There are significant price differences on personal loans vs standard variable rate mortgages. This is a quick and dirty comparison which mightn’t reflect the overall market, but they’re both significant lenders.
ECB Central Rate: 1%
BOE Central Rate: 0.5%
Halifax personal loan (up to £10,000 for up to 5 years): 9.9%
Halifax SVR: 3.5%
BOI personal loan €10,000 Over 5 years: 13.6%
BOI Variable VRP15 all loan amounts and LTVs: 2.7%
BOI vs Halifax personal loan: +3.7%
BOI vs Halifax SVR: -0.8%
Adjust for base rates:
BOI vs Halifax personal loan: +3.2%
BOI vs Halifax SVR: -1.3%
So is Halifax underpricing their personal loans or overpricing their mortgages? Or is this an Irish thing?
To try to answer the original question, personal loans tend to be non-recourse loans where as mortgages tend to be backed by assets. The differential interest rates should be a measure of the risk involved.
(Please feel free to correct me if you have any other insight)
If you look at the figures in the first post, one is in sterling, the other euro,
CaveCanem is merely trying to show how in different markets,
certain type of lending is heavily incentivised!
At least I think he is, either that or he is trying to show how profit margins differ between banks across countries.
Personally I’d like to see how the Irish rates compare to the Spanish rates, the last time i looked in El Pais, the Spanish banks were not as cheap as the Irish banks!