GE Money opts out of mortgages, axes 80 jobs
Thursday December 11 2008
One of the country's main subprime lenders is to stop offering mortgages and reduce its car loans in a move that will result in 80 job losses.
GE Money, which charges around 2pc more for mortgages than prime lenders, blamed the higher costs of funds for the move.
Currently employing 400 people, GE Money will lay off 80 staff in addition to the 85 who lost their jobs in August when the company scaled back its operations here.
GE Money is one of the country's big providers of personal, car and commercial loans. It was formed in 1997 after the takeover of Woodchester Investments. The deal, at the time, was the largest takeover in Irish corporate history.
The company, part of the massive American conglomerate GE, has some of the highest interest rates for mortgages and personal loans.
In a statement, the company said: "Mortgages are capital-intensive businesses and the returns available at present no longer justify the cost of funding these products in Ireland."
The company said the changes will have no impact on its existing mortgages, personal loans, car finance agreements and insurance policies.
Specialist
Typical GE Money customers were those with an impaired credit history or with a higher employment risk profile who are turned away by the high street lenders. Those customers are charged an additional margin on their interest payments.
GE Money joins a growing list of specialist mortgage providers exiting the market in the last 12 months.
The decision of GE Money to exit the mortgage market comes as a majority of mortgage brokers expect the market to remain weak next year, with job loss fears and expectations of further falls in house prices dampening demand.
Four out of five brokers said activity had weakened in the past three months with a majority expecting further declines in the first three months of next year, according to the KBC Homeloans/Irish Mortgage Advisers' Federation survey.
Mortgage brokers blame worries about job security and the general economic outlook for the housing market doldrums.
Also impacting sentiment is the expectation that house prices will fall further, and tighter credit conditions being imposed by lenders.
Paul Short, president of the Irish Mortgage Advisers' Federation, said: "The broker survey confirms that activity levels in the Irish mortgage market are continuing to weaken as 2008 draws to a close."
- Charlie Weston Personal Finance Editor
