Bank rates, onwards and upwards…

Something that is interesting is how people are amazed that banks are jacking up interest rates at a time like this… In fact, it is precisely because of the time we are in that they are doing it, and due to the market environment they face.

Banks have a choice at any time as to where they will put the money they hold, their job is to turn liabilities (deposits, debt, equity finance) into assets and at present there is a golden window of opportunity where any decent (almost any) assets can be lodged with the ECB and the ensuing liquidity recycled.

For the most part this has helped to support the bond market, part of the LTRO was based on this premise, but in Ireland while bond yields are attractive (still above 5%) mortgage rates are not as attractive. Currently the standard variable is less than 5% meaning a person can borrow for cheaper than the nation they live in is able to!

That won’t last, the likelihood is that sovereign rates …

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A handbag of recent thoughts…

In the Irish Times, Isabel Morton echoes some thoughts that I also have, that the property market represents a good opportunity at present, there are considerations though – namely to look for non-apartment second hand properties within the M50.

Last night I got to help launch the ‘Irish Property Buyer’s Handbook 2012‘, the second edition which was written by Carol Tallon [disclosure: the lowlight is my chapter on mortgages]. Minister of State for Housing and Planning Jan O’Sullivan was the guest of honour. It went well, and I think the book will be a success amongst prospective buyers because it really is a great piece of work on the practical aspects of buying property.

Phil Hogan is looking for some new thoughts on how to avoid a repeat of Priory Hall, the idea being ‘compulsory certificates‘ by architects. This seems like a great idea in soundbite format, …

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Should the regulator get involved with mortgage pricing?

We touched on this topic over on MyHome.ie last Friday in our weekly blog contribution to their site.

It is important to look at this from a few perspectives

1. Regulation and the role of the Regulator 2. Past decisions by the Regulator 3. Politics and policy

1. Regulation and the role of the Regulator: The idea of regulation is not for price control, rather it is about prudential control. As galling as it seems to everybody, the Financial Regulator is not (nor should they be) empowered to tell banks what prices they can charge. This is sickening given that we have spent €10,000,000,000 this year alone via the NPRF in supporting our banks (€8.8bn to AIB and €1.2bn to Bank of Ireland).

Readers, if you know of other jurisdictions where regulators set prices please let us know! The idea of a Regulator is that you pay for them …

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The Morning Show: Distressed property auction

We were featured on TV3’s ‘The Morning Show with Sybil & Martin’ in a piece they did on the recent Allsops auction. Angela Keegan of MyHome.ie and Karl Deeter of our own company took part.

The general view we have is that if you mark down prices enough then people are willing to buy what they see as value, that means that either prices remain too high or sentiment is such that appetite is not there at the current price level (we suspect the former weighs heavier than the latter!).

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