Wednesday, 29 April 2009

UK taxpayer supporting Irish housing market - New Labour Nonsense No.5

The generousity of the UK government is almost limitless. Not content with trying to prop up the UK housing market, state owned banks are now offering cheap credit to support the Irish housing market.

Don't misunderstand me; I like Ireland, and I wish the country well. But they chose to leave the United Kingdom back in 1921. The relationship is over; the UK government should not be supporting the Irish economy. From today's Times....

Banks controlled by British taxpayers are offering mortgages to first-time buyers in the Irish Republic at half the rate that they are available in the UK. Halifax, part of the Lloyds Banking Group, is charging 2.74 per cent for a two-year fixed-rate deal to first-time buyers in Dublin. A five-year fixed-rate deal would cost borrowers in its home town of Edinburgh 6.14 per cent.Royal Bank of Scotland (RBS) is charging 2.95 per cent for a new mortgage in Ireland; in the UK, it charges 5.99 per cent for a similar product.

Matthew Elliott, chief executive of TaxPayers' Alliance, a lobby group, said: “It seems bizarre and unfair that Halifax and RBS, which have in effect been propped up by British taxpayers, are offering worse deals to British customers than those elsewhere.” British taxpayers have spent more than £60 billion bailing out RBS and Lloyds Banking Group, leaving the Government with a controlling stake in each.

(Thanks to suzukiscooter for the email and the tip)


RayD said...

But these mortgages would be in Euros? So if the Pound declines further against the Euro the bank would be on a winner? Is that right or have I completely miss-understood?

dearieme said...

"It seems bizarre and unfair..": oh balls. I'd rather see an explanation than a whine.

Mick said...

Bearing in mind the state of the housing market in Ireland I think RayD has hit the nail on the head.

formertory said...

This whole reportage is just naive. Interest rate, as any fule is supposed to kno these days, is just a single factor in the cost of credit.

6.14% for a 5 year fixed is just about right in the UK for an 85% LTV no-fee or low-fee mortgage. 2 year fixed rates are much lower - 3 and a bit % here - because the market is factoring in rapid rate increases over the next couple of years.

The conditions for lending, the regulations around lending, and the funding costs of lending are all going to be different in the eurozone. I make no judgement on the products offered in Ireland.

I will though make a judgement about Matthew Elliott: it seems bizarre and unfair that a man who normally speaks such good sense should shoot off at the mouth about something he evidently knows bugger-all about. Who does he think he is? The soi-disant mortgage expert Vince Cable?

Surely this ridiculous argument could be extended to the lending activity of all UK registered banks who have operations abroad? Perhaps, because the "UK taxpayer" has "bailed them out", they should be forbidden from any foreign operations in case some British capital leaks into some Johnny Foreigner's pocket?