STRESSED CREDIT UNIONS
The Financial Regulator is turning his guns on credit unions to examine “potential stresses” across the sector, according to several Sunday newspapers.
Tag: Personal finance
PENSIONS
Companies may soon have to hand over unclaimed pensions to the Government under proposed reforms, The Sunday Tribune reports.
The Government is apparently considering a scheme similar to the Dormant Accounts Fund, through which financial institutions and An Post have transferred almost €550m to the NTMA since it was set up in 2003.
“Consideration will be given to the establishment of a state-managed fund into which companies who cannot trace former employees would lodge the accrued benefits,” according to briefing notes drawn up by the Department of Social Protection. “It is envisaged that this could be modelled on the Dormant Accounts Fund.”
MORTGAGES
People in Ireland may have to pay more for mortgages and personal loans because of the international debt crisis, according to credit rating agency Moody’s.
Fears over Ireland’s national debt saw the cost of borrowing on international markets soar last week, culminating in a virtual freeze on buying and selling of Irish bonds on Friday, The Sunday Tribune reports. For the first time in recent history, Ireland is paying more to service its debts than Poland.
Yields on 10-year government bonds rose to 6% last week and the yield on two-year bonds rose by 50% to more than 4.5%.
“The government needs to borrow about €55bn more from the markets over the next 30 months and paying a higher interest rate threatens to push up debt service costs by many hundreds of millions of euro, potentially leading to another painful round of spending cuts and tax rises,” according to the newspaper.
Separately, the Sunday Business Post has more potentially miserable news for many of the 300,000 mortgage holders who now find themselves in negative equity. Banks are preparing to go after the parents of defaulting borrowers who have guaranteed their children’s loans.
Parental guarantees became prevalent during the Tiger years as young people were encouraged to scramble onto the bottom rungs of the housing ladder at any price. Some parents limited themselves to a fixed amount but others co-signed the mortgage documents, taking on full liability as a result.
The newspaper quoted an AIB spokeswoman who said the bank still accepted parental guarantees “where appropriate” but “we reserve the right to pursue these guarantees in situations of default”.
CREDIT CARDS
Credit card companies will share more information about their customers with the Irish Credit Bureau in future, increasing the risk of damaging their credit records, according to The Sunday Times.
Currently, some companies such as MBNA disclose all their payments to the bureau while others report only when a customer fails to meet even a minimum payment.
The change has been impelled by a new EU directive on consumer credit, which is expected to become law in Ireland next month.
NATIONAL SOLIDARITY BOND
The tax-free status of the National Solidarity Bond is drawing flak because the government has introduced it while increasing taxes on bank deposits and slapping a stealth tax on other investment products, according to The Sunday Times.
PERSONAL DEBT
Households who turned to the Money and Budgeting Advice Service (MABs) for help in February owed €53m to creditors – an average of €14,990 a household, The Sunday Times reports.
Around 83% of debt is owed to banks and credit unions and 47% of MABs
ENERGY PRICE WAR
The light may be about to go out on the marketing campaign that has seen 300,000 households make the “the big switch” from the ESB to An Bord Gais for their electricity needs. As part of the move to open up the market in this country, the ESB has not been allowed to reduce its prices while Bord Gais and Airtricity have been offering discounts to get customers to sign with them. But this week the Commission for Energy Regulation (CER) will announce that the ESB will set its own prices from October, clearing the way for a new energy price war, the Sunday Times has reported.
MONEY SAVING & TECHNOLOGY
Home owners are paying too much for home insurance, warns The Sunday Times.
The cost of rebuilding a home has fallen by up to nine per cent in Dublin, meaning the rebuilding cost on most home owners’ policies is too high, inflating their premiums.
DEBT MANAGEMENT
With total borrowing standing at more than €350 billion and more than €170 billion owed from households on mortgages and other loans, the Sunday Business Post publishes a four-page guide on how to manage personal debt better.
The tips include a so-called “ten commandments of borrowing” and where to find the best loan deals. Most of it is plain common sense and retreads old ground but there are some nuggets.
- Always use APR interest rates rather than the headline rate given on promotional offers – that way you will see the real cost of the loan over its term
- Zero per cent interest rates offered by stores on expensive items may only last for a year and then you may be crucified for the remainder of a loan term where you cannot repay early – always read the small print
- Be particularly wary when it comes to financing a car through hire purchase – you may think you own it but you don’t until you have made the last payment