Average loan life set to rise as we witness the death of the ‘Switcher’ mortgage.

For almost the last decade we saw a market develop where customers were king, and where banks competed for their business, this was an era where ‘refinancing’, ‘switching’, and ‘re-mortgaging’ became a common occurrence, in the 1990’s the re-mortgage market was very small in comparison to where it went from 2000 onwards. The reason for the upsurge was that loyalty doesn’t pay when it comes to the Irish banks, they were giving new borrowers better rates and charging existing borrowers more, the choice of fixed rates for an existing borrower were always more expensive than for the person who had jumped ship elsewhere and come to a bank as a fresh client.

Today we are seeing something that has long been unfamiliar, banks are intentionally being uncompetitive, pushing rates to the point where they are not doing any marginal lending and where their average loan is reaching higher and higher above the ECB currently several banks have broken the 6% mark meaning that rates are now at the highest they have been in almost a decade.

This means that lenders …

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ECB Base rate increased 0.25% to 4.25% today

The ECB (European Central Bank) changed its base rate today to 4.25% which is an increase of 0.25%, the previous base rate of 4% had been left unchanged since its inception in June of 2007.

The move, while not favoured by borrowers, is vital in order to control Eurozone inflation which has been running well above the ‘at or just below 2%’ level that the ECB has intended to adhere to. In the first quarter of the year many commentators were saying that they believed we would see a rate reduction in the summer, this blog on the other hand argued otherwise in articles which were posted in mid March and again in mid April. As recently as May professional commentators (our crew is more along the line of humble observers!) …

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House prices are on the move!

Sherry FitzGerald said yesterday that property prices fell 4.5% in the second quarter of the year having fallen 1.9% in the first quarter. The results to the 12 months to June showed that prices fell 10.2%. So house prices are moving, albeit down.

The factors that are affecting property are mixed and many, primarily the prices are/were too high, and any time assets receive valuations above and beyond what they merit you will see market corrections. We are also seeing a unique time in banking history, and in many respects the property price correction is not dissimilar to the 1929 crash because both of them focus around leverage, I’ll continue on that point in a later blog about ‘similarities in economic history’.

Cheap money from central banks is also on the wane, in fact almost every economy has increased rates in an effort to bring inflation under control, mixed in with the lending liquidity issues we see a two fold effect. First is that there is not as much money to lend, even …

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A tale of two commissions.

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.

Some of you may recognise this line from ‘A Tale of Two Cities’ by Charles Dickens, however, I am not a classical scholar, instead it sums up my monetary sentiments for 2008. On one hand we are seeing property prices [the very foundation of the majority of Irish wealth] wither away, as global conditions worse, especially in the USA where house prices are now falling quicker than they did during the Great Depression.

There has been more than a few articles in this blog about the current issues in the broker market, the description I would use to describe it at the moment tends to modulate between ‘ugly’ and …

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How to beat a recession. Simple ways to avoid the pinch.

I think the point has been reached, certainly from public sentiment, where we are seeing more negative news than positive news, the see-saw has well and truly tilted, good news seems to be brushed over to focus instead on the financial equivalents of four car pile-ups on the M50. The money market stops to stare and the slowdown of the on-lookers causes everything else to back up.

One thing I might ask, is in that case, then why stay on the proverbial M50? In today’s post we’ll look at some simple ways to beat a recession and reduce costs so that you can keep a good standard of living and even profit from a downturn. Some is simple common sense, some might be about things you haven’t considered.

1. Stop driving: Oil prices have risen and they don’t look likely to fall any time soon, I am a cyclist myself, and sometimes people look at me funny when as Operations Manager of a financial house I turn up to meetings in a high-vis jacket, and admittedly sometimes I feel out …

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Islamic Finance, Ireland is turning truly cosmopolitan

Islamic finance in Ireland? What is it all about? Well before I go into it today’s post will start with condolences, you see I was meant to be at a seminar at the end of March about Islamic Finance and it had to be put off because several children parishioners of the Dublin Mosque were killed and others extremely injured in a car crash while on a field trip down to the country. My hopes and thoughts are with the children who survived and for the families surviving the ones who were lost. Due to this tragedy the seminar has been postponed but we’ll cover some of the basics of what Islamic Finance is all about and how it may change certain aspects of the Irish Market.

According to the Koran (Qur’an) there are many laws surrounding contract and general dealings. The extent of Shar’ia law is actually quite complex and in many ways you could compare it to British Common Law which was developed using the …

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