Irish Times mentions Irish Mortgage Brokers on ECB rate move

The Irish Times mentioned Irish Mortgage Brokers in their story by Arthur Beesley and Eoin Burke-Kennedy on the rate cut by the ECB from 0.05% to 0%. The implications for borrowers are minimal, it’s more about ‘signalling’ to the market, the good news for debtors is that rates look set to stay low, which is awful news for savers.

“Mortgage broker Karl Deeter said monthly repayments on a 25-year €200,000 loan would drop by €5. The refusal of Irish banks to pass a succession of ECB rate cuts to variable rate mortgages has long been contentious.”

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Drivetime RTE: Mary Wilson speaks to Karl Deeter about housing, 7th March 2016

Mary Wilson discussed current housing issues with Karl Deeter on the back of a story by Charlie Weston in the Independent about first time buyers having to save up €50,000 to buy a home.

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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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Economic Factors affecting Irish Property Market (part I)

Background: The Irish residential property market has gone from a period of spectacular growth, to a dramatic crash and lately to recovery in the past ten and half years (2005 – 2015) the period I will concentrate on in this article.

The economic factors which influenced these major upheavals are many and varied such as Interest Rates, Unemployment, Population Growth, Demographics, Wage Inflation, Exchange Rates vs Sterling & the US Dollar, Budget Measures, Central Bank borrowing limits, Credit Availability, Rents, Sentiment & Stock Market performance.

This is not an exhaustive list but it does show the range of factors that can influence property price movements with some having a much more dramatic effect than others. Here I will confine my analysis to the influence four key factors played on residential property prices in Ireland during the period discussed.

These are Unemployment, Migration, Exchange Rates & Sentiment. Firstly I will look at the property prices themselves and how they have behaved during the period.

Property Prices:

In the early part of the period under review (2005 to 2007) property prices increased …

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Irish rents vs yields for one bed apartments

Looking at the yields versus the monthly rents for one bedroom apartments in the all the Dublin regions for quarter four of 2015, it can be seen that the rents ranged from €888 for North County Dublin to €1,480 for Dublin 4, while yields ranged from 5.7% for Dublin 6 up to 10.5% for Dublin 10.

Dublin County was divided into 25 areas corresponding with the postal districts plus North, South & West Dublin and we were attempting to see what relationship exists if any between the amount of monthly rent paid and the yield generated for the owner.

The yield is the gross figure and can be directly related back to the price of the property by calculating the annual rent and multiplying this by the multiplier which is calculated by dividing 100 by the yield e.g. take the one bedroom apartment in Dublin 1 with a monthly rental of €1,141 multiply by 12 to give €13,692.

It has a yield of 8.7% which gives a multiplier of 100/8.7 = 11.49. This will then give a property price of …

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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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