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AS PART OF the ‘giveaway’ Budget 2024 all residential mortgage holders who owe between €80,000 and €500,000 are eligible to get 20% of the increase in their repayments from ‘22 to ‘23 back as tax relief.
The average ECB lending interest rate in 2022 was 0.64%, but this has shot up to an average of 3.83% in 2023 assuming there are no more hikes before the year is out.
Those on fixed rates or variable rates with the high street banks have seen very little of these increases passed onto them so far, but tracker mortgage customers with all lenders and variable rate customers with non-bank lenders have been hit hard.
A tracker mortgage has risen from 1.79% on average in 2022 to 4.98% on average in 2023, while some variable mortgage holders with non-bank lenders are now at rates of 9% or more.
It’s these 160,000 or so households that the budgeted relief pot of €125 million targeted at, reducing the average year-on-year increase in mortgage repayments of just over €2,000 by around €400 each.
On the face of it, that approach may seem fair enough, as they are the mortgage holders facing the largest rising repayments, but there are two very different groups being lumped together here.
The first group are the 123,000 mortgage holders who had the option to fix their mortgages at rates between 2-3% for the last two years as rates rose, but chose not to.
The second group are the 37,000 mortgage holders with vulture funds, who cannot fix as these funds don’t offer fixed rates. These households are often known as ‘mortgage prisoners’ as other lenders won’t take on their loans.
Almost by definition, the first group can afford to cover the rising repayments as they didn’t need to switch mortgage to lower fixed rates to keep repayments down and so haven’t. Most of these mortgage holders are financially stable enough to afford an extra couple of grand a year. You could say they’re simply taking a bet on rates coming back down again so they can benefit once again from the rock-bottom rates they have been enjoying since 2008.
The second group though face a very different reality. Many of these customers had financial difficulties in the past and were abandoned by the high street lenders when they were sold to vulture funds, but have since managed to escape being in arrears. Now, unable to do anything to control their rising repayments, these households are teetering on the brink of mortgage arrears once again.
Budget 2024’s tax relief is a once off measure, it does not compensate for the increases in repayments seen between 2021 and 2022. It will not compensate for increased repayments in 2024, which are expected to remain around the current high levels according to the current consensus on ECB interest rates.
These households are therefore staring down the barrel of an increase of €5,000 in repayments over the three years on average, with many facing even higher rates and no option to fix.
Set against this an average tax refund of just over €400 each, although better than nothing, seems inadequate at best.
I’ve spoken to many of these customers in the last two years as a result of our mortgage prisoner campaign, which seeks to change lender rules to allow mortgage prisoners to access the retail rates available to the rest of the market. The hardship, stress and frustration they feel, due to a situation they find themselves in, due to no fault of their own, is painful.
The government has missed a real opportunity here, if the €125 million set aside for this relief had been targeted at only those who really needed it, the mortgage prisoners, they could have wiped out almost two years of repayment increases for these customers. This would have bought these households much-needed time to seek out the solutions they need to stop them from falling further into distress. As it is, the government measures appear too little, too late.
Mark Coan is founder of the online moneyguide moneysherpa.ie.
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It isn’t job creation it is job displacement with less regulation. Along with readily available tax avoidance
Bingo. Hailo works for everyone. Über works for Über.
So Uber want to creat 50000 jobs if cities play ball.
In other words if the city councils do away with rules and regulations and let Uber do what they like.
Another case of big business calling the shots .
No thanks
I wouldn’t use an Uber car. It’s an unregulated taxi services that can charge what it likes at peak times. Dodgy.
Uber wants it all.. 50000 k jobs earning crap pay ..
Creation of jobs is great.
uber seem like they are aggressive and
not your usual app based company and i
think they will fall as quick as they rise.
It’s interesting how little traction Uber has in Ireland. Just goes to show the benefits of deregulation.
You have to go through the taxi companies here, so its not the real model. It’s unbelievable that taxi companies here would worry about the safety of passengers if Uber was opened up properly. There are some beauties driving taxi’s around Dublin.
Uber should be shut down unlicensed drivers is a disaster waiting to happen !
It has basically failed in Dublin too as it had to resort to using taxis to operate it’s service..
Have used Uber’s standard service here too. It basically operates here as a hackney service, operated on your phone with some added value, and it’s fine.
The Uber Black type service with random driver pick-up thing is the issue and to be honesty I see the challenges. I don’t think I’d use it.
I tend to try and avoid taxis like the plague… I’m sure as hell not going to pay over the odds for one … I can’t see Uber picking up much traction here.
Uber app needs access to your photos and camera..taxi..!
Use uber in the US regularly. Fantastic service and so cheap.
How many days left till their bubble bursts? 34.5bn ??
The ubers can’t use bus lanes
have your say