Today in the pressWednesday 02 January 2013 10.55
BANK CHARGES TO SOAR ON RANGE OF SERVICES - Banks are set to charge more for current accounts, continue to cut deposit rates and hike credit card charges, experts have predicted says the Irish Independent. And this year banks could offer a financial incentive to tracker mortgage holders to switch to a variable rate, financial analysts said. The European Central Bank (ECB) meets next week, with expectations it may deliver a cut in interest rates some time in the first three months of this year. But any cut will only benefit those on trackers, with homeowners with variable rate mortgages likely to see further hikes, experts said. AIB have hiked variable rates by 0.5% each in two successive months, while Bank of Ireland pushed up its variable rates by 0.5% last year. Trevor Grant of the Association of Expert Mortgage Advisers said banks were likely to try and get more people to give up trackers by enticing them on to variables. Trackers are loss-making for banks, but great value for consumers, because they are tied to the ECB rate and are priced at a low margin over the ECB rate. A typical tracker is 1% above the ECB rate, meaning a mortgage rate of 1.75%. This compares with an average variable rate of 4.3%. Some 300,000 homeowners now have variables, up from 200,000 just a few years ago. The number with trackers has fallen to 373,000.
GANNON CONFIDENT €30.5m OWED TO NAMA WILL BE REPAID - One of the State’s best-known builders, Gerry Gannon, is confident that the £24.9 million (€30.5 million) owed to Nama by his business’s British arm will be repaid. The Irish Times says that in accounts just filed by London-based Gannon Homes (UK) Ltd, profits at the firm increased 17-fold to £359,929 in 2011. A note attached to the accounts states: “The directors are of the opinion that all loans can be repaid as and when the market returns to enable the completed units to be sold.” “In the meantime, the directors are confident that rental income and income from property management services provided by the company will generate sufficient positive cash-flow to enable the company to meet a substantial portion of its funding requirements,” the notes continue. The accounts show that during 2010, the company’s loans were transferred by the Irish Bank Resolution Corporation to Nama, with bank loans of £24.9 million outstanding at the end of 2011. The most recent accounts for Mr Gannon’s Irish-based Gannon Homes Ltd, for 2009, show €196.7 million in loans provided by AIB, Anglo Irish Bank and Irish Nationwide Building Society had been transferred to Nama. The firm’s bank loans and overdrafts are supported by a personal guarantee from Mr Gannon.
HOLLANDE INSISTS RICH MUST PAY MORE TAX - François Hollande has pledged to retain high taxes on the rich and made reversing a sharp rise in unemployment his top priority for 2013 in a bid to regain political momentum as he battles a flagging economy and low opinion poll ratings, says the Financial Times. In his first direct comments on the issue, the French president said a decision by the constitutional council to block his flagship 75% marginal tax rate on incomes of more than €1m a year would not alter his socialist government’s intention to make the wealthy bear much of the burden of restoring the country’s public finances. Speaking to the nation in a traditional New Year’s eve address, Mr Hollande avoided making a specific commitment to retain the top bracket at 75% as the government wrestles with how to respond to the council’s ruling. There has been speculation that the measure, a key election pledge by Mr Hollande due to be in place for two years, could be watered down or even dropped, despite insistence to the contrary by ministers. Although popular among the wider electorate, the tax, which would raise little more than €200m a year, became a symbol for business leaders and others protesting bitterly that the government’s tax policies were driving wealth creators out of the country.
'RAIL AN EXTRAVAGANCE' FOR MANY AFTER 50% FARE RISES IN 10 YEARS - UK rail fares for season ticket holders have risen by as much as 50% in the past decade making travelling to work by train an extravagance that growing numbers of people struggle to afford, according to campaigners. The Guardian says that commuters returning to work after the Christmas break face average season tickets increases of 4.3% and an overall rise on ticket prices of 3.9%. But the Campaign for Better Transport says this is just the latest in a series of fare increases that is having an "appalling" impact on commuters. Chief executive Stephen Joseph said: "It's truly shocking that we have deliberately made getting the train to work an extravagance that many struggle to afford. The time has come not just to stop the rises but to reduce fares." CBT said its research showed that in the past decade London commuters have seen average season ticket costs increase by £1,300; fares grow 20% faster than wages; and average costs in real terms increasing by £360. In the last 10 years rail fares had gone up significantly in all parts of England but that there were big differences between routes over that period. Annual fares from Sevenoaks in Kent to London have increased by nearly 90%, from £1,660 to £3,112; and from today, commuters travelling between Worcester and Birmingham Moor Street will pay £1,240 for a season ticket compared with £816 in 2003 - an increase of £424 or 52%.