Mortgage rates to hit back to the highs of the 80's ?

[nasdo]

Given that banks are now increasing mortgage rates and will have to continue to make any margin of profit over deposits, would it be right to say mortgage rates may hit the likes of 10-15% in the long-term? These were the rates in the 80’s and the new financial regulator chief seems to be giving a good indication that low level rates are going to be abolished and rates are likely to return to normal levels for lending. The likes of €200,000 mortgages should not be affordable without a good chunk of savins and rightly so.

But it is also important to be frank and acknowledge that the coming months are likely to see a continuation of the process of the banks re-pricing their mortgage books. Ireland had very low mortgage rates in the recent past but that era is now clearly ending. Part of the reason for such favourable rates was that the banks’ business models were, as we now know, fundamentally flawed, chasing unsustainable profits through risky property and development lending, profits which effectively subsidised aggressive campaigns for mortgage market share and unsustainably low interest rates. That skewed business model now needs to be fundamentally re-calibrated – and at a time when banks’ costs of funding are significantly higher. Interest rate increases for borrowers are an unfortunate but inevitable consequence of this new world.

irishpressreleases.ie/2010/04/14/introductory-statement-by-matthew-elderfield-head-of-financial-regulation-to-the-joint-committee-on-economic-regulatory-affairs-14-april-2010/

[mr_anderson]

Unlikely, because rates should not have to go that high to have the desired effect (e.g. lowering inflation, curtailing credit expansion etc).
Well, in theory anyway …

[Seanfhonduir]

NAMA & Deficit = Govt spending crowding out = high real interest rates anyway

[DSE3Br]

Won’t the banks have this mysterious NAMA levy to repay too? ROFL