Saturday 16 December 2017

Our massive tracker mortgage debt is a ticking timebomb waiting to be set off by an ECB rate hike

Cartoonist: Ken Lee
Cartoonist: Ken Lee
David McWilliams

David McWilliams

What is going on in the Irish banks? It's perplexing that after all the billions of euro pumped into the banks, they are still fragile and - according to the latest European stress tests - Irish banks are among the weakest in Europe. How could that be when the economy is growing at three times the EU average, when the demand for credit is strong and when interest rates are at their lowest level in years, underpinning local demand?

The latest tests looked at what would happen to Irish banks if there were a massive economic shock to the system, with the Irish economy contracting by over 10pc.

The bad news is that the banks would not have enough capital to withstand this eventuality. The good news is that this eventuality is quite unlikely.

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