Department of Finance Presentations: January 2012

Following on from the NTMA’s slidefest from a few days ago, here’s an interesting set of presentations that have just been released (apparently without a press release explaining who they were originally presented to but I think you can guess). There are presentations on Mortgage Arrears, SME Lending, Deleveraging, Funding, and a Banking Report Card. Enjoy.

Draft Insolvency Bill

The draft of the new personal insolvency bill is available here.

European Commission Report on Ireland: December 2011

The latest European Commission report on Ireland is available here. Lots of interesting stuff in it. One bit that caught my eye is a discussion of an internal report prepared by the Central Bank

A second report covering the use of certain types of credit limits, from a prudential point of view, is at an early stage of development. This would take under consideration policy tools including Mortgage Insurance Guarantees and Loan-to-Value (LTV) limits, as well as potentially fixing all interest rates for certain products such as mortgages.

It’s not obvious to me that banning variable rate mortgages is a good idea, either from the point of view of consumers or from the point of view of international financial institions considering coming into Ireland to offer mortgages. While fixed-rate mortgages do offer increased stability, the premium required is quite large so that financing costs would be higher on average (and house prices probably that bit lower as a result).

There are various reasons why fixed-rate mortgages are not common in Ireland or the UK (this 2004 report on the UK mortgage market by David Miles discusses this issue in detail). But banning variable rate mortgages seems to be an extreme proposal.

Central Bank Paper on Mortgage Arrears and Negative Equity

The Central Bank have been publishing data on mortgage arrears for some time now.  On Friday, the Bank released some very useful additional analysis in the form of a paper by Anne McGuinness (press release here.) The paper provides new information on the extent of negative equity and also on buy-to-let mortgages, which are not covered in the Bank’s usual quarterly arrears figures.

Comments at Central Bank Mortgage Conference

For those of you who missed the excellent Central Bank mortgage conference a couple of weeks ago, the presentations are available here. I’ve also written up my own comments from the day and posted them here.