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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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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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 Primetime featurs Irish Mortgage Brokers

We were asked to take part in an interview on Primetime about house prices and whether or not they were starting to show signs of falling. Our view is that they will fall in time (probably in a damaging way) but that it won’t be soon because supply is still above demand and price indicators like rents are still rising. This is damaging for first time buyers and those stuck paying high rents.

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Is the Housing Gap Increasing?

With an attempt to lift the housing market out of the current crisis it’s in, the Irish government is left to answer one very important question. Is the Help to Buy scheme even helping?

Or…is it worsening the gap of the home hunters who are looking for the ability to buy?

As what is already well known, house prices are soaring. Without the supply of housing increasing at any fast rate, this will continue to be the case.

Therefore, home prices are continuing to rise, much faster than incomes are rising, and the gap between available homes and affordable homes is continuing to worsen.

When looking at reports from CSO, the average wage in Ireland is €45,075 for a full-time employee. That number is, however, much lower as a median, where most of the working class clusters. The median is found at €28,500. A drastic difference and even more of a surprise when finding that, that means, nearly half the population is below that number.

This is where the Help to Buy scheme comes into play.

Introduced just earlier this …

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When Vulture Funds Buy Mortgages

As vulture funds have been seen as taking over the market, the next question is, what do we do next? What happens after a vulture fund takes over your mortgage?

These funds first entered the Irish market at the end of the financial crisis and since, have remained a consistent factor in the mortgage game. Though many years have now passed since they were first introduced, there is still much uncertainty that remains with what exactly these funds are.

Vulture funds essentially entail the many forms of private equity firms and pension funds that exist with the goal of investing across many asset classes such as debt. Debt often acting in the form of mortgage arrears.

The question many are wondering is why? Why are these vulture funds deciding to buy the mortgages that are in arrears?

Due to post-financial crisis events, there was an extremely high number of mortgages that were in arrears as a direct effect, and many that will be in long-term arrears as well.

Because banks are generally not willing to write down any debt of …

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Intriguing Statistics of First-Time Buyers

Perfect Property has recently found success in finding the common budget of the average house hunter in Dublin.

While in such a crisis, this is information that has been found is essentially vital in understanding a piece to the puzzle of what keeps buyers from buying.

Of course, there are statistics on the shortage of homes compared to the increasing demand, a factor into understanding the crisis that is just as vital.

According to Perfect Property, a relatively new search engine, the average Dublin house hunter has a budget of €315,000 to purchase a home with.

A pretty substantial budget for any home buyer, however, we are still observing a vast amount of first-time buyers applying for the new state mortgage scheme, introduced just a few months prior.

A scheme that was expected to cover nearly 1,000 loans and last for an extended period of time is now lucky if it lasts the full year.

Of course, when looking in the Dublin area it can be expected that the budget for a home will …

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Borrowers Looking to Lower Existing Mortgages

Now, more than ever, it’s time that homeowners do whatever they can to lower their mortgages.

With the rise in European interest rates, it is expected that higher mortgages bills will be quick to follow.

Homeowners are beginning to get more and more comfortable as economic recovery since the recession has been tracked as going in such a positive way.

By overpaying on a mortgage the borrower will knock tens of thousands off of their mortgage easily. And they would dramatically cut back on the time it takes to finally become mortgage free.

According to Dowling financial, by an increase of 100 euro per monthly payment, the average mortgage would be paid off three years earlier and save nearly 12,826 euro in interest.

A small increase in payments leads to quite a substantial savings. Probably an effort worth it to most borrowers.

Those that should keep their guard up and remain mindful are those with a fixed rate mortgage.

Overpaying on fixed-rate mortgages could cause borrowers to be hit with an early redemption fee. A charge that could potentially be …

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Affordable Home Schemes

With the current housing crisis in the midst of the country, many plans have been developed to get the country out of its current slump. Some merely get laughed at, while others are well on their way to implementation within the housing market. It is likely that before long these effects will take a toll in the market and we will begin to see some upward movement in home buyer confidence.

The government has been quick to release multiple initiatives set out with the goal to turn the crisis around and allow the market to begin looking up. The Home Loan Scheme recently announced by the government is designed with the strategic plan to provide low-cost mortgages to first time home buyers.

With the first announcement of such a plan, many home buyers are thinking; is this too good to be true? As they have been waiting for an extended period of time for some light to be shed on the crisis that allows them to finally move into the homeowner sector.

The Rebuilding Ireland Home Loan …

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The Mortgage Rate War

Good news is underway for those looking to enter the housing market, but find borrowing rates to be making it too expensive.

There’s a mortgage rate war.

Though this term sounds less than appealing, it is a war in favor of getting lower rates to borrowers and moving more first time buyers into the housing market.

As discussed in a previous posting, Ulster bank recently announced dramatic cuts in their variable and fixed mortgage rates.

The question racking everyone’s brain after such an announcement was, will other banks fall in line to stay competitive in the market?

Ulster caused increased competition in the market and even more so, posed a threat to the other banks.

These other banks were beginning to notice that in order to stay competitive they only had one choice…

To get to Ulster Bank levels or face the result that they may lose all new entrants into the market as well as some of the old.

Shortly after the announcement of Ulster Bank to reduce their mortgage rates, followed KBC …

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