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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First time buyer steps explained

Being able to take out a mortgage has become a major hassle for all types of home buyers, but especially first time buyers. Recently, a 2018 study by the Central Bank reported that the best position to be in so that your request for a loan can be approved by one of the 7 largest lending banks is in a couple with a substantial down payment already available.

This is most likely the case because a couple can bring in two salaries, making a steady stream of income more reliable even if one person were to lose their job. Additionally, having a large down payment reduces risk for the lender. If you were to foreclose on a property, meaning you couldn’t afford to pay your mortgage anymore, there would be significantly less consequences on the lender side.

Although this is an ideal situation for approval, it is not the only solution. Plenty of first time buyers are individuals without extremely high credit scores and salaries, but there are a few key parts that must be fulfilled in order …

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Ireland affordability from a US student standpoint: Groceries

There are many noticeable aspects that differ significantly between the United States and Ireland. For me, one of the largest changes is that the value of every euro I have us significantly more than that of my US dollar.

When coming to Ireland, I used my local bank to exchange dollars for euros with the euro being 1.2 times more valuable than my crisp dollar bill. Although I was aware of this rate, it has continuously thrown me off as I go in and out of sandwich shops, Tesco’s and the occasional Spar.

When I walk into any of these places, I think only in terms of my euros in hand. I am amazed by the €4 sandwiches, the €1.5 salads, and in general much less expensive grocery prices. When getting my first installment of groceries, I was amazed by the €36 price. This is because I usually spend around $50 at the grocery store in the US in order to stock up with those same ingredients.

Although that seemed cheap, the extra $5 in conversion made the payment just …

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Child saving options

When it comes to opening a savings account, earlier is always better. Especially in Ireland, it can be extremely beneficial to start accounts for children at a young age. Personally, I believe that opening a savings account was a very influential step in the shaping of my financial views.

My first savings account was opened after my first communion, and I’m sure that many other irishmen have had this same experience. For me, this was a huge deal. The money I had gotten from such a special time in my life was now being used to finance my future.

As a child, it is easy to get lost in the concept of money, when you have cash or coins in your hand, it is far more valuable than any amount on a written check. Because of this child-like wonder, the actuality of the value of money is highly skewed.

By teaching your children early the power of independent saving and investing, they will be given the tools that enable them to continue down a more financially stable path …

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RTE 1: Claire Byrne Live features Irish Mortgage Brokers, 17th September 2018

We took part in a panel discussion about the ‘take back the city’ campaign. While we are in favour of solutions to housing shortages, taxing dereliction and land, we are not in favour of taking people’s property. This has to be balanced against why property rights were established in this country and we also questioned why they went after private property rather than the abundant and abandoned state owned property which includes council owned homes that are not being used.

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Alternative Reason for the Rise in Home Prices

As we track the Irish mortgage market, the soaring prices are blamed much on the shortage in supply alongside a growing demand.

The law of supply and demand dictate much of what happens in the economy and the many financial phenomena in which are seen.

This, being a large reason as to why the supply and demand law is being blamed for much of what is happening in the Irish housing market today.

To do an analysis on what actually caused the flawed market that there is today, it is important to study the market as it was in 2006. The market boom before the bust.

In 2006, home construction was at peak levels, with nearly 90,000 homes built. With a population of just around four million, that is an impressive number for home production to occur.

This, however, is where the law of supply and demand began to become of question.

As homes were on the rise and an increase in supply was seen, prices continued to rise as well. The opposite of what the supply and demand law …

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Irish Independent feature Irish Mortgage Brokers

We were asked for comment on housing recently by the Irish Independent and had this to say on social housing: Karl Deeter, of Irish Mortgage Brokers, suggests that sites be released for social and affordable housing schemes, or private homes, in return for equity. Developers would have little cause for complaint.

“On a vacant site (in Dublin city centre), you could build an eight-storey building with 75pc of the building rented at 20pc below market, and for the rest you have a guaranteed upward-only rent review of 2pc a year,” he says. “If we do it on a build to sell, or build to rent, we share the profits..

“We need to flood the land market. People want to talk about the law of the jungle, but you can’t be a lion, and when a rhino comes along you complain.

The general view in our opinion is that much of the malaise always comes back to the base element of housing which is land.

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Is a ten year fixed rate a good idea?

Recently KBC introduced a 10 year fixed rate, they are not the first back to have done this, in the past other banks had them but their prices were high, the difference today is that you can get a 10 year fixed rate mortgage for below 3% and that means it’s worth considering.

First of all, why would you want to fix for so long? Obviously the longevity of a guaranteed price in a world where rates are expected to rise over time makes it attractive. This has to be balanced against the likelihood of competitive forces driving down Irish mortgage rates. Currently there is upside down pricing where fixed rates are cheaper than variable rates, how long this will last is anybody’s guess.

What we can do is look at the yield curve in order to get an idea of when rates might go up. Looking at that curve today (the quote date is from the 22nd which is last Friday) we see that yields are still negative a full six years into the future.  What …

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Non-credit fuelled booms

There has been an ongoing narrative that the last housing boom (and many others) was only possible due to excessive credit. We have argued for a long time that this is a mistaken interpretation. While credit can make a bad situation worse, just like adding fuel to a flame, it is not the genesis of the problem.

We were pleased to see this view articulated by the Central Bank Governor Philip Lane recently. He stated that “cash buyers of property are limiting the ability of the Central Bank to control house prices through mortgage lending rules” he “singled out cash buyers as one of the key drivers of inflation in the Irish property market. Cash buyers used to account for about 25 per cent of house purchases in Ireland, but since the crash and ensuing credit crunch this figure has risen to 60 per cent“.

This is a point we have been making for years, firstly was that first time buyers are not, and have not been the problem. That was part of why we were specifically …

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