EU warns about ‘spiralling’ house prices

The European Commission has cautioned about “spiralling” house prices and has questioned the number of supposedly permanent restructured mortgage deals that banks strike with distressed borrowers that fall apart.

EU warns about ‘spiralling’ house prices

By Eamon Quinn

The European Commission has cautioned about “spiralling” house prices and has questioned the number of supposedly permanent restructured mortgage deals that banks strike with distressed borrowers that fall apart.

“The recovery in housing assets, together with some increases in earnings, strengthens households’ net worth and capacity to repay,” the commission said in its latest post-bailout report on Ireland.

“On the other hand, the spiralling house prices warrant constant supervisory caution,” it said.

It highlighted the significant number of mortgage arrears cases — representing balances of more than €11bn of long-term arrears.

Citing Central Bank research, the Commission said that split mortgages have the best record in resolving arrears cases, but that households currently paying interest-only loans have the worst outcomes under restructured or new deals.

“In summary, these results highlight that loan restructuring practices may still leave certain underlying vulnerabilities, which may surface if the conditions worsen,” it said.

Confidence in the banks has been hit by the tracker mortgage scandal, it said.

Low credit demand by SMEs may “partly” be because they face some of the highest interest rates on their loans in the eurozone.

It said that at 4.7%, loans for Irish SMEs were “substantially higher” than anywhere else in the eurozone.

New home loans at 3.2% were also “much higher” than in other eurozone countries, it said.

The economy will continue to grow strongly but the globalised nature of the country poses risks, it said.

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited