Dr. Mark Cassidy:

I agree. There has been a sustained period of extremely low official interest rates. While mortgage rates for those on variable interest rates have been higher than those in other European countries, there is a very large group of people who are on tracker interest rates. In fact, the share of tracker interest rates among those who bought property just before the crisis and who are, therefore, the most vulnerable cohort is extremely high. While those mortgage holders may have suffered negative equity and reductions in their wealth because of prices, they have been protected to an extent from an affordability perspective by tracker mortgage rates remaining so low. Once official interest rates begin to increase, that cohort will start to see an increase in their repayments for the first time. There is a potential financial stability risk there. During the time that has gone on, most borrowers have been paying down their debts so the vulnerability has reduced. However, there is a cohort which is highly indebted and which will find repayment burdens increasing significantly when interest rates rise. That will increase the risk to a shock but even under normal circumstances, they will find themselves more stretched. This is an area where it is crucial to examine the different groupings as the aggregate figures mask the vulnerability somewhat. However, the cohort of those aged between 35 and 45 years who bought at the peak prior to the crisis is vulnerable to higher interest rates.