Last week on ‘Talking Money’ Mary Wilson spoke to Karl and Jill about ways to ‘beat the bank’. In an era of low returns and higher costs on credit and use of the financial system beating the banks becomes an important aspect of finances because of the amount of interaction most of us have with banks.
Last night’s Primetime had a well thought out piece on variable interest rates.
The general thesis was that variable rates are ‘too high’ and that banks should not be allowed to charge them, the figure of 1% of a ‘cost of funds’ was mentioned several times and various suggestions were made as to making the banks stop the practice of setting their own prices.
To begin with, the ‘cost of funds’ at 1% may be what a bank buys their raw materials at, but then you have to make more on top of it to allow for operational costs, to provide for losses, regulatory burdens, margin and the like. It is worth noting that in AIB’s interim statement which was only made yesterday that they noted that “Net Interest Margin (NIM), excluding ELG, expanded to c.1.64% year to date (YTD) September 2014″.
This means the idea of 4.5% minus the 1% ‘cost’ equating to a 3.5% ‘profit’ doesn’t stack up. If it did the net interest margin …
In the second instalment on pensions we looked at the situation people may find themselves in if they have waited until their 40′s or 50′s to start saving towards retirement. There are some scary valid concerns but also some good news when it comes to retirement provision started late.
On Monday the 27th of October we had the first of two parts about pensions, the focus this week was that people are passing up money that is on the table for the taking. The other issues were about the kind of advice you get, and the best ways to structure your pension as well as to demonstrate the available funds if you save for retirement.
We were asked to speak to Ireland AM on TV3 about the proposed mortgage caps, some of the concerns about what the outcomes may be and the curious case of how the Government themselves are trying to circumvent this plan.
We have designed a simple calculator that lets you put in your property price, what rents you are currently paying, how you think prices will change and how many years it would take you to save a 20% deposit if you only have 10% now.
Just download the excel file, fill in the bright yellow boxes on the first sheet, and then scroll down to the green area to find out if you win or got shafted. (download here)
You can play around with different scenarios, but suffice to say that a regular couple who have €25,000 saved up and are looking to buy a property for €250,000 today will be worse off if rents and property prices went up by 2% a year (and it took them 4 years to save the additional deposit required) to the tune of €15,500.
We don’t believe it is in the remit of the Central Bank to damage the balance sheets of financially healthy individuals, but you can test your own hypothesis and see how it …
We spoke with Mary Wilson on Drivetime about the Budget 2015 announcements and agree that it wasn’t a ‘budget for builders’ because it was more like a budget for land bankers.
It was budget week and on ‘Talking Money’ we came up with a ‘fantasy budget’ which considered some of the things we might do if budgetary powers were in our hands. Some are far out, others are novel, some (like car tax abolition) are pragmatic, you can decide for yourself what you think!
On the night of Budget 2015 we were asked to participate in a large panel discussion on Vincent Browne’s ‘Tonight’ show. We tried to make the point that the budget was not one that should have people too disappointed, it was the first time in years that anything came back to tax payers rather than taking more (apart from the better paid who now have a super USC rate).
The news that higher loan to values will have to be limited is being mistakenly applauded by many financial commentators, almost none of whom work in credit. Towards the end of the post we demonstrate that you can actually be worse off by being forced to wait and put down a larger deposit than if you acted normally and bought today with a 10% deposit.
That’s why taking a look at the numbers beneath and how it will affect mortgages is important. First time buyers are typically the younger end of the house owning spectrum, they largely chose to stay out of the market during the financial crisis, a good choice, very rational.
That is why the people renting rose so much between 2006 and 2011. A total of 474,788 households were in rented accommodation in 2011, a considerable rise of 47 per cent from 323,007 in 2006.
It created a build up of non-owners who want in, but who are not the main driver of property price increases …