Saturday 3 December 2016

Mortgage 'apartheid' is costing families 11 weeks' pay

Published 03/04/2015 | 02:30

It takes an average of just seven weeks to sell a home. (Photo: PA)
It takes an average of just seven weeks to sell a home. (Photo: PA)

Variable-rate mortgages are so much more expensive than trackers, it takes a family almost three months to earn enough to meet the extra cost.

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The premium imposed on variable mortgage holders is now so high that a family will need to earn an extra €12,500 a year just to cover the difference.

The gap between tracker- and variable-rate mortgage holders has been branded 'mortgage apartheid'.

The shocking new calculation comes as Finance Minister Michael Noonan failed to get any commitment from the Central Bank to force banks to reduce rates.

The Irish Brokers' Association has worked out that it will take a couple, both earning average wages of €35,000, 11 weeks to earn enough to cover the extra burden of a variable-rate home loan.

After this time, the couple will have earned €6,000 after paying income taxes - which is the extra cost a year in interest payments over a tracker.

The Finance Minister and Central Bank Governor Patrick Honohan met to discuss high variable rates yesterday. Mr Noonan asked for a report on the profits being made by banks on high variable interest loans, but the Central Bank boss made no commitment to force rates down.

Fianna Fáil's Michael McGrath welcomed the acknowledgment that variables are too high. But a separate report shows that repossessions of family homes are set to surge as banks threaten 31,000 homeowners with the loss of their properties.

Irish Independent

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