The short answer is loads! Especially the big two of AIB and Bank of Ireland.

In general, and rates do change, AIB and BOI will not be the cheapest in the market. So they are mid-high price range on a mortgage.

Banking is a simple business that the Banks (including Central Banks) have managed to make very complicated. They take money from depositors and pay them (near 0.00%) and then lend this money to borrowers at 2.2% – 6%+. After over head costs, they keep the profit. Simple as that.

Say we have a €380k mortgage with BOI – rate 2.9%. That costs you €1,582 a month. There are costs to the Bank in setting up that mortgage (depending on how efficient they are), but the ongoing costs are low. The biggest cost they will have is the amount of reserves they need to hold in case that loan goes bad – that costs them about €100 a month. There is very little ongoing operational cost to them to maintain that mortgage so let’s assume €100 a month. The key here is how much they can now borrow the €380k they lent to you. Not so long ago they had to pay their depositors to lend their money. Not any more!

They can now borrow from the European central Bank at -1%

Yes that’s a minus sign. The European Central Bank will pay them to take money. Take Y1 – they can get paid ~€300 a month by the central Bank to lend you money – yes that’s correct. So even with the cost of €200 a month to service that mortgage, their “costs” are a positive €100 a month.

On top of that, you will pay €189,000 in interest on that €380k loan over a 30 year loan. So with the “positive costs” we can assume that they can make about €200,000 on that €380k loan.

Not bad if you can get it.

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