Squeezing mortgage holders cannot go on
Published 21/07/2015 | 02:30
Even the rating agency Fitch says that reducing the burden on the most hard-pressed Irish mortgage payers who are stuck with standard variable rate home loans would be a boon, not just to borrowers, but to lenders.
A report issued by the agency points out that easing up on Irish borrowers - who we know are paying the highest interest rates in the eurozone - would actually improve the chances of banks getting their money back.
AIB isn't the most expensive bank and it has reduced rates slightly, but a deal yesterday, whereby it borrowed on the bond market at a cost of just 0.663pc a year, illustrates just how divorced the rates charged by banks are from their cost of funds.
The AIB deal was secured on the mortgages of customers who pay multiples of what the bank pays its lenders.
Fitch had previously warned against bringing in a law to cap mortgage rates, but yesterday it said that making home loans more affordable would reduce the level of debt distress and therefore improve the chances that lenders get their money back. It's common sense, but in high finance that can be a rarity.