Dáil Éireann Debate, Tuesday - 13 February 2018
131. Deputy Michael McGrath asked the Minister for Finance the estimated impact of a 1% increase in ECB interest rates on interest owed on tracker mortgages here; and if he will make a statement on the matter. [6968/18]
View answerThe Central Bank has advised that it published a research paper in December 2017 entitled, 'Resolving a Non-Performing Loan crisis: The ongoing case of the Irish mortgage market', which provides information relevant to the Deputy's request.
One of the issues this paper investigates is the impact of a 200bps increase in the interest rate on trackers on mortgage repayments specifically for Primary Dwelling Houses. The research demonstrated that in the event of such an increase in rates the ratio of payments for many borrowers will be between 10 and 30 per cent greater than currently. (Please refer to Figure 13. - https://www.centralbank.ie/docs/default-source/publications/research-technical-papers/10rt17---resolving-a-non-performing-loan-crisis-the-ongoing-case-of-the-irish-mortgage-market.pdf)
For the Deputy's information, the following table provides examples of the effect a hypothetical 100bps increase in mortgage rates would have on 100k, 200k and 300k mortgages at various terms remaining, where the rate goes from 1% to 2%.
Figure: Payment Changes for various terms for 100k mortgage
|
Months |
Pre |
Post |
Diff |
Cumulative increase |
|
120 |
€875.84 |
€919.32 |
€43.48 |
€5,217.66 |
|
180 |
€598.29 |
€642.68 |
€44.38 |
€7,988.62 |
|
240 |
€459.69 |
€505.03 |
€45.34 |
€10,880.47 |
|
300 |
€376.67 |
€422.97 |
€46.31 |
€13,892.18 |
|
360 |
€321.43 |
€368.71 |
€47.28 |
€17,022.43 |
Figure: Payment Changes for various terms for 200k mortgage
|
Months |
Pre |
Post |
Diff |
Cumulative increase |
|
120 |
€1,751.69 |
€1,838.65 |
€86.96 |
€10,435.32 |
|
180 |
€1,196.59 |
€1,285.35 |
€88.76 |
€15,977.24 |
|
240 |
€919.38 |
€1,010.05 |
€90.67 |
€21,760.95 |
|
300 |
€753.33 |
€845.95 |
€92.61 |
€27,784.36 |
|
360 |
€642.86 |
€737.43 |
€94.57 |
€34,044.85 |
Figure: Payment Changes for various terms for 300k mortgage
|
Months |
Pre |
Post |
Diff |
Cumulative increase |
|
120 |
€2,627.53 |
€2,757.97 |
€130.44 |
€15,652.98 |
|
180 |
€1,794.88 |
€1,928.03 |
€133.14 |
€23,965.86 |
|
240 |
€1,379.07 |
€1,515.08 |
€136.01 |
€32,641.42 |
|
300 |
€1,130.00 |
€1,268.92 |
€138.92 |
€41,676.54 |
|
360 |
€964.29 |
€1,106.14 |
€141.85 |
€51,067.28 |
