Mortgage lending gets tougher in Canada

The Canadian housing market has been growing rapidly in the past few years. Currently, many experts fear that home in cities like Toronto and Montreal are greatly overvalued, a reflection on the general instability in the Canadian economy. While Bank of Canada has yet to announce its well anticipated interest rate hike that will curb the rapidly rising house prices, lenders have already begun tightening lending rules and raising mortgage rates.

 

Early this month, major lenders Bank of Montreal, CIBC and Royal Bank of Canada have all raised rates on various types of fixed rate mortgages. Both Bank of Montreal and Royal Bank of Canada raised mortgage rates by 0.2% and rates at CIBC raised by 0.05%. The higher rates of lending is thought to precede Bank of Canada’s anticipated rate hike, which may come as soon as tomorrow.

 

Accompanying the higher mortgage rates is a series of other lending restrictions put in place by Canada’s banking regulator, The Office of the Superintendent of Financial Institutions …

Read More

Should there be a tax on hoarding land?

There is evidence for property owners hoarding land because there is an expectation for rising house prices in the future. However, this only contributes to the housing shortage crisis. If the budget for 2018 included such a tax for property owners who choose to hoard land, it will give a financial incentive to build on the land now.

Property taxes are supposed to reflect the market value on the properties but all the valuations have been halted leaving a lot of room for political unrest.

Increasing the property tax, according to John Fitzgerald from the Irish Times, will give the government extra proceeds to fund for housing. This will give incentive to better utilize properties and give extra cash to the government to help out with the housing shortage.

It will also allow people with homes help the …

Read More

Dublin puts blame on Airbnb… again

The new protocol is whatever the issue is blame it on Airbnb.

Airbnb is being blamed for causing the housing crisis in Dublin. Critics are saying that the up and coming ‘hip’ way to travel site is causing apartments and houses that would be long-term let into short-time let. The site apparently contributing to Ireland’s housing shortage by taking housing off the market.

Policymakers and businesses has started a trend worldwide of blaming this short-term rental site for economic and societal problems with little evidence to back it up, claims Mark Paul from the Irish Times.

Ireland is not the only blaming Airbnb, New York has hotels (Airbnb’s competition) lobbying politicians left and right. Italy accused Airbnb of turning the country into a theme park.

Such problems are linked to issues in Venice from Airbnb, supposedly. With landlords making more money in a week from travelers compared to long-term lets in a month; therefore, the landlords are increasingly turning their properties into Airbnb listings. Venice being such a small city, there is not many places to rent in the first …

Read More

Judging from cost of living pressures on living wages is wrong

Ibec has claimed that the living wage is not an accurate way to assess cost of living pressure and is a structurally wrong concept to begin with.

The living wage puts a lot of pressure onto the business. Whether the business’s are able to pay is not accounted for in the living wage. This was following the Living Wage technical group, who sets the living wage figure, increased it by 20 cents to €11.70 in Ireland for 2017.

The reason for the increase? It was accounting for the current housing shortage and the increased rent levels.

This is different than the minimum wage set at €9.25 and set by Government’s low pay commission.

The living wage was created in 2014 updated every July. It is ideally the set average wage for full-time employees to cover the minimum cost of living.

It is set by the Living Wage technical group. They consist of researchers and academics and directed by Vincentian Partnership for Social Justice.

It is priced by many factors which include: health insurance cost, food cost, Universal Social Charge weekly …

Read More

Millennials are less likely to move more than other generations

The millennial generation in America have been moving less frequently than before. 11.2 percent of Americans moved homes from 2015 to 2016 which is the lowest since the start of the Census in 1948. Before 1985, more than 20 percent of Americans were moving in a year but the rate has been declining since then.

Richard Fry of Pew Research Center believes one of the factors for the lower moving rate for millennials is the difficulty of owning a home. After the housing bubble burst of 2008 the stricter lending regulations combined with high student debt can make it difficult to obtain a loan to buy a house. Buying a house is another reason people would want to move.

Richard Fry also thinks it’s because of the relative immobility of millennials. 25-35 year olds are moving slower than people of the same age for the past 50 years. This is surprising considering they have lower …

Read More

Mortgage update on the UK: First-time buyers average deposit is rising

In the UK, the average price for their first-home has hit a record high at £207,693. As well as nearly half of all buyers of homes are first-time buyers. Within the first six months of 2017, the number of first-time buyers are at 162,704. This is only 15 percent below the peak of 2006.

On average £33,000 are needed for deposits for first-time buyers.

London we see even worse housing increases at an average deposit for first-time buyers at £106,577.

Northern Ireland is hitting the lowest spot at an average of £16,457 of deposits, Wales at £17,193, and Scotland £21,565.

Like our Help-to-Buy scheme in Ireland with tax rebates of up to 20,000 euro, the UK has a program similar. Their Help-to-Buy scheme with the low mortgage rates gave first-time buyers a push to buy. That could …

Read More

Bank of England raises counter-cyclical capital buffer to 0.5%

Bank of England announced to lenders that it is raising the country’s counter-cyclical capital buffer from 0 to 0.5% to mitigate pressures from increasing consumer credit. The counter-cyclical capital buffer is a requirement on all banks, lenders and investment firms to keep a certain level of capital when credit growth is excessive. To a certain extent, this buffer is able to insulate banks from the cyclical growth and downturns of the economy. Bank of England’s decision reflects its interests in slowing down credit and lending in the British economy.

 

By raising the counter-cyclical capital buffer to 0.5%, British banks must increase their held capital by over £11.4 billion over the next 18 months. The Bank of England also has the intentions of further increasing the buffer by 0.5% to 1% by the end of 2017 to combat increases in consumer credit and lending. The counter-cyclical buffer has only been used once in the UK, but was quickly revoked due to stagnate economy conditions during the immediate aftermath of Brexit.

 

Bank of England’s Financial Policy Committee warned that there …

Read More

Pepper Group may be bought out

A financial services company from Australia has received €436 million offer to takeover from KKR, a New York private equity firm.

 

It is not KKR’s first time entering the Irish market. Pairing up with the Ireland Strategic Investment Fund they set up a €500 million fund to finance the residential property development.

 

KKR bought Avoca Capital back in 2014, a credit investment manager in Europe located in Dublin, that was managing €7.05 billion of assets at the time.

 

Now they are looking at taking over the Pepper Group. Pepper entered the Irish financial services market about 5 years ago by buying GE’s Capital’s Irish mortgages.

Pepper has spread throughout Ireland ever since they bought around €600 million of subprime mortgages during the height of the financial crisis. Buying them at 40c on the euro which was backed by Goldman Sachs, a Wall Street …

Read More

Housing Prices push up living wage

The Living Wage Technical Group, an organization that annually calculates the wage required to support an acceptable standard of living in Ireland, recently published it’s 2017 report, listing the living wage as €11.70 an hour. This new rate is €0.20 higher than the previous rate and €2.45 higher than the actual minimum wage in Ireland.

 

The Living Wage Group defines the living wage as a rate that “provides employees with sufficient income to achieve an agreed acceptable minimum standard of living”. It is calculated to account for the price of various necessities such as clothing, food, housing, healthcare, and education. Out of these factors, many experts have attributed rising housing prices as the main reasons behind the need for higher wages.

 

In its 2017 report, the Living Wage Group supported this reasoning and published that “the current housing crisis, and associated increases in rent levels, has been the main driver of the increased wage rate”. The average house price in Ireland has risen 11.2% over the past year, with areas such as Dublin seeing even greater increases in …

Read More

Switching your mortgage can benefit you in the long run

Switching your mortgage can be a hassle but is it worth it?

Yes. Switching your mortgage can save you tens of thousands, it soon may be less of a hassle as well.

The Competition & Consumer Protection Commission (CCPC) is realizing the benefits of switching and are looking of ways to take the hassle off the consumer. They currently are researching on how to make the process easier. They are taking focus groups from Dublin, Cork and Galway currently.

Of the research, the main drawbacks to people who switched were the amounts of paperwork, complicated, and too much time. Of those 35 percent estimated it took between one to two months while 24 percent said it took longer than two months. The CCPC proposed to start e-conveyancing with the Legal Services Regulatory Authority. It also proposed a start of automated switching process with the CBI and …

Read More