Kilcoyne said 100pc and interest-only mortgages were putting people under greater financial strain.

Charlie Weston and Pat Boyle

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Firefox + BugMeNot lets you bypass most sites that require log in.

"This is because the borrower is not actually paying off any of the borrowed money, just the interest charges incurred on that loan."

Does this really need spelling out? Wonder how many people on IO don't realise they don't own any more of their home than the day they took out the mortage.

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Firefox + BugMeNot lets you bypass most sites that require log in.

"This is because the borrower is not actually paying off any of the borrowed money, just the interest charges incurred on that loan."

Does this really need spelling out? Wonder how many people on IO don't realise they don't own any more of their home than the day they took out the mortage.

There was a time when firts time owner-occupiers would describe themselves as "buying their first home." They would continue to describe themselves in such a fashion for some considerable time.

Nowadays, a similar description would apply to anyone searching with mortgage approval.

Get your keys and foot inside the door and one seem sentitled to say one has "bought", even if you haven't

paid off a penny of th einterest, let alone the capital.

Edited by Sledgehead

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What's happening here is staggering and very sad. It's a tragedy unfolding in slow motion, but many just can't/won't see it. Most first time buyers know that they are borrowing too much, but they feel compelled to do so, or they will never be able to own a home. The pressure on young people from their friends, family and the media to "get on the ladder" is just incredible.

But I know a few who are getting really worried about future interest rate rises. A work colleague was asking me just yesterday where I thought interest rates were going - she bought 18 months ago and is concerned about her monthly finances. I advised her a while ago to consider taking out a fixed rate mortgage. She enquired about this, but decided she couldn't afford the higher rates back then.

Mrs Flash was talking to a young friend who has just got married and bought an apartment in Dublin with new husband. Things should be rosy for them as they look forward to an exciting new life together. But he is now working in Dubai because he cannot find a job paying enough to cover the mortgage. They have only been married a few months but have spent more time apart than together, all thanks to this wonderful house price boom that has made the old rich at the expense of our young. And after telling her story she asked "Do you think we've done the right thing?"

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Isn't it just typical though that today the Irish Indo are running an article on how House prices are predicted to increase by 55% over the next ten years.

"Warning Warning, things are a bit bubbly guys, people are taking on too much debt----but prices will keep rising, everyone will make huge capital gains, so don't worry"

I am sick of the propping-up that the media are playing at, constant deluge of positive spin.

Last night on TV the headline item on the news was the 10 year anniversary of the recording of some house price index and how house prices have risen by 270% since 1996.

This should not be celebrated - it is ruining the economy and the experiences of the present young Irish generation. It is too late to do anything - but this government have had a fantastic opportunity to really improve this country - and they have spent it all in the one shop.

Look, young people of Ireland - the economy is dependent on a Housing market that is displaying large signs of irrational exhuberence - do not mind what other fools are doing - go and Rent....getting a large mortgage on a small house in a shabby part of Dublin is plain stupid - you are still renting, it is just not called renting, you are paying the bank for the privilege of saying "I own my own home" - it is a scam and is purely psychological.

Things can not keep going, can people not understand this - economists have no clue, the government tell you all is fine because they are trying to stay in power, and the media are being paid to lie to you that all is well and increasing....it is all a scam and I will tell you something it is all going to end in tears, do not say that you have not been warned.

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"More pain on way as home loan rates to rise again

.....timebomb.

This is because the borrower is not actually paying off any of the borrowed money, just the interest charges incurred on that loan.

In the meantime, further interest bills build up.

Consumers' Association chairman Michael Kilcoyne said 100pc and interest-only mortgages were putting people under greater financial strain."

An amoeba with 1 brain cell would have see this all coming 3-5 years ago......

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Isn't it just typical though that today the Irish Indo are running an article on how House prices are predicted to increase by 55% over the next ten years.

"Warning Warning, things are a bit bubbly guys, people are taking on too much debt----but prices will keep rising, everyone will make huge capital gains, so don't worry"

I am sick of the propping-up that the media are playing at, constant deluge of positive spin.

Last night on TV the headline item on the news was the 10 year anniversary of the recording of some house price index and how house prices have risen by 270% since 1996.

This should not be celebrated - it is ruining the economy and the experiences of the present young Irish generation. It is too late to do anything - but this government have had a fantastic opportunity to really improve this country - and they have spent it all in the one shop.

Look, young people of Ireland - the economy is dependent on a Housing market that is displaying large signs of irrational exuberance - do not mind what other fools are doing - go and Rent....getting a large mortgage on a small house in a shabby part of Dublin is plain stupid - you are still renting, it is just not called renting, you are paying the bank for the privilege of saying "I own my own home" - it is a scam and is purely psychological.

Things can not keep going, can people not understand this - economists have no clue, the government tell you all is fine because they are trying to stay in power, and the media are being paid to lie to you that all is well and increasing....it is all a scam and I will tell you something it is all going to end in tears, do not say that you have not been warned.

Was Ireland not piss poor ten years ago? What exactly has changed? Are they now one of the most productive nations in the world? Do they produce a vast array of valuable commodities? Or have they just adopted the fiat currency of an infant state with a central bank that set its repurchase rate too low for too long?

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  • 301 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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