Stepstone Mortgages, Another Irish Sub Prime lender bites the bullet.

When IIB launched their sub-prime lender ‘Stepstone’ the plan was for them to be the inverse of what The Monkeys sang about, they would be your ‘stepping stone’ towards financial stability, they looked specifically at clients who were recently self employed and therefore wouldn’t have 3 years of accounts, people who wanted to refinance who may have had arrears, and other standard specialist lending clients.

Now Stepstonehave joined the slowly (but disturbing) list of Irish Banks to close their doors for business. This means that the Irish financial industry will have to face up to the reality of unsteady world money markets in an ever more local perspective, it’s no longer happening ‘over there in the US’ or ‘across the water’ anywhere else, its up close and personal, especially for the people who were made redundant this week. I feel bad for them, they all did a great job and they were certainly not behind the decision to close up shop, it will also decrease competition in the industry as the number of …

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Online Mortgage, how to get a mortgage online or over the internet

We did an article on the 21st of February about online mortgages, this is just a very brief follow up because we got a few mails about it.

So far we don’t know of any brokerage or lender offering a purely 100% online mortgage, there is a good deal of work that can be done via the Internet but there is not a fully Internet based solution out there right now. By an online mortgage the assumption is that there are no phone calls or emails or anything done that require interaction with another human being. An Irish mortgage online will be a reality at some stage in the future, and hopefully we will be the group pioneering them but currently because of money laundering requirements and the complexity of mortgages a mortgage online is not possible, at least in the sense described above.

What is the closest thing to mortgages online? At the moment sending in documentation and then talking to a human at some point is the nearest working solution. In an ideal world you could automate almost …

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100% Mortgages, how to get a 100% mortgage

100% Mortgages became quite popular in Ireland recently and up until the credit crunch they were proving to be the answer for many young buyers, the reason for requiring a 100% mortgage is normally because a person has been renting and paying off college debt etc. and for that reason they were not able to save up a deposit of 8-10% or more. Given that Irish property prices (at least in Dublin) were – and still are – above c. €350,000 it means you would have to save up the guts of €35,000, no easy feat even if you didn’t have college debt and lived at home.

The issue currently though is that the Irish property market is in a declining phase, so lenders have pulled back for the most part from 100% mortgages for the simple reason that they could be in a situation of inverse equity. When you get a mortgage normally you have at least some stake in the transaction, a down-payment or deposit and that portion ensures that you are committed to the transaction, call it …

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New Iranian Oil bourse, it might just get them bombed.

When it comes to Uncle Sam and oil you simply don’t mess around. I don’t mean that in a frivolous way either, playing about with Oil supply will get you invaded, it has happened before (both Gulf Wars) and can/will happen again.

Iran’s leader Mahmoud Ahmadinejad might not be your favourite leader, and he does some of the disgraceful things that are a hallmark of some Middle Eastern politicians, such as claiming there was no holocaust. Perhaps for them ‘holocaust’ is subjective given that there is one happening in Iraq today and nobody is talking about it any more than the SS did back in the 1940’s, the only saving grace at the moment is that it is not a state sponsored exercise. Anyways, Ahmadinejad might not be to your liking but he is the legally elected President and the leader of Persia, thus far his wild comments and defiant stance when it comes to things like nuclear power have brought about international pressure but the thing that might make his country the final resting place of many bombs is …

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Chinese Property and US Manufacturing, what does it mean for 2008?

There are times when you get caught by surprise, there are times when you get dazzled by the headlights but you know something is coming then there are times when you see the smoke signals in the distance and there is plenty of advance warning. Chinese REITS are of the latter ilk. In fact the whole Chinese Stock Market at 37 times earnings seems to represent a giant bubble.

The acronym BRIC (Brazil, Russia, India, China) has been the road to profit for many investment managers but this all looks set to change. The growth in developing markets has attracted speculative money, and lots of it, China would be the most extreme example of this, their largest companies are now ranked in the top ten in the world (by market capitalization), as far as I am currently concerned now is the time to pull out.

Since the beginning of November Hong Kong property stocks have fallen 40% mostly in the area of REIT’s.

[REIT’s: This stands for ‘Real Estate Investment Trust’, this is an investment vehicle that is used for …

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Vice Funds, because hard markets are thirsty work

Vice funds: These are funds that invest in Alcohol, Tobacco, Arms/Military supplies, and Gambling. Basically they go for everything that isn’t green, socially responsible, or beneficial to mankind, and much to my personal chagrin it seems to work. (the first one I looked at has done over 21% on average for the last five years)

In an environment where stocks and property are going haywire the stocks in these markets seem to be performing quite strong. Reutersrecently did an article about art and wine, and how the recent world market events have left them relatively untouched (in the sense of a negative impact), infact wine funds are one of the things that are experiencing a growth phase during all of this. Maybe its true, when there are hard times we all turn to drink. Certainly the shareprice in Diageo made gains in the last month (although it did fall 1.3% this week).

During the great depression people still found the money to drink (to what I recall the popular whiskey …

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Stagflation 2008, what’s the good thing about recessions?

2008 looks like a year where we will (we being the EU, USA, and likely Asia) will face a recession, in America the fears are even a little bit more as they might suffer from Stagflation which is the mean-eyed just got out of prison older brother of recession.

Stagflation [just to be clear] is where you have the decreased or negative GDP in an inflationary environment. This could happen in the US because currently the GDP there is reducing, America is not really a manufacturing nation any more, so it relys on services and consumer spending, actually about 2/3’s of the US economy is based on consumer spending. So picture that fact, and then picture a world where the Dollar to Euro is at $1.50 and oil is at $100+.

That means that anything imported is much more expensive, so people will not continue spending at the same rate. Then to exacerbate that situation you have expensive gasoline and a country where car engines are only getting bigger, whether or not people can no longer afford to drive to …

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Stagflation 2008, what's the good thing about recessions?

2008 looks like a year where we will (we being the EU, USA, and likely Asia) will face a recession, in America the fears are even a little bit more as they might suffer from Stagflation which is the mean-eyed just got out of prison older brother of recession.

Stagflation [just to be clear] is where you have the decreased or negative GDP in an inflationary environment. This could happen in the US because currently the GDP there is reducing, America is not really a manufacturing nation any more, so it relys on services and consumer spending, actually about 2/3’s of the US economy is based on consumer spending. So picture that fact, and then picture a world where the Dollar to Euro is at $1.50 and oil is at $100+.

That means that anything imported is much more expensive, so people will not continue spending at the same rate. Then to exacerbate that situation you have expensive gasoline and a country where car engines are only getting bigger, whether or not people can no longer afford to drive to …

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First Time Buyers – What you need to know

If you are considering your first home then you should do a lot of research because today’s market is a tricky one, there is value to be found in 2008 if you look for it and know how to negotiate, however, for the naive it can also be fast method to part ways with your hard earned money.

Some developers are currently knocking up to €100,000 off the price of properties they are selling, this has gotten a lot of media attention, however it also begs the question ‘why?’, are we to believe that they suddenly want to help out first time buyers? Or are they trying to shift stock that they think won’t sell otherwise? The real question is whether properties were vastly over-priced and the prices reflected pure greed or is the developer being forced to sell due to financial reasons or what the underlying cause for something so drastic is.

If somebody offered me an iPod for €50 I’m not sure I’d be interested, I guess I’m a natural born skeptic. I’m not implying that houses with …

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Debt Consolidation

Debt consolidation is a popular term in the mortgage market and what it involves is taking out one large loan to pay of other smaller ones, in the mortgage business this normally means tapping into the equity of your home in order to do so. The equity of your home becomes the security for the loan, and this means that you may get a lower interest rate however there are also inherent drawbacks to this.

If you take out a loan in the form of a mortgage and it is secured against your home then in essence you are putting your home on the line, if you were mortgage free and bought a car for €80,000 putting your home as security for a loan in order to get the car then if you could not pay you could potentially have to foreclose on your home. Typically you would sell the car but this is just to give an example of the risk.

Sometimes debt consolidation makes perfect sense, for instance if you have several loans (especially if they are at …

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