Bank of Scotland cut back on LTV's

Bank of Scotland recently announced that no longer will support an applicant seeking to borrow 90% for a newly constructed, or second hand property.

In view of the new homes gathering market clearing pace, I feel Bank of Scotland have been a little short sighted here. This profile of the property market accounts for a huge amount of business, especially with builders seeking to offload newly built properties at knock down prices. I don’t think I am being short sighted when I predict fervent activity over the coming months with many first time buyers eyeing dropping prices as an economical godsend, match that with a low rate environment and it gives mobility, choice, and all of this at a price that won’t break the bank.

Paying € 1,100 / € 1,200 for a 2 bed city centre apartment makes sense for people who don’t wish to live with their parents. If we move this on a step further, it makes even more sense to buy. With very low lending rates, you …

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Bank of Scotland cut back on LTV’s

Bank of Scotland recently announced that no longer will support an applicant seeking to borrow 90% for a newly constructed, or second hand property.

In view of the new homes gathering market clearing pace, I feel Bank of Scotland have been a little short sighted here. This profile of the property market accounts for a huge amount of business, especially with builders seeking to offload newly built properties at knock down prices. I don’t think I am being short sighted when I predict fervent activity over the coming months with many first time buyers eyeing dropping prices as an economical godsend, match that with a low rate environment and it gives mobility, choice, and all of this at a price that won’t break the bank.

Paying € 1,100 / € 1,200 for a 2 bed city centre apartment makes sense for people who don’t wish to live with their parents. If we move this on a step further, it makes even more sense to buy. With very low lending rates, you …

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Recapitalised banks ‘cherry picking’ applications.

The only banks that are truly ‘open for business’ are those that have received state funding, and this is on both sides of the book.

On the deposit side Anglo are paying market leading rates, they are now fully nationalised, and because their new owners have the deepest pockets the ‘better banks’ who didn’t need a state sponsored bailout cannot compete.

On the lending front only two banks are actively engaged in lending at somewhat regular levels, and they too were saved by the taxpayer (because that is where the state get their money from). However, rather than being the ‘saviours’ of the banking sector they are merely taking the best of applications and opting for the cream of the crop, any ‘increase’ in lending is as much down to artificially low margins on rates (state sponsored), and gaining customers that would have gone elsewhere in an operational market (because if every other bank is unable to obtain state funding to lend with then they have to lose customers to those that did …

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Recapitalised banks 'cherry picking' applications.

The only banks that are truly ‘open for business’ are those that have received state funding, and this is on both sides of the book.

On the deposit side Anglo are paying market leading rates, they are now fully nationalised, and because their new owners have the deepest pockets the ‘better banks’ who didn’t need a state sponsored bailout cannot compete.

On the lending front only two banks are actively engaged in lending at somewhat regular levels, and they too were saved by the taxpayer (because that is where the state get their money from). However, rather than being the ‘saviours’ of the banking sector they are merely taking the best of applications and opting for the cream of the crop, any ‘increase’ in lending is as much down to artificially low margins on rates (state sponsored), and gaining customers that would have gone elsewhere in an operational market (because if every other bank is unable to obtain state funding to lend with then they have to lose customers to those that did …

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Generic overview of the market 2009: by sector

I was asked by a colleague in the UK to provide an overview of the Irish mortgage market, he has often advised the Bank of England in the past on the UK buy to let market, however this time it is in relation to a talk he was due to give to an international financial services group on the Irish economy. Below are the contents of my correspondence which is a no holds barred view of the mortgage market in 2009.

Remortgage: This area is finally starting to see some life again, the rate drops are filtering through and many of the people on fixed rates taken out in 2005/2006/2007  are shopping around, as always new business attracts better rates than existing customers so there is once again an argument for switching.

However, the many people who took out trackers are basically out of the market in the long term as every single lender has removed tracker mortgages from the market, in fact, if you know of a lender willing …

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Approval in Principle, the flaws.

Our firm [and I am sure many brokerage firms] are witnessing a conundrum in the market which is causing both clients and the broker a huge amount of heartache. It is that of the ‘AIP’ or ‘Approval In Principle’ not being honoured by banks over short periods of time. One lender in particular [we can’t name names] is doing that on so many cases that we no longer consider their approvals as holding any relevance.

What is an approval in principle (A.I.P. is the broker-speak we use to describe them)? It generally means that you have given a bank enough information to make a strong [and yet preliminary] decision on a case, sometimes it is subject to further documentation, or they want to get a valuation report before making a full offer, in any case an AIP is NOT a loan offer but it is as strong an indication as one can get without dealing with solicitors, in the past an AIP was honoured almost exclusively and they were seen as fundamental to …

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Survival of the weakest, only in Ireland.

If the State can’t organise a bailout effectively then what hope have they of running a bank? A simple and yet profound question: if the bankers who run banks for a living (many having survived the 70’s and 80’s) can’t find the answers then what hope have the state who have no track record in doing so?

This is not a simple situation, banks that survived the Great Depression have crashed and burned, given this, is it vital to save every bank? Is a bank going to make it even with a slush fund? Thus far I remain unconvinced.

Anglo Irish Bank was set to get a bailout to the tune of 1.5 billion Euro. This couldn’t be arranged in time to save the bank and they have been nationalised, the speed of their fall from grace tells us at least some basic facts:

Anglo were not the strongest bank in the bunch, I won’t get into balance sheets, loans, impairments or anything else, the mere fact that they fell first …

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Best mortgage interest rates for first time buyers

The current market is heavily weighted in favour of the buyer and for that reason we have seen more first time buyers interested in finding out how much they may qualify for, albeit that they may not plan to buy any time soon, many people still seem to be holding out for the ‘market bottom’, and naturally we don’t know when that time is, will be, or was (because it could have been last week, only time will tell), it is only with hindsight that the actual bottom can ever be accurately identified.

Another reason is that there are expected rate cuts coming, the next will be delivered at the 4th of December meeting of the ECB next Thursday. Many potential buyers are thus going to wait to see what kind of drop is delivered, if Trichet indicates that another may be in the pipeline it will have a strange effect of causing the inverse of what monetary policy is intended for.

The question we are getting recently is ‘what …

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