“Ireland’s banks are facing an unusual problem: hardly anyone seems to want a mortgage from them.
Allied Irish Banks Plc said home loans were the slowest growing part of its Irish lending in the first half, while Bank of Ireland issued more than double the amount of new mortgages in the UK. than in its home market.
About 60 percent of homes in Ireland are being bought without a mortgage in recent years, up from 25 percent a decade ago, the central bank said in July, indicating a sharper drop in the market for home loans than analysts expected.”…
“Given weak lending margins and slow growth, banks must find new ways to increase revenue. Bank of Ireland plans to charge some corporate customers 0.1 percent to hold their deposits, a person with knowledge of the matter said last week.
While banks normally turn to fee-based businesses to boost income, regulation makes that difficult in Ireland.
“Ireland is one of very few developed countries where the fees the banks are allowed to charge for those products are regulated,” says Davy’s Sheridan. “Every time they want to bring in a new product, it has to be approved by the regulator. Therefore their ability to levy charges for services is quite difficult.””
Good times.
Irish Banks Face Consumers Who Don’t Want Their Biggest Product (Bloomberg)
Thanks Nelly Bergman
Why is ‘Over-Regulated’ in parenthesis? No one actually used that phrase as far as i can see.
I’m guessing it’s a tongue in cheek jab at how banks were previously, practically unregulated and were handing out mortgages to anyone and everyone, but now they can’t and are facing a loss.
You wouldn’t need parenthesis for that. You could just use the word Over-Regulated. Parenthesis implies someone using the term.
https://en.wikipedia.org/wiki/Scare_quotes
If an Irish bank says it want’s less regulation then the people must cry out for more regulation to be applied. The only rule of thumb with irish banks is that they should Never be Trusted.
@Nelly Bergman If you can ever pull up the words of a speech made by Anglo’s Seanie Fitz (circa 2007/08) where he was calling for Less Regulation in the Banking sector.
It was lunch given by Experian, The British Ambassador was their guest of honour and I will always remember some man with a few drinks in him, loudly laughing in derision at parts of Seanie’s speech. I think he knew something we didn’t.
Not sure i am following your appeal to me, dav. Apologies.
This piece is full of interesting facts.
First: fee-based services is all they can come up, waiting for 9 years to realise residential lending might not pick up as revenue driver. The brains must have fled to Lockheed Martin or something.
Second: there is been a lot of talk about negative interest rates. As if it is some kinda novelty. Anyone with private current bank account knows it existed as ‘banking fees’. I don’t see much difference between the two.
Third: regulations are a form of risk management for investors and capital. Smart and balancing regulation goes a long way. Naturally, it must be reviewed every X number of years to deal with org entropy (lazy bureaucracy) and change economic etc. conditions. Holistic exercise. Because any other won’t do. What are the chances of this happening? Small. But is this an argument for ‘gelding’ it? Sheridan appears standby for shearing (‘very few developed countries’).
And probably a few more things I haven’t spotted, but broadsheeters would have. And I am looking forward for these things to be brought up. Hope it clarifies my reasons for sending it to people to look at.
Re Banking fees:
In what country other than Ireland is it seen as somehow bizzare or a nasty-practice for someone/organization to charge a fee for services rendered?
Because banks aren’t keeping your money squirreled away, they are using it, essentially gambling with it.
@Nelly b, apologies I was trying to draw a comparison with your above piece and seanie fitz’s appeal for less regulation 10years ago. Thanks for bringing the bloomberg piece to our attention.
Who are these people buying houses without a mortgage? Vulture funds who are just ‘investing’ meaning everyone else is effed. That’s who.
Did you just ask yourself a question? Yes, you did :-P
No one is borrowing because those who need to borrow in order to purchase a home would be wise to wait until this housing plan was implemented
And getting a deposit together while renting is a pain. However I’m all for the Central Bank rules though
+1
The AIB quote said that it’s the “slowest growing part”.
That means it’s still growing. It’s just slower growing than other parts.
It doesn’t mean that it’s growing less than mortgages have been growing before. Or that there’s a slowdown.
No one is borrowing because Ireland has the highest mortgage interest rates.
No one is borrowing because Ireland has the highest *insert any tax/charge/service here* rates.
Over-regulated = Banker-speak for “Market close to peak, get them to de-regulate and squeeze the last out of the bubble before it bursts”
+1
eh how about nobody can afford a mortgage
The interest rate is not the problem @ 3.5% when residential rentals have a gross yield of 4-5% (or more) – ie it costs more to rent than to buy. Its a combination of initial deposit requirement plus capital repayment capacity that is the issue.
Give me a 1.25% 10yr Fixed and I’ll borrow.
A 10yr fixed at 1.25% suggests an implicit credit margin on the mortgage of around 1%. Not exactly attractive from a lenders perspective.
1% margin for what’s now nearly unsecured lending……………..
Is there a banking version of artybollocks?
Oh boo hoo
Everyone is too much of a risk after the bust.
Not enough houses for sale, thank nama and the banks.
So fupp the banks for not making enough money.
Glass/steagall the sooner the better
No one is buying because you need a 20% deposit and it takes a long time to save up for the 10% let alone the 20%. So, the Central Bank’s rules worked in that the market has cooled (for potential owner occupiers).
It’s perfect for the vultures, now that they don’t have to compete with ordinary people.