The European Commission has imparted the importance of Ireland honouring it’s financial commitments in terms of repaying national debt.

In a statement the European Commission has said honouring loan commitments is of the upmost importance.

“It is of the utmost importance that Ireland is seen to honour its financial obligations.”
European Commission

European media outlets are focusing on Greece and Spain, and wondering whether Ireland may need to renegotiate her debts.

The Irish government in response to recent comments including the statement above have insisted Ireland will be able to meet commitments.

Taoiseach Enda Kenny has dismissed suggestions Ireland should follow the lead of the Spanish government in trying to secure debt relief.

“There is a big difference between the two situations. Spain is a big country with a huge economy, and is in a very different position from Ireland.”
Taoiseach Enda Kenny

In response to comments from Sinn Féin leader Gerry Adams, the Taoiseach stated the government was not planning to raise any undue expectations on the upcoming €3.1 billion loan repayment.

It is important for Ireland to demonstrate a strong commitment to keeping to austerity measures and showing an astute ability to repay national debts.

Any movement divergence from the plan could cause problems in the debt management markets for Ireland.

The economy is not looking bad for Ireland at the moment.

Minister for Finance Michael Noonan has recently given the Irish economy an upbeat assessment, stating that if the world economy were to improve Ireland would soon follow suit.

The Irish economy could “take off like a rocket” according to Noonan.

Noonan was speaking after ringing the bell at the Euronext/NYSE stock market in France/Paris.

The minister acknowledged that he will be trimming forcasts for 2012 in the following month, but kept an upbeat tone for prospects for 2013.

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European Commission homepage.

According to new Central Bank statistics Irish homeowners are paying well below the European average on home loans.

In Ireland the average amount paid for a mortgage loan is 2.98%, compared to 3.87%, according to the statistics published 9th March.

The Central Bank said homeowners were paying lower rates in Ireland because borrowers on the most part have tracker rate mortgages. Tracker mortgages in Ireland are tied to the ECB rate set in Frankfurt.

Tracker rate mortgages have been in the news recently, as Irish officials decides what to do about them.

The ECB have reduced their rates to an all-time low of only 1%, in an attempt to improve the European economy.

According to an article in the Independent some banks are paid less from homeowners than they are paying themselves to borrow from the loan markets.

This means that borrowers around the country on tracker mortgages are now getting great deals on their mortgages.

Homeowners may even be in a position to “over-pay” on their mortgages. This is where you pay more than necessary, making the most of the cheap rates.

Variable rates however have reportedly born the brunt of the problems, as these can be set manually be banks regardless of the ECB rates.

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A new report on the governments latest Personal Insolvency Bill has recommended that MABS should take on a role in new debt plans.

The report stated families should be facilitated to be able to stay in homes in any insolvency arrangement.

It is suggested that Justice Minister Alan Shatter should examine introducing this into legislation.

The report was published by the Joint Committee on Justice, Defence and Equality.

It is reported that the committee thought the new proposals did not contain enough detail on how Personal Insolvency Trustees would be regulated and paid for. Questions such as who would provide necessary training and qualifications.

The committee believes that potentially MABS could take on this role, as long as they were provided with the necessary resources.

MABS has a good reputation in Ireland and is a natural choice for many.

In addition to this, the committee thought an appeals mechanism should be put in place for the occurence of creditors refusing proposed arrangements.

It is likely a whole industry could evolve around the new insolvency proposals.

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According to ISME as many as half of loan applications by small and medium sized business are being turned down by banks in Ireland.

In the business lobby group ISME’s latest Quarterly Bank Watch Survey, it was revealed that 50% of Irish businesses surveyed had been turned down for credit in the last quarter by their bank.

This is not something the government will want to hear. Access to credit is vital for business, and even more vital for the economy at large.

It is likely that questions will be being asked at government level over how to increase loan funding.

In the Quarterly Bank Watch Survey it was also reported that of firms that applied for credit, a huge 91 percent said they felt the banks were making it more difficult for them to access credit.

ISME chief executive Mark Fielding pointed to a recent Central Bank report and EU Survey on access to find in the Euro area, which reported that Irish small/medium sized businesses were second to least successful at getting business credit only after Greek companies.

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Irish banks are set to take out around €10 billion in loans according to an article in the Independent.

The loans were part of €529.5 billion of funding to European banks from the European Central Bank (ECB).

The purpose of the loans in to ward off chances of Euro-zone recession problems.

Irish bank yields are reported to have risen as investor concerns about the upcoming referendum were trumped by the ECB loan funds.

Around 800 banks in the EU have borrowed loan funds, at reduced rates, from the ECB during the operation on Wednesday.

According to a Reuters article, the loans have fuelled hopes that the business credit would help return back to normal the economy of countries affected by the debt crisis, and lead to the fall of borrowing costs.

Reuters report that Germany has 2000 banks, Ireland with 590 banks, France 1147, 405 in Britain, Italy 785, Spain 415 – taken from ECB data.

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Europe’s mortgage rates could be on path to hit a historic low, as the region does what it can to save the Euro during the Euro debt crisis.

And, despite the recent 0.25 percent rate reduction, and the ECB giving banks an unlimited amount of cash for three years so European lending establishment would stay afloat, another interest rate cut is expected to occur in January.

Despite the deepening financial crisis throughout Europe, Taoiseach Enda Kenny is trying to get its bailout debt decreased in return for an agreement to have a vote that would present more centralized powers to Europe. These powers are necessary to impose greater financial punishment on countries like maintaining their borrowing within the specified and agreed upon limits.

Kenny, in a letter to Herman Van Rompuy, EU council president, said he wanted to postpone some of the debts’ repayment for close to 30 years.

Rather, he wants a repayment agreement on some of the €63bn the state borrowed to fund the troubled banks. Some of the borrowed funds fell under the EU-IMF bailout with others on the bond markets.

Kenny said he wants a new EU rescue fund set up to take control of the debts, possibly getting a better deal on repayment.

This deal would ensure that voters like any referendums they are being informed about.

Due to the hardened stance by both small and large states, the possibility of a successful outcome is looking more and more distant.

Tanaiste Eamon Gilmore finally agreed that the Government would need to be ready to have a vote on a new EU treaty.

Gilmore said if a new EU treaty is what must be done to save the currency and be able to borrow on the financial markets once again, then it should be up to the Irish people to make the choice.

Despite the fact that ECB president Mario Draghi sliced rates and gave cash to European banks, he stifled rumors that it would purchase government debt. Markets had expected ECB would offer to purchase unlimited government debt, with this being an important step. Upon his comments, world markets dropped.

For the second time in two months, the ECB sliced its key interest rate to one percent. The move will help more than 400,000 people on tracker mortgages before Christmas, saving them nearly €40 a month on a €250,000 home/business ​mortgage. A similar rate cut occurring in January would bring the interest rate down to an historic 0.75 percent.

Draghi said a good deal of the 200,000 variable rate homeowners will not see the benefit. However, banks are using the cut decrease the cost of credit. Ulster Bank said it would not pass it on, making it the second time they’ve refused to pass the ECB cut. The Bank of Ireland will only pass on some of it. KBC Bank said its variable rates are constantly being looked over. However, the majority of banks are passing the cut on.

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AIB is reportedly asking would-be homeowners looking to purchase a one-bedroom apartment to pay more than a 25% mortgage deposit. As reported in the Herald.ie, the state-owned lender has reduced the level of mortgage funding for one-bedroom properties – a move could hurt first-time buyers.

AIB at one time demanded that persons have an eight percent deposit of the total property value. However today, it wants persons to provide 25 percent of the total purchase price.

According to the Herald AIB’s decision is likely to do two things:

- It’ll make it harder for people to get a one-bedroom apartment loan.
- It will cause a drop in property prices.

AIB’s move could also prove to be a headache for people looking to sell their one-bedroom apartment, which experts have said is becoming the most difficult property to sell.

AIB has executed stricter guidelines on guarantors. For example, the bank is telling young buyers that if they get any kind of financial assistance from their parents, they must place their parents’ names on the mortgage documents as the co-borrowers.

Before, the bank requested expected borrowers to get a parental guarantee should their children be unable to get an approval of a mortgage by themselves. There were thousands of first-time one-bedroom buyers utilized parental guarantees to qualified for a loan.

Irish Mortgage Brokers Operations Manager Karl Deeter said the bank has become leery of the parental guarantee, which has led to the change. He said the bank’s asking parents to become co-borrowers could mean prior guarantee are not being upheld in arrears cases.

Deeter said parents who become co-borrower could be liable if the mortgage goes into default.

Last year, EBS said it no longer provides one-bedroom apartment mortgages in very rural areas.

According to the Professional Insurance Brokers’ Association, most brokers have reported up to 80 percent of all applications submitted are declined.

Since its peak in 2005, mortgage lending is down 94 percent.

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The data also shows households have outstanding credit from banks of more than €117b.

This amount does not include home loans.

Add in the mortgages and it brings the total outstanding credit to more than €152b.

The Central Bank’s data also provides a breakdown on the kind of home loans households are currently repaying:

• 53 percent are tracker mortgages
• 32 percent are standard variable rate mortgages
• 13 percent are fixed rate mortgages

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Credit unions in Ireland are seeing a significant increase in applications for €500 and €600 loans, reflective of households trying to fund their Christmas spending.

Families have also been asking for loans for their home-heating oil, as the cost for 1,000 litres has increase by more than €150.

An Irish League of Credit Unions spokeswoman said consumers didn’t have much choice but to borrow funds to handle the season. Since November, credit unions have seen a rise in small loans, as the members prepared themselves for the holiday season.

“Credit unions have noticed a significant growth in demand for small loans since mid-November as members prepare for Christmas.

“This has accelerated considerably in the last week. We believe that this is not confined to any particular group of credit unions, as the same reports are coming from credit unions all over the country.”

The Irish League of Credit Unions has asked sector regulator James O’Brien to ease lending restrictions during the month of December. Roughly 300 credit unions have some kind of lending restriction placed on them. There are more than 400 credit unions across the state.

It is reported there are some cases where credit unions are allowed to only loan €100,000 each month, meaning members who have good repayment histories might be turned down for any additional loans.

The Irish League of Credit Unions sent out a warning about moneylenders taking advantage of folks who are unable to obtain loans through their community lender due to the present lending rules.

According to research compiled by the League of Credit Unions, four in 10 adults could be in debt to pay for all Christmas celebrations, which coincides with reports of an extremely high demand for the loans. In fact, it could take some people nearly seven months to repay the money they borrowed to purchase presents, drinks and food. And, women are likely to spend more money than men are, running their debts up.

Many people dip into their savings to pay for the holiday season, with one in ten using their credit cards, according to the league. Other people will look to borrow the money from credit unions or moneylenders.

Article by LoansIreland.ie. Loans information and tools in Ireland.

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Many struggling families may suffer with an additional €1,000 a year loss after they’re hit by a bundle of stealth charges, with a second wave of additional pain possible. According to Brendan Howlin, Public Expenditure minister, said €2.2 billion in spending cuts would leave all middle-income families to deal with considerably higher bills, as reported in the Irish Examiner.

However, some of the harshest cuts were earmarked to those who are most susceptible such as folks who had disabilities and needed help from the state to heat their homes.

Some of the measures on the chopping block include:

• Child benefit cuts of €19 for third child; €17 for four or more children
• Back to school allowance cuts of €50 to €55
• Charge increase for hospital private beds despite VHI warning that premiums could be driven upwards by nearly 50 percent.
• Double of primary school transportation charge

Environment Minister Phil Hogan said a €100 household charge would be introduced to homeowners in January, saying it was a forerunner to a property tax. When put together, the measures could result in families having €1,000 or more less each year.

For example: a family with four child stand to lose €434 in the child benefit, would pay roughly €110 more in school transportation, and be subjected to a €100 charge if they’re homeowners. Plus, their healthcare premiums would double, pushing the bill to more than €1,000.

Finance Minister Michael Noonan placed additional pressure by the announcement of the budget’s second half, which includes VAT increase and carbon tax increases. This will make goods even more expensive.

However, cuts aimed at the most vulnerable in society were the ones that attracted much of the criticism.

The key social welfare rates escaped unscathed. However, the Fine Gael-Labour Coalition chooses to do the following:

• Reduce disability allowance for persons between 18 and 21 by €88 a week; 22 to 24 years old -by €44
• Decrease time for fuel allowance from 32 weeks to now 26 weeks, which will leave many older citizens choosing heat or food.
• Decrease amount single parents are able to earn before seeing the family allowance affected.

​Howlin said the cuts were spread out fairly and the Government would take care of its most vulnerable.

Howlin admitted he was breaking a few election promises but said he never expected to make these kinds of announcements when he running for the position.

€755 million is being removed from the capital budget for infrastructure projects like roads and rails; €543m is being removed from the health sector; €475m from the social protection sector; €132m from the education sector; the remaining cuts come from other departments. The total amount being cut is €2.2 billion.

The Garda budget is being slashed by €79m, which will close 31 stations; overseas aid money is being slashed by €52.9m.

According to Sinn Féin, the Government is targeting those low and middle income families most at risk with the same austerity budgetary measures that Fianna Fail that ended up failing.

However, Government backbenchers are quiet, which suggests that most have accepted the cuts and won’t do anything about it.

Primary Cuts

• Social welfare – €475m
• Education – €132m
• Healthcare – €543
• Public service pay bill – €400m
• Dept. of Environment, Community and Local Government – €34m
• Dept. of Transport, Tourism and Sport – €45m
• Dept. of Agriculture, Marine and Food – €105m

Glancing Look – Good

• No decrease in weekly payments for social welfare
• €20m allocation made to new labour market activation fund; this target long-term unemployed
• Decrease secretarial supports and allowances for previous Taoisigh.

Glancing Look – Bad

• Cut in third child payment to €148 a month; four or more child to €160, saving about €45m
• Cut in fuel allowance from 32 weeks to 26 weeks, savings of €51m
• Abolishment of back to school allowance for toddlers, savings of roughly €30m
• Decrease of mortgage-interest supplement, savings about €22.5m
• Decrease in student maintenance grants, post-graduates grant cuts, savings of €15m
• Jobseekers’ benefits based on five-day, not six-day week, savings of close to €6m
• Third-level student registration fees increase by €250, savings of €18.5m
• Monthly drug payment scheme increases to €132, savings of €12m
• Employer joblessness refund cut from 60 percent to 15 percent, savings of approximately €81
• Single-parent family payment changes, savings of nearly €21m
• More than 30 Garda stations to close in 2012, savings of €79m

Glancing Look – Ugly Cut

• Primary school transport charge doubles to €100.
• Disability allowance cut to €100 for 18 to 21 year-olds and €144 for 22 to 24 year-olds, down from €188

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