If you would like to submit a contribution to our Readers Blog section then follow this link. Be sure to include your full name, address and contact number otherwise your submission will not be considered for publication. We will contact you prior to publication.

Taxpayer at mercy of ECB interest rate hikes

A SIMPLE compound interest calculator shows that if the Government borrows €54bn over 10 years from the ECB it will cost €62bn.

If interest rates rise as expected then this price shoots up by €7bn per 1% increase. At 4% we will have to pay the ECB €80bn. This means Brian Lenihan’s Dáil statement that if the property market rises by 10% we get our money back is optimistic, to say the least.

Why the minister did not tell us the full cost is a question for him. Perhaps it should be asked. 4.5% is the maximum that the ECB has charged in the past so the table below ends at this figure.

However, there is no guarantee that the rate will not be higher. How much will property have to rise to get a return at these amounts?

The figures are laid out in this table:

Rate: 10 years

1.5% ..................................... €62.73bn

2.0% ..................................... €65.94bn

2.5% ..................................... €69.32bn

3.0% ..................................... €72.73bn

3.5% ..................................... €76.59bn

4.0% ..................................... €80.50bn

4.5% ..................................... €84.62 bn

A second point not considered is the cost of protecting and maintaining buildings owned by NAMA. What percentage are vacant? What percentage need to be completed? How much has been set aside for annual maintenance and upkeep? How will these costs be clawed back? How much will it cost to provide security for all these empty houses? Would it be cheaper to knock some of them down?

Alternatively, we could clear the waiting lists by handing them over to people who really need homes.

Barry Keane

Glendalough Park

Cork


Lifestyle

Easy and cost-effective ways you can spruce up your home. By Carol O’CallaghanStaying in is the new going out: Easy and cost-effective ways to spruce up your home

Need a funny, hopeful read? Hannah Stephenson rounds up the best.10 uplifting books to cheer you up on dark days

Esther N McCarthy put the call out to Irish crafters and grafters this week. Let's support our local makers, all of these are available onlineWish List: Supporting Irish crafters selling online

Shane Johnson takes a look (and listen) at two recent electronic full-lengths.Album reviews: Wajatta and Takeleave provide beats and pieces

More From The Irish Examiner