Problems have been arising with mortgage interest rates in Ireland for quite some time now. As there has been a worsened housing market and much conflict has arisen from it, the uncertainty of many different aspects have come to arise.
Many banks have had to make competitive advances in the market just to stay relative and appealing to their customers. The housing market has simply become a game in Ireland.
Without constant changing rates, their appeal would diminish, in turn, causing a fall in their overall customer base. A rapid decline in business would quickly be seen.
Most recently, Ulster Bank announced more drastic cuts to their interest rates that would, in turn, also affect their fixed rate mortgage offerings. This was done as a way to stay competitive as many other primary banks for lending have been recently seen as doing similar things.
The Irish housing market is offering customers some of the highest variable rates accessible across the eurozone. Ireland’s average variable rate stands at 3.37% while the rest of the eurozone has an average of just 1.8%. That being, a large gap between the two percentages.
Ireland’s interest rate issue is seen to be one with many complex problems enthralled into it.
Many of these problems in which circle around the cost of doing business, issues around arrears, and issues around taking arrears back. Price variations can be seen across all markets, perhaps just marginally more in Ireland than the rest of the world.
Global lenders are even beginning to see the lack of feasibility in entering the Irish market and are now choosing to opt out of the opportunity.
Primarily why it is seen that foreign investors are veering away from being a part of the Irish market is the difference in the market from a political and social risk standpoint.
In Ireland, pricing will be given in the range of 2-3%, while not-for-profit lenders will be offering rates of 3-3.5%. With this being known, the choice is made easy and often times, investors will choose an alternative path from what the Irish market has to offer.
There simply just will not be outsider pricing accepted in the Irish market as there are different risks associated with it if problems happen to arise with the lending process.
On another note, however, the home construction industry had its 50th consecutive month of upward growth. Easily good news, however, the most recent month was reported as the slowest growing month yet. Possibly a precursor to a coming trend.
Overall the Irish market is suffering from many complex problems in which build to make the market simply too difficult for new entrants at all.
A problem that with the overall improvement of the housing market should diminish.