Mortgage Rip-Offs? | Explained By Prime Time

00:05:14
https://www.youtube.com/watch?v=PHgrIM4xvKk

概要

TLDRThis analysis explores the reasons behind high mortgage rates in Ireland compared to other Eurozone countries, focusing on the role of the European Central Bank, the influence of tracker mortgages, and the legacy of economic crises. While the ECB's base interest rates set a foundation, Irish banks keep rates high due to historic borrowing costs and reserve requirements. The lack of competition, with significant market shares held by just a couple of banks, also contributes to elevated rates. Although some strides have been made in the recovery of the Irish economy, previously established factors complicate the pricing landscape for homebuyers.

収穫

  • 💰 Irish mortgage rates average above 3% which is significantly higher than the Eurozone average of 1.8%.
  • 📉 The European Central Bank's base rates influence mortgage pricing across Europe, including Ireland.
  • 🏦 Banks in Ireland are passing on the costs of past mistakes to consumers through high mortgage rates.
  • 📊 Tracker mortgages, linked to ECB rates, complicate the current situation for banks and borrowers.
  • 🤔 High reserve requirements affect banks' ability to offer competitive mortgage rates.
  • 🏠 The lengthy repossession process in Ireland deters foreign banks from entering the mortgage market.
  • 📈 The lack of competition in the Irish mortgage market contributes to higher prices for consumers.
  • 📉 Economic recovery in Ireland could potentially lower mortgage rates, but legacy issues persist.
  • 💸 Approximately 60% of mortgages in Ireland are controlled by two major banks, signaling a lack of competition.
  • 📉 Irish banks are still recovering from the financial crisis, which impacts current mortgage rates.

タイムライン

  • 00:00:00 - 00:05:14

    The comparison of mortgage rates reveals that Irish borrowers end up paying significantly higher rates than their European counterparts, primarily due to the increased costs imposed by local banks. The European Central Bank's base interest rate influences how banks set their prices, and while Irish banks were once trusted, their reputation diminished after the economic crash, leading to higher borrowing costs. Additionally, factors like reserve requirements and a lack of competition exacerbate the issue, keeping mortgage rates elevated for Irish consumers. Consequently, while some argue that these rates reflect the risks and costs for banks, others question if there's an element of being overcharged for loans.

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ビデオQ&A

  • Why are Irish mortgage rates so high compared to other Eurozone countries?

    Irish mortgage rates average above 3%, while most Eurozone countries have rates below 1.8% due to higher borrowing costs and lack of competition.

  • What are tracker mortgages and why are they relevant?

    Tracker mortgages are loans that follow the ECB base rate, and their popularity during the Celtic Tiger years now complicates the situation as banks face losses from them.

  • How does the European Central Bank influence mortgage rates?

    The ECB sets base interest rates, which banks use to borrow money, and these costs impact what they ultimately charge consumers.

  • Why haven’t foreign banks entered the Irish mortgage market?

    Foreign banks are deterred by the lengthy and costly repossession process in Ireland, leading to higher risks and potential losses.

  • What are reserve requirements?

    Reserve requirements are cash reserves banks must hold to cover potential loan defaults, which affects their ability to offer lower rates.

  • How much of the Irish mortgage market is controlled by major banks?

    About 60% of all mortgages in Ireland are held by the Bank of Ireland or AIB, indicating a quasi-monopoly.

  • Are Irish homebuyers being ripped off?

    The situation is complicated; while rates are high due to several influencing factors, banks are still recovering from past significant losses.

  • What impact did the economic crash have on Irish banks?

    The crash severely damaged the reputation and financial health of Irish banks, resulting in higher costs for consumers.

  • What is the role of competition in mortgage pricing?

    Lack of competition in the mortgage market maintains higher prices as fewer players lead to less incentive to lower rates.

  • What effect does the housing market have on mortgage rates?

    An improving economy in Ireland should theoretically lower rates, but legacy issues from the past still impact pricing.

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  • 00:00:00
    right now if you get a mortgage from an
  • 00:00:02
    Irish bank you're gonna end up paying
  • 00:00:03
    tens of thousands of euro more for that
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    loan and a German person getting a loan
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    from the German bank or Spaniard from a
  • 00:00:09
    Spanish banker pretty much anyone else
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    in Europe but why it's all euro are
  • 00:00:14
    there good reasons why Irish homebuyers
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    are paying more or are we just being
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    ripped off by banks the average mortgage
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    rate charged here is above three percent
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    across other countries using the euro
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    the typical rate has less than 1.8
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    percent so why are we paying so much
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    more it's worth breaking down how Bank
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    set their prices to try and get an idea
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    of what you're paying for the bottom
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    line in all this is what's called with
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    the European Central Bank base interest
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    rate every single euro comes from the
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    ECB it has to first be borrowed from
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    there before it gets to me or use an
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    ideal background for the European
  • 00:00:51
    Central Bank to raise the president of
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    the European Central Bank was greeted as
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    Santa Claus by borrowers across the
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    eurozone today so the ECB will lend
  • 00:00:58
    money to a bank it'll attach its base
  • 00:01:00
    interest rate as a fee bank will then
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    land onto another bank
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    adding its own percentage on in the
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    process that might happen a few times
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    before any money gets into your account
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    in the form of a mortgage so those fees
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    the banks are charging each other are
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    built into the price before you get
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    offered a deal so you're paying - to
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    start with but so was everyone else
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    across the eurozone so where is the
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    extra percentage coming from with Irish
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    banks and total the bank is making four
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    and a half million euro a day in front
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    of hundreds of thousands of ordinary
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    bank customers are being milked in order
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    to contribute to excessive profits the
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    banks all from pointed a hangover costs
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    of the franchise there is no crash
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    coming I mean the conditions for a crash
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    are not there so therefore the soft
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    landing I think is delayed until 2008 or
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    beyond there's two main elements to this
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    the first is tracker mortgages that's a
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    type of loan they offer during the
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    Celtic Tiger years and as the name
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    suggests these mortgage rates track the
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    ECB rate with the banks themselves
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    adding only a small margin to make a
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    profit the credit crunch is really
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    hitting home now and rates for popular
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    mortgages like trackers have shot up
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    quite a good deal over recent weeks
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    these loans may
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    made sense during the boom back then
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    Irish banks were seen as a safe bet by
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    others European banks felt there was
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    very little risk of Irish banks not
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    paying them back so they didn't charge a
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    whole lot extra
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    when lending money into Ireland but
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    after the economic crash the reputation
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    of Irish banking went through the floor
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    I don't like the way he's treating us
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    and other banks are only willing to lend
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    to them if they stood to make a big
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    financial gain in return for taking on
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    such a risk that meant that some Irish
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    banks began to actually lose money on
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    track of organs they were spending more
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    to borrow that they were getting back
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    from the people that they'd given tract
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    or mortgages to in the first place the
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    rate at which banks borrow money off
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    each other has got more expensive
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    tracker mortgages are now live bikes in
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    an exposed fashion they're still locked
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    into tracker contracts from the boom
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    years so they say they have to charge
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    new customers more to try and recover
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    the money they're losing the economy
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    here is improving them which has again
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    made it cheaper for banks to borrow so
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    that should become less of an excuse but
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    the second element and the one that
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    isn't going away is reserve requirements
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    in plain English that's the cash a
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    lender is required to set aside to cover
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    any loans that might go bad because of
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    the losses made during the crash Irish
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    banks fight to hold more cash in reserve
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    so the cost involved in that is priced
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    into other loans the banks say all of
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    those add up pushing up mortgage rates
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    for you and me but if mortgage rates
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    here are high and the banks are
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    struggling with the cost of the crash
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    you might wonder why other European
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    banks haven't taken the opportunity to
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    come here and undercut the locals in any
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    walk of life a lack of competition tends
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    to keep prices high as there's not much
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    incentive for the big players to cut
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    their price right now around 60% of all
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    mortgages in Ireland are held by Bank of
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    Ireland or AIB that's something the head
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    of the ECB has referred to as a quasi
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    monopoly so it seems like fertile ground
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    for new entrants but one thing seems to
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    be putting them off and that's the
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    difficulty banks here have in
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    repossessing homes in other countries it
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    might take a few months for a bank to
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    take a property off someone who maybe
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    isn't keeping up with their mortgage
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    repayments in Ireland oh it could take
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    years and it usually involves a long
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    costly legal process that's a political
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    issue rather than a banking one and
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    something that a lot of people wouldn't
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    like to see change but if it is how
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    I'm more expensive for a bank to seize
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    and sell on a property and in the
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    process make money back or possibly even
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    turn a profit and it's a greater risk of
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    them making a loss I'm when there's a
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    higher risk of them losing out the
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    lender is always going to look for a
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    bigger reward before putting their money
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    on the line so are you being ripped off
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    well that's sort of in the eye of the
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    beholder what is clear is the Irish
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    banks are still dealing with the cost of
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    the mistakes they made during the boom
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    which the taxpayer paid for during the
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    bust
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    [Music]
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    you
タグ
  • Irish mortgages
  • Eurozone comparison
  • European Central Bank
  • tracker mortgages
  • banking costs
  • reserve requirements
  • market competition
  • economic crash
  • bank profits
  • housing market