Retro warning! The following blogpost describes how getting an Irish mortgage has changed over the years.
Any dodgy hairstyles and clothing have been replaced by actors to protect the innocent.
Figures from the Central Bank show that the average mortgage rate is around 3 percent in Ireland today. This got me thinking about current affairs programmes on RTE, before the days of TV3 and Vincent Brown.
Irish people looked with envy at interest rates in Germany of around 2 or 3 percent while we were paying mortgage rates in the region of 11 to 12 percent.
Of course back then we had our own Punt and were linked to Sterling. We had financial independence of sorts, but paid dearly for it.
Many hours of discussion on RTE would take place about the reasons for our interest rates and why Germany could operate with such low interest rates. That was one of the attractions for Ireland when we looked at joining the single currency. The incentive that we would have low interest rates, like the rest of Europe, and not be tied to Sterling.
Has it really worked out the way we expected?
We have the low interest rates alright, but we also have banks that are on life support from the Government via the taxpayer, and hundreds of thousands of people in ongoing financial difficulty.
Back then in the long-haired and flared 1970’s, the Banks were not in the home mortgage market, it was left to the Building Societies to provide home loans. With hindsight, maybe the Banks should have stayed out of home mortgages and consequently would not be sitting on their present predicament. Then again, the senior bank staff would have missed out on all those bonuses.
Applying For A Mortgage In 1970s Ireland
To apply for a mortgage back then in the 70’s, you had to have the 15 per cent of the mortgage required on deposit with a Building Society for 6 months. Then you could fill in an application form and wait for a few weeks before word came if you had been granted a mortgage.
Living in rural Ireland back them, I remember having to travel 40 miles to the nearest Building Society in order to qualify for a mortgage. Back then, there was no suggestion that maybe you should borrow an extra few thousand to change the car as well. That was an idea that came in the boom.
After getting a mortgage sanctioned by your Building Society, you then had to go to the Bank and get a bridging loan for the amount to build your house. The Building Society would only release the money when you were actually living in the house, when their surveyor confirmed it all was in order.
When the house was completed, which used up all the loan money I went to visit my friendly bank manager telling him that the house was now complete, but I needed a furniture loan before I could move in.
This is when I hit the brick wall.
In a stern voice, I was told there would be no furniture loan until the bridging loan had been paid off. That finished me with that branch. So I had to go to another bank to get the necessary loan, in order to complete the transaction.
If we were half as quick to remember our financial history as we are when it comes to our political history, perhaps we would be less inclined to take things for granted.
Today’s impatient, always-on society means we’re often too busy and in a rush to take a step back and see the big picture.
All these years later, have we really made it any less stressful to go about having your own home?
The last word on the global economic crisis will be left to Stewart Lee…
