Mortgage rates set to drop and competition to increase in 2015

We have commented several times since last year that the trend for mortgage rates in 2015 will be to see them drop. With spreads of c. 300bp’s on lending it makes it one of the reliably profitable sectors of banking given the stringent underwriting being applied.

With the Central Bank looking to curtail first time buyers but doing nothing about incumbent borrowers getting restricted it means that they have directed the market towards refinancing.

This is because one of the niches left on the table is that of existing variable rate holders, which banks will now try to tempt away from one another in an effort to grow market share.

There are many who cannot take part and below is a list of the mortgage holders who won’t benefit.

Those in negative equity, they are going to be stuck when it comes to refinance, they can trade up with a negative equity mortgage but they won’t be able to ‘switch’. Those on fixed rates which accounts for in the region of 50,000 mortgage accounts, they face break penalties, and only …

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If you are in financial trouble, don’t be an idiot

A part of me feels bad about not having any pity for some of the people who recently had their homes repossessed. Note: I said some not ‘all’, the reality is that I agree with repossessions for people who bury their head in the sand. In many cases the person had made no payment in three or four years and avoided any contact from the lender.

How do you negotiate with a person who won’t even come to the table? Or worse yet, who refuses to acknowledge there is an issue to come to the table for! The IBF recently decided to start working with MABS on a new protocol for people in financial difficulty, we fully support such a move, and for people in mortgage arrears, or indeed any financial arrears we even wrote a guide for …

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How falling interest rates hurt banks during a liquidity crisis

The falling interest rates are heralded by consumers of Irish mortgage companies as a godsend – well, for the clients of the Irish banks who actually pass on the full rate cuts that is! However, at the same time it creates a rate compression which damages the bank and this is what we will consider in this article.

Banks have two sides to the operation roughly speaking, on one side there is the lending function which we are all aware of, mortgages, car loans, personal loans etc. on the other side is the deposit taking function which provides part of the money they lend out. There is of course the interbank market which supplements (and often surpasses) deposit funds for lending, but to keep things simple we will focus on a world where deposits roughly equal lending.

When

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Financial Regulator probe into mortgage brokers & estate agents.

Yesterday the Indo had a front page story about brokers and estate agents could potentially ‘rip-off’ customers. This obviously affects the whole industry because it means that brokers and estate agents in general are sullied in the process and obviously the article was highly upsetting for many, but that doesn’t mean it was not fair and balanced.

It is especially difficult for any broker to stomach reports that say their industry is guilty of wrongdoing, but the actual solution must be for broker to be the most vociferous proponents of ensuring an investigation is completed and we must also lobby for strong retribution to any firm caught doing wrong if we are to be taken seriously by consumers.

The danger as I see it is that anything short of harsh punishment will only send out the message that yet again there is a ‘financial firm getting away with it’. The Financial Services Ombudsman’s most public moment was when they failed to have a judgement against Davy Stockbrokers adhered to in the High Court costing the tax payer hundreds of thousands …

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Financial Regulator probe into mortgage brokers & estate agents.

Yesterday the Indo had a front page story about brokers and estate agents could potentially ‘rip-off’ customers. This obviously affects the whole industry because it means that brokers and estate agents in general are sullied in the process and obviously the article was highly upsetting for many, but that doesn’t mean it was not fair and balanced.

It is especially difficult for any broker to stomach reports that say their industry is guilty of wrongdoing, but the actual solution must be for broker to be the most vociferous proponents of ensuring an investigation is completed and we must also lobby for strong retribution to any firm caught doing wrong if we are to be taken seriously by consumers.

The danger as I see it is that anything short of harsh punishment will only send out the message that yet again there is a ‘financial firm getting away with it’. The Financial Services Ombudsman’s most public moment was when they failed to have a judgement against Davy Stockbrokers adhered to in the High Court costing the tax payer hundreds of thousands …

Read More →