House prices to slow to crawl if crash-out Brexit hits, says KBC Bank Ireland chief

House prices will grow at a crawl next year but there will be no repeat of a property crash here under a crash-out Brexit at Halloween, the boss of KBC Bank Ireland has said.

House prices to slow to crawl if crash-out Brexit hits, says KBC Bank Ireland chief

House prices will grow at a crawl next year but there will be no repeat of a property crash here under a crash-out Brexit at Halloween, the boss of KBC Bank Ireland has said.

Chief executive Peter Roebben said that all banks face significant challenges in the coming months, not only from any hard Brexit hit on the Irish economy, but the growing clouds from the global trade wars and the prospect for ECB interest rates staying lower for much longer, which weighs on lenders’ profitability.

A hard-Brexit at the end of October will not lead to a crash in Irish house prices but cause “a further tempering” in house price growth as a number of buyers postpone decisions to buy homes, Mr Roebben said.

“The price increase will further slow down and you will have a kind of a pause, but a crash in house prices I do not see that happening,” he said, citing the shortages of homes and high demand.

Official figures show that house prices have continued to tick higher in recent months, but that the annual residential property price inflation has slowed to below 3% across the State.

Asked about the prospect for an ECB deposit rate cut next month and its effect on the bank’s mortgages and retail savings rates, Mr Roebben said that KBC Ireland had “partly” anticipated lower official rates by the reductions it announced last week in some of its fixed-rate mortgages.

On the €3.4bn the bank holds in deposits from Irish savers and whether they could expect cuts in their savings rates next month if the ECB moves, he said its message was that KBC remains “a challenger bank” in Ireland and was looking to seeking to attract new customers. He said it was satisfied with its saving deposits and mortgage rates for the time being.

“It is, of course, a valid question if these low interest rates stay much longer, it puts a significant burden on banks’ business models,” he said.

After a growth spurt in new business, KBC boosted its market share to 12% by the end of June, up from a share of around 10% a year earlier.

Its net profit in Ireland fell sharply to €24.9m in the six months to the end of June from €115.9m a year earlier when it had posted significant writebacks, of €80.8m.

It is waiting for a decision on the Central Bank on the fine for its part in the industry-wide tracker mortgage scandal. Mr Roebben said that the coming months will be significant for all economies around the world.

Markets again reflected some of those pressures, as sterling again slid against the dollar and the euro. It traded at one stage at 92.65 pence -- a two year low -- but rose slightly later to 92.25 pence -- after the Financial Times, citing unidentified senior aides to the prime minister, reported that Boris Johnson would hold an election in the days following Brexit if MPs sunk his government with a vote of no-confidence.

Mr Johnson has demanded the EU show it is willing to change the deal it had agreed with his predecessor Theresa May before new talks can begin. The EU has repeatedly said it will not reopen the negotiations. Foreign exchange strategists polled by Reuters predict that the pound will trade between $1.17 and $1.20 as the October 31 deadline approaches. Betting markets also forecast a higher chance of a no-deal Brexit.

- Additional reporting Reuters

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited