PTsb compel clients to go for variable rates as fixed rates start at 7.25% (no joke)

We thought a client of ours was joking when they said they were being told that as an existing customer of PTsb on their mortgage that the only fixed rates they were getting offered were more than 7%.

It’s a standard residential loan rolling off a 1 year fixed rate, the ‘existing business rates’ (to you and me that’s ‘the loyal customer rates’) are so awful that we can think of no reason for why anybody would want to borrow from PTsb unless they never want fixed rates or need the cashback offer they have.

As a broker we obviously have to consider our past, present and future relationship with any lender, one way to sour that relationship is to take clients who are on a reasonable product and price and then strip them of choice (which is what a rate of over 7% effectively does) when the initial honeymoon is over.

For that reason we would remind people to consider their lender proposition very carefully and to get independent advice because when you go direct you’ll never get to …

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Independent.ie mention Irish Mortgage Brokers

We were mentioned in the Independent today in a story relating to the Central Bank, it hinged upon the fact that they had a ‘whistleblower’ line for people wanting to report financial wrongdoing and it wasn’t operating correctly which means they couldn’t take a call.

The story quoted us as follows: Compliance officer with Irish Mortgage Brokers Karl Deeter said it was not good enough that the whistleblower phone line was not being answered and emails not getting a response.

“Imagine if you called 999 to report a crime and no one answered. What would you think of our police service?” he said. A Central Bank spokesman claimed the problem had been rectified after the situation was raised with it by the Irish Independent.

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Newstalk Breakfast interview Irish Mortgage Brokers

We were pleased to be part of an interview by Newstalk featuring Karl Deeter of Irish Mortgage Brokers and Ross Maguire (SC) of New Beginnings.

The conversation was around the newly published Competition & Consumer Protection Commission (CCPC) consultation on the Irish Mortgage Market.

Our general view (tl;dr) is that competition alone cannot explain the issues inherent in the Irish mortgage market, that there are many other forces at play.

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The state can’t help you get a write-down (if you need a mortgage)

We had an interesting call today because a prospective client wanted to know about Home Choice Loan which is a state sponsored lender.

Her situation was interesting, she is in the process of negotiating a write-down from Tanager via the servicing agent Lapithus and wanted to know if there was any lender out there that might do the deal.

According to the Home Choice Loan website (and a fair critique is that they have done very little in the way of lending to anybody) they are there for first time buyers but ‘some exceptions may apply’. When queried we were told they wouldn’t consider a case for a refinance away from another lender.

What if that involves a good write-down? Currently no lender is willing to finance a deal like this so only people with access to cash can get the deal done, but in a world of low yields if the state was to consider loans like this and do them at their published rate of 3.25% then the nation could make a return on the money …

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First experience with ‘Help to Buy’

We are currently undergoing our first experience with a client who wants to use ‘Help to Buy’ and the same issue has arisen at two different banks so we are comfortable that it is probably a teething issue that is live and current.

The problem is that the banks are telling us they need proof the person will qualify for the HTB scheme, but to qualify you have to have a signed contract, no borrower is going to sign a contract unless the bank will advance the loan factoring in the HTB because otherwise they may not be able to complete the loan.

The lenders had forewarned us that there would be problems, but this one seems very basic. They could just make the offer contingent on the person qualifying for the scheme. Otherwise it will mean that people are stuck waiting for the contractors name to show up on what is so far a very short list, and they are also putting the kart before the horse in terms of how it was meant to operate.

For now all …

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Making sense of ‘help to buy’

Yesterday Revenue announced the details of the new ‘help to buy’ scheme. It is designed to make buying a home more realistic for first time buyers and to increase the supply of new homes. Whether it’s a good or bad idea is beside the point, what most people want to know is how it works so here’s the breakdown.

It’s a scheme to allow first time buyers buying a new home to get a rebate of up to 5% of the purchase price or contract price (whichever is the lower) from income tax and DIRT tax paid in the past four tax years to a maximum of €20,000. The property must cost less than €500,000 or 600k for retrospective applications, the size of the loan versus the value of the property must also be 70% or more.

So, for every €100,000 of value you must be borrowing at least €70,000 the idea being that very cash rich buyers don’t need this help. It started on the 19th of July 2016 and goes until the 31 Dec 2019.

Now that it’s …

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Irish Times mentions Irish Mortgage Brokers: Why is there a housing shortage?

We were featured in today’s Irish Times on an article by Barry McCall asking ‘why do we have housing shortages’.

Our contribution is as follows: Karl Deeter of Irish Mortgage Brokers believes this is part of a global trend. “The mega-trend is that we are now living in a low-yield world,” he says. “Central banks are being forced to play both sides of the same table. Low interest rates cause asset prices to rise and the Central Bank is curtailing credit to prevent asset price rises. But there is an upward pressure on house prices despite this and it has been compounded by the earlier economic collapse which has led to supply disruption. These are trends that are bigger than any of us.”

While the Central Bank rules are undoubtedly playing a part in the problem, Deeter sees supply as equally, if not more, important and one factor here is planning laws. “Ireland has a particular problem when it comes to third-party property rights,” he argues. “Planning applications for housing developments are being turned down in areas where …

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Newstalk: Pat Kenny show features Irish Mortgage Brokers

The Pat Kenny Show on Newstalk had Karl Deeter in studio to discuss the property market today. We tried to make the point that there are several issues in the market making a tricky situation even harder to navigate, but that double sided approaches by the Central Bank (loose monetary policy and low interest rates) are helping to drive prices up while other rules are attempting to restrict credit.

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The unaffordability index of Irish housing

This picture speaks a thousand words and in many cases tens of thousands of earnings that a person would have to have in order to afford an average home in different parts of the country. We used recent data from the Daft report and then broke it down into borrowings and compared that to average wages.

The column after ‘county’ is the average price in that region. If we assume a first time buyer will typically want a 90% mortgage we then look at the amount of earnings they’d need to have in order to get the loan.

The last column is where the real story lies, it compares prices in the area to average wages taken from the CSO.

Anything in a white cell with a minus is very affordable, anything in black means you’d have to be earning above average wage to buy a property in the area.

If the cell has a red background that is showing you where the difference is greater than €10,000.

It’s fairly clear that cities and in some cases …

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2016 Mortgage lending rules submission by Irish Mortgage Brokers

We sent our research and thoughts on the lending rules to the Central Bank as part of their industry consultation process regarding the existing mortgage lending rules.

While we are critical of them in particular for first time buyers, we haven’t had an issue on other aspects of it (such as controls for investors). The submission argues with supporting evidence for 90% loans for first time buyers to be available generally but to keep other controls generally in place, or to do nothing at all and give the adjustments more time to bed in.

Submission is here: 2016 Central Bank macroprudential rules submission Irish Mortgage Brokers

The findings of a survey carried out by Behavior and Attitudes of clients of Irish Mortgage Brokers, DNG and Hooke & MacDonald which was mentioned in the press is also available here: 2016 MacroPrudential review – survey findings

 

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