Spin me right round’ – some thoughts on IBF data

In statistics there are two key components, the first is the actual ‘data’ the second is the ‘inference’ or what the data actually means. If you saw that one summer was hotter than the last by collecting daily average temperatures that would have statistical significance, if on the other other hand you saw that July was 56% hotter than January then you’d be stating the obvious and your ‘inference’ would be laughable.

That we can see this when it comes to meteorology is obvious, and almost nobody would take such news as having any significance, but when it happens in finance it can go unchecked although Eamon Quinn at the Wall Street Journal caught the IBF out on their release which is about mortgage lending being ‘56% up this quarter’.

Here’s the actual quote they lead with ‘The latest figures from the IBF/PwC Mortgage Market Profile, published today, show that the number of new mortgages issued in Q2 2013 has increased by 56.1% on the previous quarter.’ And it …

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RTE Drivetime – the IBF property market report, 28th May 2013

We were asked to speak to Mary Wilson about the IBF property report on RTE Drivetime. There was a view given earlier in the day that the month on month increase in applications was a positive thing, we chose to look at year on year figures which tell an entirely different story. And while lending is down 26%, drawdowns down over 18%, transactions are up over 14%.

To us this is indicative of a market where credit is not functioning in it’s natural role, price is not the issue, it’s scarcity which is the problem.

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Slowdown in pace of increase in arrears is welcome, says IBF

The Irish Banking Federation (IBF) and its members note from today’s Central Bank statistics on mortgage arrears that, as expected, the overall level of private residential mortgage arrears has increased – but significantly the pace of that increase is further slowing.

The increase to 11.3% in the total number of private residential mortgages in arrears comes as no surprise, reflecting as it does the difficult economic circumstances in which an increasing number of customers find themselves.  However, the slowing pace of increase in arrears is welcome, with the Central Bank noting that:

·there is an underlying decline in the number of accounts up to 90 days in arrears ·the pace of increase in arrears over 90 days has slowed; ·the number of accounts 91-180 days in arrears fell for the first time (-0.1%) ·the pace of increase in arrears over 180 days fell significantly.

It is also notable that the small decrease to 81,683 in the total number of restructured accounts is largely related to “a reclassification effect, resulting from the application of a more harmonised definition of restructures across …

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AIB tightening criteria? Are banks really lending?

In recent days the IBF came out with a very positive story about how mortgage lending has increased year on year for the first time since 2006, at the same time the Central Bank are saying that criteria is tightening and other research suggests that almost HALF of our residential market is transacted in cash!

This is a classic example of two stories that contradict each other, or at least that seem to do so. Can you have tightening criteria with more lending? Of course you can! Demand for mortgages is up year on year (in our brokerage taking gross leads as the figure) about 30% or more.

Banks are saying that they accept the vast majority of mortgage applications (c.62% is their estimate), and the likes of AIB are actually ahead of …

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Property Crash, Where to Now? RTE 1

We were delighted to take part in the making of Richard Currans documentary ‘Property Crash, Where to Now?’. It is the follow up to 2006’s ‘Future Crash’ in which he predicted the demise of the Irish property market.

The full version is available on the RTE player, we just posted the clip that we took part in (showing off for our loved ones basically!)

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The issue with the case against ‘Reckless lending’

In operations I have two main roles, firstly is the obvious operational aspect of any company which has to do with logistics of loan suppliers and our distribution to clients as well as looking at the general business planning to ensure we are always at the best of our abilities. The other role is regulatory, I act as a compliance officer, while that is not a legal position, it is one in which the practical aspects of law surrounding financial services are to be found, how it works in real life.

On that basis I was surprised to see that there were several articles talking about the use of tort law to prove negligence in lending, and with that, a particular reference to the Consumer Protection Code (CPC) which has since been updated. While I admire the initiative being taken by New Beginning I have some doubts which I will express here.

One issue we have had with regulation is that it actually …

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Irish Banking. How does it play out?

I used to be in a Chess Club, and one thing it taught me (apart from how to lose using the Kings Gambit) is that you can often see a general result long before you see it exactly, when you are a piece down and can’t control the centre of the board you know you are in trouble, but how and where the checkmate occurs is unknown, game theory can’t tell you precisely and reverse integration from the end game may not bring you to where you started from, but the player knows instinctively that they are up against the wall.

Sometimes appearances can be deceiving, you might think you are fine and you are not (2003-2009), other times you can get caught up about losing a pawn but you are in fact gaining ground (2010), albeit painfully and slowly.

I believe the same can often apply to markets. Today we will look at the reasons for why we believe the banks are going to survive and furthermore, what the results will be of their survival.

The core belief in …

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Synopsis of the ‘Code of Conduct on Mortgage Arrears’ February 2010

The Financial Regulator recently brought out a new code of conduct for mortgage arrears, the full length eight page document is here.

The code applies to: all of the regulated mortgage lenders in the state (this includes the sub-prime lenders), as well as all mortgage lenders operating here via other EU states (eg: Leeds Building Soc.)

It applies to consumers only, and only in respect of their principle private residence in the state. The code should be treated as an extension of the Consumer Protection Code.

Scope: The code covers finance for primary homes, lenders must adopt flexible procedures that aim to assist the borrower as far as possible. It sets out what the lenders must do in an arrears case but allows repossession where the code is not appropriate (fraud, breach of contract, abandonment). It doesn’t relieve the borrower from their duties to repay

Legal Background: S117 of the Central Bank Act 1989

Avoiding an arrears problem: Once …

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Primetime 2nd February 2010: Mortgage Market Focus

Primetime took a look at the mortgage market situation in Ireland on the 2nd of February, they spoke to various industry experts as well as people on the street about their feelings on the situation. The clips below are well worth watching.

In this clip Primetime spoke to people on the street, and the general opinion was one of empathy for borrowers in trouble but the overall tone was that people didn’t necessarily want to step in and have their tax money going to bail them out. Then David Murphy interviews an anonymous borrower who is in debt trouble, as well as getting the opinion of Irish Mortgage Brokers Operations Manager Karl Deeter and Paul Joyce of the Free Legal Aid Centre (FLAC).

In the second video Pat Farrell of the IBF (Irish Bankers Federation), Stephen Kinsella (Lecturer of economics at University Limerick, and author of ‘Ireland in 2050), Pauline Blackwell of FLAC (free legal advice centre) and Ciaran Cuffe of the Green Party talk to Miriam O’Callaghan about the issues of debt and the solutions for solving …

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