EU raiders put manners on high-charging motor insurers
The tracker scandal rumbles on, and rents look to be out of control but a health policy price war was a boost, says Charlie Weston, Personal Finance Editor
It was a mixed year for consumers. The good news is that mortgage rates fell, but mainly for those prepared to opt for a fixed rate. Also coming down was the cost of health insurance policies.
Many of those who lost a tracker mortgage through the actions of their bank were notified this year that they were getting the good rate back and being compensated.
But the bad news is that thousands are still paying elevated motor insurance rates, despite official figures showing a fall in premiums, and rents continue to surge.
Mortgages - trackers
The tracker controversy proved to be the personal finance story of the year.
Banks were the big losers, subject to public opprobrium, dressing downs from TDs and senators and were dragged into the offices of Finance Minister Paschal Donohoe to explain themselves.
The Central Bank, under the leadership of senior official Derville Rowland, got tough and forced banks to own up to thousands more cases.
Bank of Ireland, under the leadership of new its new CEO, Francesca McDonagh, made dramatic admissions about the number of tracker overcharging cases.
By the end of the year, banks were being forced to own up to 34,000 tracker cases, at a combined cost of close to €1bn.
Mortgages - loans
First-time buyers started the year borrowing more than the previous year, as house prices continued to surge.
At the beginning of 2017 the average mortgage amount being approved for first-time buyers went above €200,000. This was the first time the average approval amount for new buyers has hit this level since 2009, when the property bubble started to burst.
In the summer, the State's consumer protection and competition enforcement body found the mortgage market here to be "dysfunctional".
The market needs more competition and the State should try to attract more entrants, according to the conclusions of the study by the Competition and Consumer Protection Commission. The report called on the Central Bank to develop a process to attract new entrants to the market.
The Government's help-to-buy scheme came under pressure all year, especially as now Taoiseach Leo Varadkar had said, when he was bidding for the leadership of Fine Gael, that he would scrap the scheme.
But it was retained.
The scheme has proved to be an important incentive for first-time buyers and has sped up their ability to buy by one year for more than 40pc of buyers, according to a survey conducted by DNG.
Last year 50,000 house sales were recorded on the Property Price Register, which included 7,000 new homes.
Credit unions were the focus of unwanted attention when it emerged that a number of them were hit by staff raiding member accounts.
Gurranabraher Credit Union in Cork is understood to have lost €200,000 and will have to make an insurance claim to refund members.
It comes after a similar suspected crime at Synergy Credit Union in Fermoy, Cork, and huge losses in Rush, Co Dublin.
The sector lost another credit union with the closure of Charleville.
The High Court appointed liquidators to the Co Cork credit union that has been in a distressed financial position for a number of years.
Charleville was not insolvent but various efforts since 2007 to deal with its problems have not been successful, the court heard.
The closure of another lender and mergers among them means that there are now 269 active credit unions, down from close to 400 a few years ago.
Cartel-busters from the European Union were credited with sending motor insurance costs into reverse.
After three years of relentless rises, which saw the cost of cover jump by 70pc, official statistics started to show a fall in premium costs in 2017.
However, such were the previous hikes still going though the system that many drivers did not see their cover costs fall, and instead got higher quotes than the precious year when the time came to renew their motor insurance.
Manners were put on the insurance industry when in July European Commission competition enforcers carried out dramatic dawn raids on insurers, brokers and Insurance Ireland.
Officials from the EU's Competitive Directorate are investigating the possibility that an insurance cartel is operating within the Irish motor insurance industry.
The insurance industry also started to benefit from a Government task force that is introducing reforms that are set to cut their costs, which was set up by current Housing Minister Eoghan Murphy.
But Insurance Ireland said it believes there is an urgent need to implement fundamental and sustainable reform of the cost of claims.
This followed a Department of Finance report showing that legal and other litigation-related costs can add €42,000 to the cost of a €100,000 payout for an injury.
Rising rents and surging property prices have become two great certainties.
Rents continue to hit new highs and the latest studies suggest annual growth will average 5 to 6pc in Dublin over the next few years.
That would bring the average rent on a property in the capital up to more than €2,000.
The rental squeeze means that a record number of people are now tenants, with more people living in each housing unit than ever before.
A report from Savills Ireland shows how the housing crisis is having an impact on our everyday lives, with a quarter of people in Dublin now renting their homes.
There are now almost three people in each rented home, which includes apartments. This lays bare the plight of the 'trapped generation' - growing families who have been unable to trade up amid the after-effects of the housing crash.
It also demonstrates how increasing numbers of young professionals are having to share rented accommodation.
The report says that 18.9pc of Ireland's population are now in the private rented sector - the highest proportion since records began - rising to 24.3pc in Dublin.
Property prices are rising at a rate of around 12pc a year, according to the figures up to October, the latest figures published by the Central Statistics Office show.
However, the property price surge has lifted thousands of homeowners out of negative equity.
It is now estimated that less than 10pc of homeowners are in negative equity, or 75,000 mortgage holders.
This is down from close to 40pc, or 320,000 loans.
It was a year of two halves for the 50pc of the population with health insurance.
The year began with the seemingly relentless rise in the cost of premiums. Laya and Irish Life Health announced multiple price rises earlier in the year.
But the largest player in the market, Vhi, shook up the sector when it cut its prices on a range of plans.
It shocked the market when it was revealed in this newspaper in October that it has cut the price on 21 of its plans, including some of its older schemes. It also slashed prices on its corporate plans, regarded as better value.
This prompted a price war among health insurance providers.
Laya then decided to cut the prices on 22 plans, with Irish Life Health reducing the premium rates on 20 plans.
Laya reduced prices by an average of 6pc. It says this will mean savings of up to €374 for a family of two adults and two children.
The price-cutting moves are in stark contrast to the hiking of premiums over the last three years, which has put a massive squeeze on family finances.
And Irish Life Health got in on the act by reducing the cost of some plans by up to 17pc.
Insurance expert Dermot Goode said the decreases showed health insurers were now prepared to compete hard for customers.
But he warned that people will end up paying more if they do not shop around for better value insurance.
The cost of electricity and gas has gone up.
Six energy companies have increased their prices since the start of November and this has made it more expensive for many families to heat up their homes or use electricity. This winter also marks the first time in a number of years that many of these energy suppliers have raised their prices - and could well be a signal that more price increases are to come.
The biggest energy price hike of the year came from the State. Last October, the Government increased the public service obligation (PSO) levy by almost a third, from €80 to €105 a year.
The levy now accounts for between an eighth and a ninth of an average electricity bill, depending on the rate the customer is being charged for their electricity.
Everyone must pay the same PSO levy, regardless of the amount of electricity used.
The majority of private pension schemes have deficits, despite close to €10bn being pumped into them by companies and their staff in the last six years.
The black hole in the State's large private companies and semi-states has shot up by €1bn this year alone.
And the widening funding gap is despite a number of companies attempting to plug the holes by lowering pension benefits and trying to get employee to transfer out of schemes.
There is now a shortfall of €3.6bn across 26 schemes of the big employers.
These are some of the largest companies in the State, employing thousands of workers.
This is made up of 11 of the bigger quoted companies and 11 of the largest semi-state concerns, along with another four companies listed on stock markets outside the country.
The poor out-turn is despite surging stock markets, according to an analysis by pension advisers Lane Clarke & Peacock Ireland.
Low bond yields mean pension funds have seen deficits balloon.
This is a direct result of the low-interest rate environment.
The analysis shows that the deficits in the biggest pension schemes in the private sector shot up by €1bn this year, even though an extra €1.1bn was put into them by sponsoring companies.
The analysis looks at traditional defined benefit pension schemes.
These are where people get a set level of pensions based on their years of service.
Those with a full 40 years of service get two thirds of their final salary.
But these schemes have become highly problematic to fund due to people living longer and low bond yields.
Deficits have remained stubbornly high since the economic crash, the report found.
The tax cuts announced in last October's Budget will start to make their way into people's pay packets from the start of January. Under the Budget changes, a person can earn an extra €750 in 2018 before getting hit for the higher rate of income tax.
The cuts in the universal social charge will also allow most people to take home more pay after tax. The Economic and Social Research Institute said the tax cuts do not go far enough.
The Budget tax measures will only put an extra €5 or €7 a week back into the pockets of a lot of people.
For example, a married couple earning €55,000 will only take home an extra €33 a month in 2018 than they did in 2017, assuming one parent stays at home to look after a child. But any boost in your take-home pay under Budget 2018 could easily be wiped out by the higher prices of 2017.