We were part of a panel discussion with Matt Cooper on the ‘The Last Word’ the day the Central Bank rule changes were announced.
The panel consisted of Charlie Weston from the Irish Independent, Brendan Burgess from AskAboutMoney.com and Karl Deeter of Irish Mortgage Brokers.
There were differing views where the for/against was clearly laid out and the concerns about whether it’s a good idea.
We were asked to take part in a studio debate (at the end of the clip) on Standard Variable Rates, why they are so high and what we should do to bring them down. We believe they are already headed down and that this is mainly a straw-man issue, rates are going to come down in spite of anything anybody does.
Our appearance at the Oireachtas finance committee was discussed on RTE Radio 1 on the day, it was about the proposal for mortgage lending caps. The meeting in question took about three hours but the clip the journalist chose was a very good reflection of our general position.
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 …
This is an interesting issue: negative equity mortgages, their availability, their merit and what they mean for homeowners. The story was covered by Conor Hunt in RTE