We were on ‘Talking Point’ to discuss the relevance pre-nuptial agreements. Victoria White (journalist), Fiona McLoughlin (Law Lecturer) and Karl Deeter (Irish Mortgage Brokers) were on with the presenter Sarah Carey. Due to the level of Garth Brooks news of late Karl also played a folk song as part of the #dublingoescountry thingy.
Morning Ireland: Interest only loans and the Insolvency Service
We were asked to speak on RTE’s ‘Morning Ireland’ business news with Brian Finn about interest only mortgages and whether or not they constituted a future threat to the mortgage market as well as to comment on the Insolvency Service of Ireland figures that were out which showed a marked increase (although still low gross numbers) in resolutions.
RTE Drivetime: Talking Money on health insurance
This week on Drivetime’s ‘Talking Money’ Jill Kerby and Karl Deeter discussed some of the issues surrounding health insurance, the implications of community ratings and how the market is set to change in coming years.
The interest only time bomb…
We put up the Central Bank figures on interest only mortgages but thought some further thoughts on the matter might help.
That ‘interest only’ was used at origination isn’t news. Prior to the 2009 taxation changes on how mortgage interest is dealt with offsetting the interest meant that the capital payment effectively became your profit.
The shift away from this created cash-flow losses on money that was not truly received as profit and has helped create arrears. This unfair taxation treatment has avoided the exposure it warrants and it’s unfortunate that many commentators in the credit crisis space either lack micro-views or wantonly avoid it in order to look at things that are more emotive in order to create their arguments.
A moniker of ‘unfair’ is earned not granted, because the interest treatment is based upon the zoning of the property. If you had two Georgian buildings next to each other, one was a rental home the other an office, then the loans for the office are 100% offsetable, the one on the house …
Central Bank findings on interest only mortgages
The Central Bank released some findings on interest only mortgages (below), we’ll follow up with some commentary and interpretation soon.
(starts)
The research analyses the loan characteristics, including loan performance, of mortgages originated on interest-only terms in Ireland.
The main findings of the research are:
While interest-only arrangements have been widely used as a means of temporary forbearance to deal with the current mortgage arrears crisis, mortgages were also originated on interest-only terms during the height of the boom. Between 2005 and 2008, interest-only mortgages were mainly issued to buy-to-let investors on tracker mortgages and at high loan-to-value ratios. Interest-only mortgages were more likely to be issued to buy-to-let borrowers in Dublin and for the purchase of apartments than standard mortgages. The arrears rates on these mortgages are higher than standard mortgages. A significant number of interest-only mortgages are due to revert to principal-and-interest repayments in the next 2 years. The resulting higher repayments for these borrowers could lead to an increase in mortgage arrears. 44 per cent of the buy-to-let interest only borrowers will …RTE Drivetime: Talking Money on property investing
We were discussing property investment on this weeks ‘Talking Money’ on RTE’s Drivetime. A few things we focused on was that knowing yield and understanding the risk involved.
One point that should be made is that it’s always a bad idea to put all of your money into any asset, be it property, stocks or otherwise, diversification offers a better protection from volatility.
TV3: Tonight with Ivan Yates on the Mortgage Report of the Finance Committee
We were happy to take part in the Tonight show on TV3, we looked at some of the issues that politicians and regulators can generally get vocal about.
The issues of social housing failure and keeping people with wealth in houses were two main points, as well as that of the unfairness of people who borrow getting access to social housing ahead of the people who were poor all along.
Bank of Ireland will pay your stamp duty (because they can’t pay brokers)
Something many people don’t know is that Bank of Ireland are not allowed to distribute through brokers for another few years.
This means they are being locked out of one of the most dynamic channels in the market. Equally, they were paring back on ICS which recently sold.
They had often complained that it was ‘too expensive’ to pay brokers procurement fees, but now they are willing to pay customers even more than they paid brokers! This is because they are losing out to better offerings through better advice channels.
There is no other way for them to compete at present without literally paying for the business and we take that as a huge compliment, it also shows up the inherent contradiction in their past claims of brokers being ‘too expensive’, clearly in comparison they are not.
Lastly, they don’t pay your stamp duty, they pay the 1% of the loan amount, the idea that it pays your stamp is merely branding, it could go towards anything including a day at the races.
Talking Money on RTE Drivetime: Keeping up insurances
This week on ‘Talking Money’ which is on RTE’s Drivetime Mondays at 18:15 we covered the issue of mortgage arrears and how it impacts on insurance, in particular life cover.
The problem we see time and again is that people cancel their life insurance to save money and that is false economy, or worse, they took out cover with the bank and it’s tied to the mortgage payment so that when you miss one you miss the other, this is a mistake and we set out what you have to do to fix it.
AIB ‘Portable Trackers’ what does it mean?
AIB (who encompass EBS and Haven) have announced that their existing tracker customers can ‘keep their tracker’ if they move. The update from the broker arm of the bank Haven said this was confirmed only for existing Haven customers and that AIB would release their update towards the end of July but the news in the papers says otherwise.
What does this mean?
Firstly it is limited to the customers of the state owned bank, it is also more generous than competitors have offered which gives AIB the unusual accolade of being the bank who (at least it is perceived) write off debt faster, concede to government calls for lower rates and ensure they keep a legacy tracker book for longer than expected.
Why do they do it?
Existing customers have to dispose of one property and buy another, so it’s a way of getting ‘new lending’ buy doing so by giving it to tried and tested customers, a proven track record is a better indication of loan repayment capacity than almost any …