No credit? Try some dodgy tax incentives (they work)

The recent Central Bank report on a property market that has ‘overshot’ is front page news on the broadsheets. This phenomena has been well observed in other jurisdictions and the question now is whether we will be more ‘European’ in our property market or if we’ll turn Japanese.

A key issue pointed out consistently is the role of credit. Cheap credit is often cited as one of the drivers of the property bubble, an NBER paper suggests it is only a component of about 20% of prices. The absence of credit is equally being seen as a downward driver of prices.

One of my minor hobbies is the history of Irish banking from an operational perspective, and on rare occasions it offers a nugget of insight.

In the late 1970’s Irish banks were not involved in mortgages, and only a few years before that they were not involved in hire purchase, they didn’t …

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Zombie Banks acting like Zombies

I wrote a piece in today’s Irish Sun about our banks and that the state owned operations are showing a decided lack of inventiveness when it comes to helping existing borrowers.

This may be down to disincentives, issues with management or the Department of Finance, but suffice to say, it doesn’t make sense that non-state owned banks and foreign banks are innovating in potentially beneficial ways for their customers and the banks we paid to save are not.

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Are banks breaking rules by charging account fees?

“AIB will charge me for not having enough money in my account, apparently I can’t even afford to be broke.”

Regulation is a tricky area, it is a branch of law more than of finance and like law it is open to interpretation, precedent and individual cases.

So when I see Anne Fitzgerald of the NCA say that AIB is ‘breaking the rule that required it to act in the best interests of its customers’. I am concerned because it doesn’t present the context of the rule, rather it just makes a statement.

The actual rule being mentioned is Section 2.1 & 2.2 of the 2012 Consumer Protection Code. Chapter 2 in general covers consumer credit, payment services, and electronic money. The actual text of this section (2.1/2.2) is as follows:

“A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it that it (2.1)acts honestly, fairly and professionally in the best …

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RTE News: 1st March 2012, Allsop Space auction

At the auction last week we were asked if we thought that they were fundamentally a good or bad thing; the inclination (given the protests) may be that it’s selling houses out from under people.

Given that these are properties where the owners (virtually all of them were investment properties) cannot pay for them in the foreseeable future it can’t be forgotten that a speedy sale that reduces the build up of arrears and which sells a property where there are live buyers bidding against each other is probably the fairest way to do it.

Nobody likes the idea of anybody ‘losing’ their property (I can’t say ‘home’ because these were not family homes), but if they must then a fair and transparent solution is the best you can hope for.

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Standard Financial Statement or SFS – for people in mortgage arrears

If you go into arrears on your mortgage or you talk to your lender because you believe you are a ‘pre-arrears’ candidate then you will be asked to fill in a ‘Standard Financial Statement‘ or SFS which is part of the Mortgage Arrears Resolution Process (MARP) which started last year.

Engaging with the lender is a key tenet of this and filling in the SFS and liaising with the lender on aspects of it. The information in this is what will be used to negotiate the repayment that you will pay in cases where lifestyle adjustment does not allow you to make the full payment.

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Mortgage Market Trend Outlook 2012

We have made a few more bold predictions in our ‘Mortgage Market Trend Outlook 2012’ and reviewed how wrong many of our 2011 forecasts were as well.

Some of the main points thus far are:

1. That mortgage lending bottomed out in 2011. 2. That IBRC may take on some tracker loan portfolios to de-risk state owned banks (as the state already owns these loans entirely anyway). 3. That rates for existing AIB borrowers will have to go up but that for new borrowers rates may come down with changes to how prices are charged depending on risk of the proposed loan. 4. That deposit rates will start to drop. 5. That up to 25,000 mortgages will be deemed ‘unsustainable’ and that the ‘won’t pay’ contingent of arrears cases may be as high as 1 in 5.

We hope you enjoy this report, we in turn hope that we get some of the calls right!

Many thanks,

Irish Mortgage Brokers

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Best mortgage rates available, December 2011

This is the usual update of rates available at the moment. As you’ll notice, AIB is the leader in almost every section. However, they are not necessarily lending to every client hoping to obtain finance with them – to know if they’ll be the lender of choice you need to construct the application in a manner that will ensure it shows the best aspects of the case to them.

There are lots of other lenders out there too (we deal with the pillar banks and many others as well), so looking at ‘best rate’ is perhaps different than ‘best attainable rate’.

Anyway, here is the list, if you ever want mortgage advice give us a call! 016790990

Best variable rate mortgage: AIB 3.24% (with one for 2.84% < 50% LTV)

Best 1yr fixed rate mortgage: AIB 4.15%

Best 2yr fixed rate mortgage: PTsb 3.1% < 50% LTV, otherwise AIB 4.65%

Best 3yr fixed rate mortgage: AIB 4.88%

Best 5yr fixed rate mortgage: PTsb 3.7% < 50% LTV, otherwise its AIB 5.35%

Best 10yr fixed rate mortgage: n/A 12/2011

Oh, one …

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