Sir, – If, as is often suggested, Irish lenders are earning excess profits from higher interest rates, one would expect non-Irish banks to form an orderly queue to enter the super-profitable Irish home loans market. Instead of that the non-Irish lenders who have been serving this market are heading for the door. In doing so, the departing banks are not acting irrationally. We should think about why they are leaving and see what that teaches us.
One clue is provided by Joe Brennan’s report (Business This Week, November 11th) on Central Bank data which show over half of home loan borrowers in arrears have paid nothing to their lenders in the past two years. More than 15,000 borrowers in long-term arrears, or 55 per cent of the total, are “not co-operating”.
The complaint that home loan interest rates are higher here than elsewhere in Europe is frequently heard. It is seldom noted that it is almost impossible for Irish lenders to enforce the security they hold for home loans and that this inability means that performing borrowers pay, through higher interest rates, both for their own loans and for those of the tens of thousands of defaulting borrowers.
Ed Sibley, deputy governor of the Central Bank, has made this point but in suitably impenetrable terms. You reported (Business, July 14th, 2021) on a Central Bank paper which records that half of the cases of long-term arrears are borrowers who are “non-cooperating” and quoted Mr Sibley: “In cases of continued long-term non-cooperation, the functioning of the legal system to ensure the realisation of collateral for lenders will continue to be critical to the effective functioning of the mortgage market for all Irish citizens”.
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In perhaps more accessible language, we will continue to have a dysfunctional home loan market if our courts persist in the belief that only borrowers have rights and that lenders have none.
You regularly report on cases which have reached the courts where the borrower is not only in default but hasn’t paid a cent off the loan for eight, nine or 10 years. We all know who is paying for the borrower to live rent-free and interest-free in his home. – Yours, etc,
PAT O’BRIEN,
Rathmines,
Dublin 6.