tag:blogger.com,1999:blog-2826531655042170344.post8474294292288667818..comments2024-03-26T11:29:52.986+00:00Comments on Economic Incentives: Mortgages in Irish Banks (and their interest rates)Seamushttp://www.blogger.com/profile/15679299530222667673noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2826531655042170344.post-48669935617567270012011-12-31T19:24:10.405+00:002011-12-31T19:24:10.405+00:00Further to above. I see Fergus O'Rourke has fu...Further to above. I see Fergus O'Rourke has fully covered and explained internal securitisations in the previous topic, 'Loans in Irish Banks'.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-70322423221848322892011-12-31T18:47:07.546+00:002011-12-31T18:47:07.546+00:00Joseph,
If a securitised mortgage is in arrears t...Joseph, <br />If a securitised mortgage is in arrears the investors take the losses. The originating bank collects interest and capital on behalf of the investors and keeps a small fee. However, in some cases the originating bank may also be the investor. <br /><br />The securitised (or covered) bonds being eligible as Eurosystem collateral would allow banks to use the mortgages on their books for liquidity purposes. This may explain the spike in 2009 and again in 2011. If I am correct, many of these mortgages and any related losses may still, in effect, be on the banks balance sheet.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-54011402721555123912011-12-31T10:45:26.738+00:002011-12-31T10:45:26.738+00:00One further question re securitised mortgages.
If ...One further question re securitised mortgages.<br />If the mortgagee is in arrears or stops paying, who bears the loss? The bank or the person that has purchased the securitised mortgage?Joseph Ryanhttps://www.blogger.com/profile/07581632829548894401noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-82907588606520081732011-12-31T10:42:20.785+00:002011-12-31T10:42:20.785+00:00Seamus
I note that a significant proportion of mo...Seamus<br /><br />I note that a significant proportion of mortgages is 'securitised'( Approx 25%).<br />Does this mean that the mortgage income is being passed on to the purchaser of the mortgage and can it be determined if the banks are breaking even or making a small profit on these by virtue of some of their funding at least being at ECB rates.Joseph Ryanhttps://www.blogger.com/profile/07581632829548894401noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-19174819871180536932011-12-30T14:29:36.339+00:002011-12-30T14:29:36.339+00:00"More than half of mortgages in Ireland are t..."More than half of mortgages in Ireland are tracker-rate loans linked directly to the ECB base rate. With the ECB rate now back to 1% the repayments on these loans are now much lower than when these loans were taken out in the 2006 to 2008 period. "<br /><br />Séamus<br /><br />This is a point which very few commentators seem to recognise. The focus is on mortgage arrears and mortgage rescheduling. The focus is on how people's incomes have been hit by unemployment, increased taxation and salary cuts. <br /><br />Despite the huge prices paid for houses and the reduced net incomes, the arrears levels are still very low. A major reason for this is the very low interest rates. Even those on SVRs are probably paying less than they were paying when they took out their mortgages. In June 2007, the AIB SVR rate was 5.2%. Today, it is 3%. <br /><br />http://www.askaboutmoney.com/showthread.php?t=163841<br /><br />Brendan BurgessBrendan Burgesshttp://www.askaboutmoney.comnoreply@blogger.com