This is what a mortgage loan ad aired during the recent Super Bowl asked…
Conor Pope from the Irish Times had an interesting article on lending restrictions and did a good piece on it in today’s paper. In the piece he quoted Karl Deeter from Irish Mortgage Brokers on his views about the effect of the Central Bank rules on the property market.
“Karl Deeter, a mortgage broker and keen observer of the property market, has written an extensive report on Dublin’s boom-and-bust cycles spanning 300 years. He is not one of the Central Bank’s cheerleaders, and he is unconvinced that the 2015 scheme deserves much credit.
“I don’t think the new rules have had any real impact on the house market despite how it might be characterised,” he says.
Deeter points to an International Monetary Fund study of six countries that introduced lending restrictions. The report indicated that the rules made little difference, he says.
“In the credit market the rules have caused a fair bit of chaos. But I think prices were going to slow down anyway. We are in the middle of a property cycle, and cycles …
This article first appeared in the Sunday Business Post on the 7th of February 2016
Below is some well-intentioned advice on what could be done to improve the housing situation
That commentary is often critical is a natural by-product of looking at a situation as it is and considering how it could be. Ideals are not the same as standards and what ought to be is often far from what is.
For that reason I hope to look at areas in the coming weeks where improvements could be made in the Irish property market to achieve specific aims of lowering the cost of housing and delivering more housing.
I know the fine folks in the Department of the Environment read this column, as they sometimes are kind enough to complain to my editor about how we deal with subjects, so hopefully this will be taken in the spirit of some well-intentioned advice.
First off, we should end construction levies. These are up-front taxes or development levies based on the square meterage that you intend to build. The issue with them …
In an article today about mortgages by John Cradden of the Irish Independent we were quoted extensively regarding our thoughts on loans, extracts are below:
Last month saw the official launch of a new mortgage lender here in the form of Australian firm Pepper, who will be lending to the self-employed and those who got into arrears during the downturn but are now back on track.
“Up to now, if you had credit issues you were virtually unbankable, that is set to change,” said Karl Deeter of Irish Mortgage Brokers. “Equally, as banks add bells and whistles to their product suite, you’ll see some will be about flexibility rather than price and that’s a sign of competition in product differentiation coming through.”
He adds that rates will improve with the new competition. “This was what happened in the last credit cycle and will happen again so time will take care of that, but Ireland also has unusually high risk associated with our loans so that has to be factored in.”
The cashback offers are another popular incentive, with …
There was an interesting infographic out today from One Big Switch showing what people have done in order to make their mortgage repayments.
It ranged from working extra hours, to taking fewer holidays and socializing less. What is interesting about this, is that nobody tends to look at the wider economy effects of high mortgage rates, and the Central Bank while saying they want to examine them, cannot and will not do anything about it.
Higher rates act like an informal ‘tax’, and as some banks are foreign owned it means taking income out of the Irish economy and funnelling it elsewhere, this affects our balance of trade and was a reason we always questioned the Patrick Honohan diktat of not having an issue if all banks were foreign owned.
This informal tax reduces expenditure in the productive economy and goes towards rationalizing zombie balance sheets, so lower rates should be a priority for everybody, but the way to get there isn’t force, it’s competition and for that reason we are hopeful that the switching campaign will be a successful …
We were asked to take part in Pat Kenny’s ‘Friday Panel’ which was hosted by Shane Coleman. The discussion was on many property matters and went on to cover politics and crime. The panel members were Michael O’Regan the political correspondent of the Irish Times, Martina Devlin who is a well known journalist and author, and lastly was our own Karl Deeter.
The Insolvency Service of Ireland have a good explanatory video. More information about their services can be found on www.backontrack.ie
In an article by Sinead Ryan in the Independent we were quoted on several matters:
With all the talk of celebrating the Rising in 2016, it won’t extend to a rising mortgage market, says broker Karl Deeter. “The changes to lending criteria and in particular the Central Bank changes meant that while 90pc LTV (loan to value) mortgages were available, as the year progressed more banks started to withdraw them. Due to the way the figures are going to be reported in 2016 it will be a case of, ‘Want a 90pc mortgage? Get it in January or July’. And that’s because the half-year periods are going to be the times in which they are mostly available.”
One positive change, says Deeter, was that interest rates came down during the year, in particular fixed rates as banks came under pressure to explain Ireland’s excessive rates compared to those enjoyed by our EU neighbours. Although all banks rocked up at the Banking Inquiry, and most were (or tried their best to sound) contrite, the truth is that pillar Bank …
Lorcan Sirr, a housing lecturer at Dublin Institute of Technology in Bolton Street has been very critical of the Department of Environment on their approach to housing and recently wrote a piece about it on the Building Regs blog.
This considers things like the Building Control Regulations, planning regulations and Part V contributions. His closing line says it all “It’s quite difficult to engineer a situation in housing where everybody loses, but in the last 24 months the Department has managed to do that, repeatedly“.
To us this really says it all, everybody is losing in housing other than the people who already own houses and that was never meant to be how the housing market worked.
We were never advocates or in agreement with the ‘make government force mortgage rates down’ campaign (albeit on very friendly terms with the campaign promoters). The reason was that rates needed to come down in a natural way or banks would curtail credit or charge more elsewhere, this was a balancing act between sorting out operational costs and back book issues.
The belief we had, and one that does seem to be bearing fruit, was a slower (ie: less popular) road to lower rates, brought about by competition.
This has been happening, it doesn’t make headlines because it’s a slower burn but the trend is under way and it goes like this: more competition equals lower rates, the higher rates spur competition as it attracts new entrants and in time, when matched with a low yield curve, rates will fall.
The introduction of Pepper into the market, along with general competition has meant that the rate reduction cycle has begun. The hallmarks are that firstly, rates are high after a financial crash, that always happens, those high rates bring in …