VARIABLE MORTGAGE RATES SET TO RISE - How soon will mortgage rates increase? For those on a tracker rate, there is a guarantee to move only at a margin above the ECB rate. But for those on regular variable rates the temptation for the lender is to start increasing rates, to help increase profits or shore up losses. The Sunday Business Post told its readers yesterday that it will to add 0.5% to its Standard Variable Rate by early in February. That move would affect 70,000 mortgage holders.
The head of research at Dolmen Stockbrokers, Oliver Gilvarry, says the problem that is facing the Irish banks - AIB, Bank of Ireland, Irish Nationwide, EBS and Irish Life and Permanent - on the mortgage side - is that the competition for deposits has driven up their costs and their reliance on wholesale funding has increased dramatically over the past 18 months of so. Mr Gilvarry says that unfortunately the banks are going to have to pass on those increased costs to mortgage holders. He says the move upwards will be seen in the first quarter of 2010 and maybe even as early as next month. The stockbroker also says that all of the banks will start to increase their variable rates soon.
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PENSIONS SHOULD NOW CONSIDER SWITCHING FROM CASH INTO PROPERTY - Pension investors should now consider switching from cash into Irish retail and commercial property given the current attractive values in the market. What some may consider a bizarre suggestion comes from the CEO of pension management company Source, Adrian Daly. Mr Daly was a former chief executive of Hibernian Group. He says that the property market is at the bottom, or nearly, at the bottom of the cycle after roughly halved in value in the past two years, and adds that a great deal of bad news is now already priced into property. He says that traditionally pension funds have invested between 7 and 15% in property. He is now suggesting that funds that have been held in cash for the last 12 months should be transferred back into the Irish property market.
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MORNING BRIEFS - A High Court inspector's report investigating insider trading in Fyffes shares by DCC and related companies, in 2000, is expected to go public this week. An inspector into the affair, Bill Shipsey, was appointed in May 2008 at the request of the Director of Corporate Enforcement after the Supreme Court overturned a High Court judgement following legal action by Fyffes against DCC. The High Court had earlier found that then DCC CEO, Jim Flavin, was not in possession of price sensitive information at the time when DCC sold Fyffes shares almost ten years ago.
*** But a Government investigation into the banking collapse may stay private. The suggestion yesterday morning in some of the Sunday papers was that the Government favoured a private investigation similar to the Murphy Commission which investigated the Catholic Church's response to the sexual abuse of children. Last night, on The Week in Politics Programme, Government Chief Whip Pat Carey has said the Government was not excluding public hearings at a later stage. We will find out more about the nature of any investigation from the Minister for Finance tomorrow.
*** Tullow Oil is to spend €1 billion buying out its partner in Uganda. Heritage Oil had earlier said it was selling its 50% stake in two projects in the Lake Albert area of Uganda it was exploring with Tullow. Tullow had the right to match any rival offers for the assets which had been bid for by another party. Tullow said it and Heritage had spent €0.5m on drilling to prove 700 barrels of oil in the Lake Albert Rift Basin, and identify 1.5 billion barrels of potential yet to be explored.
*** On the currency markets, the euro is worth $1.4374 and 88.07 pence sterling.
