KBC launch a ‘quick approval’ process

For a while we have seen competition starting to heat up a little in the mortgage market. Several moves recently have started to demonstrate this further, Bank of Ireland have their ‘pay you to borrow from us’ campaign, KBC had a ‘pay you to switch’ along with rates that beat everybody else.

Now they (KBC) have launched a quick approval process which aims to cut down the time it takes to get approved which at it’s worst was taking up to four weeks with some banks. This is only for an approval in principle, which isn’t worth much (not like a loan offer is) but it is the first step in the mortgage process in terms of getting meaningful feedback from a lender.

They have a first time buyer 1yr fixed rate of 3.5%, short term fixed rates are where banks tend to go to attract business as the first year costs are what many buyers are fixated on rightly or wrongly.

There is one bank rumoured to be considering a return to brokerage, another who shut operations considering re-opening …

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KBC reactivate the switching market

There has been an absence of competition in the switching market for some time. AIB don’t even do them while others try to avoid switcher loans. PTsb have been in that space for some time but were largely unchallenged except by (to a lesser extent) Ulsterbank.

Which is why it’s nice to see KBC come out with a product for people who want to switch to them. Naturally the best prices are at low loan to values, these types of loans have obvious advantages to banks in terms of the condition of their loan book, but it’s good to see this as moderating credit conditions have to start somewhere.

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Don’t be late! Banks announcing cut off dates for mortgage cheques

Every year Santa brings a few unlucky kids some coal, the banks have a similar deal for people who are late with their paperwork and it’s called a ‘cut off date’.

This means that irrespective of what you do, you won’t be able to get a mortgage cheque if you submit paperwork after a certain date (we’ll list them as they come in). The problem for some people is that they might be reliant on closing in 2013 in order to get a legal property tax avoidance for owner occupiers so if you are going to try to draw down in December do yourself a favour and get everything sorted out ASAP.

And also remember, by ‘documents in’ that means ‘on the system’ and from the time a document arrives to when it gets scanned up can take a few days depending on the institution.

Cut off dates announced thus far:

BOI and ICS: Tuesday 17th

KBC: Friday 20th

(edit: 28/11/13 10:51am)

AIB/Haven: Monday 16th

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Lickety split-mortgages: are they really a solution? #splitfail

The calls for ‘more split mortgages’ are commonplace, what is often lacking is a deeper understanding of the flaws inherent. For instance, why was there any outcry at banks charging interest on the warehoused portion? Failure to do so is an effective write-down and cash flow loss.

That isn’t to say banks shouldn’t get both, but don’t dress it up in the flowery language of ‘split mortgages’, instead just say ‘we believe in write downs and cash flow losses’. Take an example where a bank doesn’t charge interest for 25 years on a €100,000 warehoused portion of a mortgage where a total of €300,000 is owed.

Assume a discount rate (we’ll side with ECB being able to do their job [mistake]) of 2%. The present value is = 1/(1+r)^n this is where ‘r’ is the rate and ‘n’ is the compounding periods. The reason for doing this is to give an idea of what the €100,000 would be worth in the future if there was no interest and inflation never went over 2%, the …

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What banking insiders think of what banks are going to do

We got a comment on our site from an ex-banker who heard a radio segment where we were talking about banks and repossessions. We got in touch and asked if we could post his comment as a stand alone entry, he agreed, his thoughts are very interesting and in part might help explain why we have repossession orders without repossessions, eye opening reading…

I listened to your piece on Newstalk this morning (19/08/2013) regarding ‘strategic defaulters’ and I just wanted to congratulate you for highlighting the reality of this issue.

I worked for the former *closed bank* for over 17 years and for a two year period I was it’s Mortgage (Residential) Administration Manager. Although I’m out of banking now I still help former clients with negotiations with various banks.

My experience over the past couple of years, and especially this year, in ‘dealing’ with the banks, foreign and domestic, has exposed some incredibly unethical and unfair practices and on the whole I fear …

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Spin me right round’ – some thoughts on IBF data

In statistics there are two key components, the first is the actual ‘data’ the second is the ‘inference’ or what the data actually means. If you saw that one summer was hotter than the last by collecting daily average temperatures that would have statistical significance, if on the other other hand you saw that July was 56% hotter than January then you’d be stating the obvious and your ‘inference’ would be laughable.

That we can see this when it comes to meteorology is obvious, and almost nobody would take such news as having any significance, but when it happens in finance it can go unchecked although Eamon Quinn at the Wall Street Journal caught the IBF out on their release which is about mortgage lending being ‘56% up this quarter’.

Here’s the actual quote they lead with ‘The latest figures from the IBF/PwC Mortgage Market Profile, published today, show that the number of new mortgages issued in Q2 2013 has increased by 56.1% on the previous quarter.’ And it …

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Talking with a strategic defaulter…

That strategic defaulters do or don’t is just a sideshow about quantifying their numbers, for several years we have been dealing with them on the advisory side of our company. Banks have large legal departments and teams chasing borrowers, and in turn the borrowers will from time to time hire their own professionals as a counterweight to the process, what you are about to read isn’t intended as justification, ethical reasoning or anything else, it’s just an insight into the thoughts of a strategic defaulter, why they did it and what has happened so far.

The person in question is a white collar professional and the director of a relatively well known company, she agreed to speak to us on the basis that we kept her identity private. She has a family home and six investment properties.

Karl: Did you make a concious decision to default on your loans? If so why?

Yes, because the bank were insisting I go on interest and capital repayments on the investment properties and the figures just wouldn’t add up so I chose to …

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