Paul Colgan of RTE did a story about banking & rates charged by different lenders. He also asked whether future ECB rate cuts would be passed on to borrowers.
News of the World: Money expert on Debt
IRELAND is in payback mode at the moment. As a country we’re experiencing “deleveraging”, which means that many people are using most of their money to pay back excessive borrowing. However, that practice only puts cash into the banking system and not the real economy.
This is because banks aren’t lending — they’re too busy using the cash to put out fires within their own institutions. There are 786,000 Irish households with a mortgage, and six per cent of them are in trouble. The vast majority of that six per cent haven’t paid the bank a single cent in more than six months.
SOLUTION
Our Government-led solution is to encourage that to continue. They’ve made it almost impossible for banks to repossess homes — Labour’s solution of a two-year moratorium on repossessions reeks of “delay and pray”. A further 24,000 mortgages have been restructured and are still not performing, while 35,000 are only staying afloat due to a change in their conditions — mainly by not paying back the loan, only servicing the …
Irish Mortgage Brokers and MyHome.ie on TV3’s ‘The Morning Show’, 2nd March 2011
We were delighted to feature again on TV’s ‘The Morning Show with Sybil and Martin’ (although Brian was sitting in for Martin) on their monthly property slot.
This week we spoke about the necessity of price drops to get a property sold, it is likely the single most important factor, it is also overlooked that there is often a carry cost or opportunity cost loss if sellers don’t drop prices.
Next month we are likely to cover ’empties’, that will be a fascinating show worth tuning in for!
The first time buyer conundrum, to buy or not to buy?
At the moment in Ireland there is a conundrum for first time buyers: should you buy now and potentially over-pay on purpose?
It’s an unusual one and it partly related to property prices, it is a combination of taxation changes that will occur from the start of 2012 and expectations of interest rate changes from both banks and the ECB.
The argument of ‘rent or buy‘ is well established, we produced report on it with Peter Stafford (now of the IAVI/SCS) and Frank Quinn of Senior College Dun Laoghaire, but this is different – buy now or buy later isn’t taking the default of renting as an assumed continuous option, rather it is a case of delaying for the sake of market timing.
The changes in tax are on the tax expenditure side, namely TRS (tax relief at source).
Currently it is applicable to a maximum of €10,000 p.a. and the rates applicable are …
Property prices and property costs, they are not the same, so do you rent or buy?
We have seen a growing trend in our brokerage of people getting mortgage approvals (mainly first time buyers) and not drawing down, this might indicate some pent up demand in housing – which if it comes will be regular houses as opposed to apartments – or it indicates fear of buying in general.
The thing that is pervasive is the ‘price’ of housing, and the idea is to wait until we reach the bottom. That is a perfectly rational concept, and when you are not purchasing over a long term then the price now (we’ll take from financial market vernacular and call it the ‘spot price’ of housing) is the main thing to focus on.
However, that is only one part of the ‘price’ because the majority of new buyers are not buying for cash. The other price is the price of money, the financing costs. We indicated in our annual outlook that banks would, in 2011 alone, increase rates by a further 100bps or 1%, that any bank which isn’t government owned will have variable rates in the region …
KBC move to 90% LTV
This is a very healthy sign for the mortgage market, and in our opinion it could mean that 2010 might mark the low point for credit that we have been watching out for.
In 2009 KBC under-lent, they had €1bn and didn’t lend out anywhere near that, they are also here to stay, and prior to the crisis they had about 1/8th of the market share. The fact that they are rolling out a higher loan to value is a very confident sign that
Banks have a few internal policy tools to control lending 1. Curtailing the amount of lending – we see that already, mortgage lending is about 85% down from the peak of 40bn p.a. , peak wasn’t exactly a gauge of normal, but half of that would be normal, and even on that basis it’s down 75% – that story still has to play out 2. Rate increases: this has the same effect as central bank rate increases, it reduces lending and everybody has increased their margins by at least 1% in the last year, you and …
Everybody pays, even the innocent
There were many innocent parties to the credit fuelled property bubble, they are generally those who didn’t borrow, or who carried no debt, choosing instead to live frugally, and if they used debt they used it wisely. Many of these people are at the polar ends of the age spectrum, very young (who don’t even have access to credit) or much older (who have paid off their mortgages), something we will all need to get used to though is the fact that everybody is going to pay for the mess left behind, this goes farther than NAMA.
The process I am describing is already under way, the very payments system (our financial infrastructure), is going to be used to generate economic rent from the people of Ireland in order to bring in more profit to banks so that they can repair their balance sheets. This price will be paid by the taxpayer outside of the bailout money already being supplied on our behalf. This will be even paid by people who manage to …
Apply for a mortgage online.
Mortgages in Ireland have yet to establish a truly ‘online’ presence, so if you got here by searching for an ‘online mortgage’ or something along those lines then I’ll break the bad news first, it ain’t gonna happen. What you can do is make an initial mortgage application online via this site, and one of the representatives from Irish Mortgage Brokers will call/email you back.
The actual process generally tends to be that you will speak to a qualified consultant (our team have qualifications varying from ACCA <accountant>, QFA <qualified financial adviser> to LIAM(dip) <mortgage diploma> along with various university certificates, diplomas and degrees in many topics), your consultant will help determine what you can or cannot obtain in the lending market for a property purchase and from that point it will be up to you to decide if you’d like to proceed.
After that you will (usually) meet with us and we’ll gather the various documents the bank need to underwrite the mortgage and …
The day I mis-sold an insurance policy
About five years ago I had a couple in with me who were buying a home, I was helping them to determine their insurance needs and I realised that they had literally no protection if either of them ever fell seriously ill – not via their job/employer schemes or individually. So I suggested that they consider some serious illness cover, it would have cost them about €20 a month but they were insistent that they only wanted what was ‘cheapest and nothing more’.
As an adviser, it isn’t my job to always accept what people say they want because often, with adequate probing and understanding they actually want something entirely different, a skewed but simple way of understanding what I mean is that when saving or investing the majority of people want ‘high growth and high security’ – when in fact, these two features are normally night and day, if there ever was an asset that could deliver high growth with deposit account style security then everybody would pile in and the market would adjust accordingly, therefore you need to …
The fear of Loss is greater than the elation of Gain
This is a fascinating clip about a concept I am a fan of – that of the emotions of investing, and how we make decisions – only did a post on it yesterday! The full video is available here if you want to check it out (c. 1hr long).