We were never advocates or in agreement with the ‘make government force mortgage rates down’ campaign (albeit on very friendly terms with the campaign promoters). The reason was that rates needed to come down in a natural way or banks would curtail credit or charge more elsewhere, this was a balancing act between sorting out operational costs and back book issues.
The belief we had, and one that does seem to be bearing fruit, was a slower (ie: less popular) road to lower rates, brought about by competition.
This has been happening, it doesn’t make headlines because it’s a slower burn but the trend is under way and it goes like this: more competition equals lower rates, the higher rates spur competition as it attracts new entrants and in time, when matched with a low yield curve, rates will fall.
The introduction of Pepper into the market, along with general competition has meant that the rate reduction cycle has begun. The hallmarks are that firstly, rates are high after a financial crash, that always happens, those high rates bring in the new entrant (Pepper) at a time when banks are set to start competing and this accelerates the competition.
There are other new entrants about to launch who will push this process even faster, the trick is for them to avoid set margin lending like the last credit cycle did with trackers.
The main point for consumers of mortgages in Ireland, is that prices are set to go lower so it might be an idea for those of you on a variable to think about your rate choices in the near future and about the value (or lack of) of switching your loan to ensure you get the best deal available.