2Pack will call the bottom now!


#441

What about ECB nterest rates…do you expect super low to continue? …what impact would +2% have?


#442

+2% is allowed for in the stress test when you get a mortgage anyway. I expect Euribor to remain low and Euribor is the real cost of funds for modern mortgages not the ECB base rate which only applies to legacy tracker retail rates. Any new tracker product will track Euribor and you may be certain of that. :slight_smile:

My tracker will cost my bank money until I clear it as they are not able to finance it at ECB+0.5% which is what I pay.


#443

Ok …but this doesnt address new lending if rates raise …then new mortgages will be tested +2% of new rate .


#444

German 5yr still at about zero.
Ten year is about 60bps … so that tells you where market sees rates into medium term!


#445

Yup …but property borrowing is long term …rates are super low …new lending will not be as cheap then


#446

moneyguideireland.com/ecb-in … story.html

It was the same story back in 2012 - all i heard was rates can only go one way (up) but all they’ve done is go down further. The less pessimistic argued it would be 3/5 years before rates went up to 2%+ again. Realistically it’s looking more like 10-15 years from then.

The ECB rate isn’t going anywhere, anytime soon.


#447

Then? As in 10 years+ time?

By the time 10 years rolls around and rates go up, wage inflation will likely make a current mortgage a much smaller % of outgoings.

Also you can get ahead of any potential rise by overpaying now.

If ECB rate is 0% for 10 years, it would need to be 4% for next 10 years just to average 2%.

I think there is very little to fear in terms of interest rates for borrowing purposes. Margins likely to come down futher. I think you’re barking up teh wrong tree here. There are massive challenges (CB rules, global economy etc) but this doesn’t appear an obvious one.


#448

As Charlie once said…Get out and party!!


#449

There’s no tree …just asking …I don’t have to borrow a cent so doesn’t bother me either way. …so concensus is benign for the forseeable. …great …get out and party so.


#450

Massive challenges globally …but yet in good old Ireland where we still paying off the last boom (usc) …that relies heavly on global inward investment … NEW 4 bedroom gaffs in west dublin 10x average wage…I dunno …I don’t really care enough to do a deep analysis …doesn’t seem right.


#451

Just regarding the wage inflation part, Seamus Coffey posted today with some statistics showing Ireland performing very poorly in this area despite performing well in (albeit export driven) GDP growth…
economic-incentives.blogspot.ie/2015/09/irelands-recessionrecovery-versus-eu15.html


#452

Still awaiting any significant new mortgage lending into this market
Volumes are still anaemic, with the lack of proper recourse and security now in this post bailout environment a significant drag on the banks putting much skin in the game themselves. That wall of cash has a limit to what it can do.


#453

I expect we’ll see it more next year onwards as gnp has only properly taken off lately. Add in public sector pay restoration etc. even in that graph it looks like nearly 5 points in the last year.

I don’t expect wage inflation to be anything like in the past but it’s hard not to argue wages won’t be higher 10 years from now and thus any mortgage taken now a smaller overall percentage.


#454

The Coffey chart is total compensation of all employees, economy-wide.

It is neither hourly nor per capita wages.

Total employment is up about 6 per cent off the bottom.


#455

Average earnings are still slightly down on Q1-2008 according to CSO figures both raw and adjusted - see table 4
cso.ie/en/releasesandpublications/er/elcq/earningsandlabourcostsq12015finalq22015preliminaryestimates/
The fact that earnings remained flat despite some other positive economic indicators would lead me to believe that future wage inflation is not such a dead cert.
If export driven GDP

has risen significantly for 2 1/2 years and that has not translated into increased earnings then wage deflation (particularly in an economy running way behind inflation targets) has to be a real possibility as the multinationals that make up a huge proportion of Ireland’s employers face a faltering global economy in the near future.


#456

Just curious .Say a typical couple “doing well” …earning say annual household income 100K (50k each)…with 2 kids …what is the typical take home monthly pay (net of tax with various credits / allowances applied) ?


#457

You can play around here

services.deloitte.ie/tc/

If both in paye employment (paye credit) and no pension allowance answer is €5765 net pay + €260pm childrens allowance. So €6,025 income per month.

With USC cut flagged in budget that may rise by say €50 - €100pm.


#458

These gross figures from the Revenue may help in answering that question - what is a typical couple earning.

[code] All income earners for Income Tax Year 2015 (provisional)

Range of Gross Income
€ Number of Income Earners
0 to 9,000 368,585
9,001 to 12,000 107,297
12,001 to 15,000 116,836
15,001 to 20,000 213,112
20,001 to 25,000 216,626
25,001 to 30,000 201,085
30,001 to 40,000 324,506
40,001 to 50,000 229,709
50,001 to 60,000 157,805
60,001 to 70,000 107,045
70,001 to 80,000 77,378
80,001 to 100,000 91,301
100,001 to 120,000 47,956
120,001 to 150,000 34,809
150,001 to 200,000 22,512
Over 200,001 24,642

Total 2,341,203 workers
[/code]


#459

Don’t forget that the Revenue figures will include bonus amounts. In our case that reduces the amount considered for the 3.5 multiple by €20,000. Some high earners will have quite a significant portion coming from their bonuses.


#460

Not really as they include individual’s also. The couples aren’t extracted as was the case when Revenue previously released their statistics. You can be not married and singly assessed and each individual would be in there separately.

It’s a pity there’s been no meaningful statistics in years from Revenue.

Here’s the last in 2011 revenue.ie/en/about/publicat … index.html (7th pdf)

The numbers earning €100k and over are now nearly 130,000 units (per your link) compared to 99,000 units in 2011.

Unfortunately they’ve changed the other parameters so matching to 2011 isn’t fully accurate.