Irish Times article by John McCartney, Lorcan Sirr & Karl Deeter

The Irish Times carried an article by John McCartney (Savills), Lorcan Sirr (DIT Bolton St) and Karl Deeter (Irish Mortgage Brokers) about the issues surrounding a shift away from a home ownership model.

Our point isn’t that there is a definitive ‘right or wrong’ way to provide housing, obviously our market has massive issues at present, but the larger question is the long run effects and how a lack of household savings can turn a property crisis into a pension crisis of sorts.

That is why we need to find new solutions for more than just housing.

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Sunday Independent: Irish Mortgage Brokers mentioned in housing article

We were happy to see that our concern about social engineering was mentioned in an article in the Sunday Independent by Brendan O’Connor, the quote is below.

Or does the Central Bank think it’s desirable? And why has the Central Bank taken it upon itself to decide that Irish people should move to renting property rather than buying their own house? Mortgage broker Karl Deeter has suggested the Central Bank is indulging in social engineering. What other shifts in how we live would the Central Bank like to introduce you wonder. Perhaps a one-child policy?

The issue of social engineering was first raised by us in the consultation process when it began in 2014, specifically we said this was a concern in the following two quotes taken from our submission:

This policy will ensure that many people fall prey to a policy that in protecting banks hurts their future wealth. We are, and will remain, strongly opposed to measures that have societal engineering outcomes such as this.

And later we also said that

For people who don’t have rich parents …

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Newstalk have Irish Mortgage Brokers on to discuss Central Bank rules

We were speaking on Newstalk about Central Bank rules and the impact they are having on different parts of the market. Some of the notable moments are mentioned below:

Karl Deeter of Irish Mortgage Brokers & Advisors.ie noted that high mortgage deposits are forcing people to stay in rented accommodation and fueling the housing shortage.

Deeter said: “If you’ve got people who have to come up with an extra €20,000 and they’re looking to save that, they end up renting a house for much longer than they would have. But because of that what you’re seeing is that they’re staying in a certain sector where the supply isn’t coming on board.

“It’s driving up rents. That’s almost like an additional tax which makes savings harder. It doesn’t mean that house sales have stopped or the prices aren’t rising; they are but it’s just that people aren’t borrowing to do it”.

The full story is on the Newstalk website here.

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Newstalk: Pat Kenny talks to Karl Deeter & Tom Parlon, 7th March 2016

Pat Kenny had Karl Deeter from Irish Mortgage Brokers on his show in studio and Tom Parlon on to discuss the current state of play in the Irish property market and to analyse why there wasn’t more construction and what the issues were given that there is a shortage of homes in the capital.

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Bigger deposits equal less savings.

An often overlooked aspect of finance is that mortgages are actually a brand of savings, as perverse as that may sound, you have to consider what happens when you pay off a loan over time. The ‘interest’ is the part that pays for the right to use money from the future (which is what credit is, it’s moving money through time) in the here and now, the other part is a ‘capital’ repayment.

When you repay capital you are making a balance sheet gain (or for those into more up to date accounting speak, you make an improvement on your ‘statement of financial position’), even if prices stay static, over time you will eventually owe zero and that means you have a large asset which is the end result of this ‘savings’, albeit not in actual cash.

When you have a housing scarcity and rents are rising, this acts like a ‘tax’ on income, rent and mortgages are paid in after tax income, so the urge to buy when buying is cheaper and obtain a fixed outgoing (as you can …

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Newstalk: Pat Kenny talks to Irish Mortgage Brokers

Pat Kenny interviewed Karl Deeter about the Central Bank lending rules and why, in his view, they could have been done slightly differently and better. It’s an interesting insight into the difference between control-lead regulation and results-oriented regulation.

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Irish Times article featuring Irish Mortgage Brokers

Conor Pope from the Irish Times had an interesting article on lending restrictions and did a good piece on it in today’s paper. In the piece he quoted Karl Deeter from Irish Mortgage Brokers on his views about the effect of the Central Bank rules on the property market.

“Karl Deeter, a mortgage broker and keen observer of the property market, has written an extensive report on Dublin’s boom-and-bust cycles spanning 300 years. He is not one of the Central Bank’s cheerleaders, and he is unconvinced that the 2015 scheme deserves much credit.

“I don’t think the new rules have had any real impact on the house market despite how it might be characterised,” he says.

Deeter points to an International Monetary Fund study of six countries that introduced lending restrictions. The report indicated that the rules made little difference, he says.

“In the credit market the rules have caused a fair bit of chaos. But I think prices were going to slow down anyway. We are in the middle of a property cycle, and cycles …

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Irish Mortgage Brokers mentioned in the Independent

In an article by Sinead Ryan in the Independent we were quoted on several matters:

With all the talk of celebrating the Rising in 2016, it won’t extend to a rising mortgage market, says broker Karl Deeter. “The changes to lending criteria and in particular the Central Bank changes meant that while 90pc LTV (loan to value) mortgages were available, as the year progressed more banks started to withdraw them. Due to the way the figures are going to be reported in 2016 it will be a case of, ‘Want a 90pc mortgage? Get it in January or July’. And that’s because the half-year periods are going to be the times in which they are mostly available.”

One positive change, says Deeter, was that interest rates came down during the year, in particular fixed rates as banks came under pressure to explain Ireland’s excessive rates compared to those enjoyed by our EU neighbours. Although all banks rocked up at the Banking Inquiry, and most were (or tried their best to sound) contrite, the truth is that pillar Bank …

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A picture speaks 256,000 words

The Surveyors Journal did an excellent info-graphic on how much it costs to build a house (with no land cost factored in)

It’s fairly clear that costs are not as simple as ‘cheaper land’. That is only one part of the equation, the other parts are things like local authority costs, Part V, VAT, expected profits, all of which are not directly linked to prime costs of the materials and labour that creates the construction part of the home.

Worth looking at twice before wondering why housing is so damn expensive.

 

 

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The rich will prosper when the rules make sure they do.

We have been critics of the Central Bank mortgage lending caps, believing instead that a rule similar to section 149 of the Consumer Credit Act could be used on underwriting to ensure that banks can’t find any way to loosen standards rather than employing ‘hard caps’.

What’s more, it has kept many people out, caused a chaotic 4th quarter and ensures that well off people are unaffected while those most harmed are the less well off. Our submission to CP87 was ignored in its entirety but that doesn’t matter because the results speak for themselves.

Mortgage lending is still mainly going to first time buyers, 57% of draw-downs were to first time buyers, but then look at the income multiple and you see that this is nearly five times average earnings.

What does that mean? For a start, that people on high wages with high savings were doing a lot of the lending, of course that’s fine because it was always a case that they had access to credit.

The issue is more …

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