Mortgage Switching is More Common than Central Bank States

Competition between mortgage providers has increased dramatically over the past couple of years. People are switching more frequently than every before trying to find the best mortgage rate for themselves. Over the last three years, the percentage of mortgage holders prepared to switch providers has doubled according to a banking sector report. Additionally, these figures are higher than what the official figures from the Central Bank are. Also, the Irish Banking & Payments Federation (IBPF) marks the rate of switching at over 15% which compares to the slightly more than 1% rate that the Central Bank has pit forward.

The federation suggests that the much lower calculations from the Central Bank could have a negative effect on how willing consumers are to search around for value. The IBPF notes the difference in numbers is caused by the Central Bank using the number of mortgages being switched as a percentage of total outstanding private dwelling house credit. IBPF stated, “This gives rise to a figure of less than 1 per cent for the current level of mortgage-switching activity” and “Crucially, this …

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Inflation Rates Return to Normal

 

The current housing prices in Dublin have been talked about extensively recently. The newest trend shows that housing prices have reached peak affordability and now some of the wealthy classes of people are having trouble affording homes. Current house prices in Dublin are more than nine times the average salary making them unattainable for the majority of people because mortgages can only be 3.5 times your salary. Additionally, these numbers have not been seen since the Celtic Tiger Era, however, the central bank has been more careful this time and increased borrowing rules unlike during the Celtic Tiger Era. Prices are now beginning to slow down because simply nobody is able to afford them.

Inflation has also cooled off recently with a decrease from 12.4% last May to 2.8% a year later. Dublin has seen a significantly smaller inflation rate with an increase of prices from the current year to May of .6%.

The region of Dublin had the highest median price of 366,000 Euros which is just over 9 times more than its average salary of 40,000 Euros. …

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Institutional Investors not to Blame

Institutional investors have commonly been credited with causing the rise in property prices. However, stockbroker Davy, claims otherwise and says they are not to blame. The report by Davy credits the inflation in house prices to be caused by the Bank of Ireland’s strict mortgage-lending rules. The pressure on the housing market has caused many people to become interested in the rental market causing pressure there too and a 7% rise in rentals.

Institutional investment has been rising exponentially in Ireland. It has grown in sales to a total of 1.1 billion Euros in 2018 up 200 million Euros from the previous year. These figures may seem high, but only account for 30% of total property investments in 2018 and do not have a big enough impact on the market to make a tremendous impact. Additionally, most of those investment occurred in Dublin where the top 25 transactions account for 2,370 units worth 954 million Euros in 2018.

Davy analyst Conall Mac Coille commented, “People have, however, confused the chicken with the egg,” and “Institutional investors have been attracted here …

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MyHome.ie Report Broken Down

Dublin’s housing market is showing a trend that has not been seen since 2013 and is not consistent with the rest of Ireland. MyHome.ie concluded that the annual asking price inflation has declined 2.4% nationally in the 2nd quarter of 2019. The annual asking price inflation is at its lowest level in five years. When solely concentrating on Dublin, they fell .6 % which marked the first time Dublin has been negative since 2013 with respect to asking price inflation. Asking prices are continually growing, but at smaller rates than historically. Nationally asking prices increase by 2.1% in the 2nd quarter this year. Dublin’s asking prices grew slimly at .5% which marks the weakest 2nd quarter gain since 2013.

The report also found that the median asking prices for new sales grew by 5,000 euros to 276,000 euros and Dublin grew by 2,000 to 382,000 euros. Experts use newly-listed properties as a reliable indicator into predicting future price movements. Conall MacCoille who authored the report and is the chief economist at Davy, commented on falling prices causing much fear towards …

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Central Bank warns of a financial stability threat due to cuckoo funds

Cuckoo funds or offshore venture funds in Ireland’s commercial property is causing apartments to be bought up by the big businesses that make up the cuckoo funds. The increasing dominance of offshore investment in Irish commercial property is causing risks that they will also import a boom bust cycle. According to research from the Central Bank, the threat is also that house prices will fall and the banks will be weakened.

Warnings have been definably seen as two of the biggest property investors in recent years look to sell a large portion of their office blocks. The Central Bank continues to explain that foreign financed funds are more vulnerable to negative shocks outside of Ireland. In other words, foreign investors are not as concerned with the Irish economy as they are concerned with the general economy and their investments. Foreign investors are not concerned with the health of the Irish economy and could potentially get rid of all Irish assets to pursue easy profits elsewhere.

Although there is high risk associated with cuckoo funds and foreign investors, these investments are …

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Central Bank seeks additional data

The Central Bank is keen on collecting data on its users, especially when they are looking to take out a larger loan in the future. The Central Credit Register, established in 2013, has been a beneficial tool for both parties in obtaining and storing financial information.

This tool is “a new secure system for collecting personal and credit information on loans of €500 or more” according to their website. All of the data that the bank uses to calculate your credit score is reported by people or institutions that are currently lending you funds on a monthly basis.

These reports are on a multitude of information, which include credit cards, overdrafts, different kinds of loans, and mortgages. This information is all pulled together to identify you as a possible consumer and give lenders a look at your reliability before making any offers. You can access this score in the form of a credit report by request.

As of 30 June, 2019 the Central Credit Register will begin to expand their requirements to include personal contract plans (PCP), hire …

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Late loan payments continue to rise

The Central Bank of Ireland reports that the total amount of mortgages that are now classified as long-term arrears have hit record highs, topping the charts at almost 6 billion euro. There are many types of properties that can and have become part of this number, but the largest group tends to be that of more residential properties.

In the previous quarter, mortgages in arrears were down significantly. Sadly, the largest category in mortgages in arrears, residential properties that are two years or above in late payments, is still increasing. The buy-to-let sector has been the largest subcategory of residential properties in arrears; 17.62% of the total is in arrears.

In April 2019, only 118 of all applications of mortgages for buy-to-let properties were approved while in April 2018 154 mortgages were approved. There was a 30% decrease within the same months separated by only one year, according to the Banking and Payments Federation Ireland (BPFI).

This huge scale down may be due to Brexit, or perhaps the seeming unreliability of buy-to-let properties ability to bring in …

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Credit union caps

The change in the economic climate of Ireland in the last few months has caused many money lending institutions to change their policies. Credit unions are among the most common to change, with the current amount totaling 36 unions all across the state.

The largest adjustment to these businesses are focused around savings accounts of current members. People who are utilizing these saving tools are now being asked to keep their savings below a certain amount.

Some of the caps imposed on these deposit accounts range from €15,000 to €40,000, causing major problems for many of the current users. If an account is above the cap amount, the account owner is required to find an alternative place to store these additional funds in less than a month.

One of the largest draws towards credit unions for people is the ability to get higher interest rates on savings and lower interest rates on loans. High interest rates can be very beneficial on savings but without a significant amount of funds able to be held in an account you …

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Bank Refusal to Loan to First Time Buyers

Current issues with mortgage regulations are preventing many first time buyers who qualify for many exemptions from the harsh Central Bank mortgage rules. Data form Central Bank shows that only 17% of mortgages issued last year included mortgage exemptions. Lenders are entitled to issue exemptions for 20% of the value of the loans they issue to first time buyers. This gap in issuance of exemptions has left first time buyers are left desperate and frustrated by the difficult restrictions placed qualifying for mortgage exemptions. Exemptions are needed but people are not receiving them because of the scope for banks to lend more.

The requirements to qualify for the exemptions are extremely complex. This complexity of the rules of exemption is the reason why banks are unable to understand how many exemptions can be used, which in turn makes banks reluctant to approve exemptions. Qualifying for exemptions allow a minority of higher earning home buyers to borrow more than is allowed.

According to the Independent, it is estimated that banks have only issued income exemptions to 11% of first time …

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RTE Today with Sean O’Rourke has Irish Mortgage Brokers discussing cash buyers

The Today Show with Sean O’Rourke had us on to discuss an article written by Charlie Weston in the Indpendent about the strong level of cash buyers in the Irish property market. Marie Sherlock from Siptu the trade union was also on, what followed was a robust conversation where there was some interesting debate but also a lot of agreement on the problems, symptoms and solutions to the ills of the Irish property market.

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