Independent Newspaper mentions Irish Mortgage Brokers

In an article today about mortgages by John Cradden of the Irish Independent we were quoted extensively regarding our thoughts on loans, extracts are below:

Last month saw the official launch of a new mortgage lender here in the form of Australian firm Pepper, who will be lending to the self-employed and those who got into arrears during the downturn but are now back on track.

“Up to now, if you had credit issues you were virtually unbankable, that is set to change,” said Karl Deeter of Irish Mortgage Brokers. “Equally, as banks add bells and whistles to their product suite, you’ll see some will be about flexibility rather than price and that’s a sign of competition in product differentiation coming through.”

He adds that rates will improve with the new competition. “This was what happened in the last credit cycle and will happen again so time will take care of that, but Ireland also has unusually high risk associated with our loans so that has to be factored in.”

The cashback offers are another popular incentive, with …

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One Big Switch findings on mortgage holders

There was an interesting infographic out today from One Big Switch showing what people have done in order to make their mortgage repayments.

It ranged from working extra hours, to taking fewer holidays and socializing less. What is interesting about this, is that nobody tends to look at the wider economy effects of high mortgage rates, and the Central Bank while saying they want to examine them, cannot and will not do anything about it.

Higher rates act like an informal ‘tax’, and as some banks are foreign owned it means taking income out of the Irish economy and funnelling it elsewhere, this affects our balance of trade and was a reason we always questioned the Patrick Honohan diktat of not having an issue if all banks were foreign owned.

This informal tax reduces expenditure in the productive economy and goes towards rationalizing zombie balance sheets, so lower rates should be a priority for everybody, but the way to get there isn’t force, it’s competition and for that reason we are hopeful that the switching campaign will be a successful …

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Pat Kenny show, the ‘Friday Panel’

We were asked to take part in Pat Kenny’s ‘Friday Panel’ which was hosted by Shane Coleman. The discussion was on many property matters and went on to cover politics and crime. The panel members were Michael O’Regan the political correspondent of the Irish Times, Martina Devlin who is a well known journalist and author, and lastly was our own Karl Deeter.

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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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Mortgage rates falling and set to head even lower

We were never advocates or in agreement with the ‘make government force mortgage rates down’ campaign (albeit on very friendly terms with the campaign promoters). The reason was that rates needed to come down in a natural way or banks would curtail credit or charge more elsewhere, this was a balancing act between sorting out operational costs and back book issues.

The belief we had, and one that does seem to be bearing fruit, was a slower (ie: less popular) road to lower rates, brought about by competition.

This has been happening, it doesn’t make headlines because it’s a slower burn but the trend is under way and it goes like this: more competition equals lower rates, the higher rates spur competition as it attracts new entrants and in time, when matched with a low yield curve, rates will fall.

The introduction of Pepper into the market, along with general competition has meant that the rate reduction cycle has begun. The hallmarks are that firstly, rates are high after a financial crash, that always happens, those high rates bring in …

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Pepper spice up mortgage competition

We are delighted to see a new mortgage lender entering the Irish mortgage market to provide homeloans (rather than to merely service other loans that are being sold).

Pepper started out here as a mortgage servicing company, so when a bank wanted a company to manage their loans they’d get a third party like Pepper to take care of that for them, but they were also a lender in other jurisdictions they operate in (like Australia).

To that end they have started up here too. We were contacted by and consulted with Pepper for a long time prior to this and thought that it would still be some time before they would launch, but they got their operations up and running and that makes them the first new entrant in the Irish mortgage market since before the crash (that will actually be lending money to people to buy homes).

They have also looked at a few niches the incumbent Irish banks haven’t been servicing, so there are options there for the self employed, or for people who might not have …

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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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Irish Times mention Irish Mortgage Brokers in article about renting

We were quoted in a this piece by Aoife Valentine of the Irish Times which was an interesting article about the situation renters face.

When discussing the rising age of first time buyers she quoted us as we mentioned that “this is something that’s become very obvious to mortgage broker Karl Deeter.

“When I started working in lending in around 2003, people in their 20s were borrowing. Nowadays, your typical applicant is no longer 24 to35, they’re 30 to 40,” he says.

New mortgage lending rules issued by the Central Bank in January say that first-time buyers may borrow only 3-and-a-half times their gross annual income, and they must save a 10 per cent deposit on the first €220,000 of the value of the property and a 20 per cent deposit on any higher value.

Deeter believes these rules are now having an effect on who gets on the property ladder.

“What the deposit rules have done is keep people in the rental sector when they otherwise would have been …

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Drivetime RTE: Karl Deeter on pan-European Mortgages

In this piece on RTE’s flagship evening show ‘Drivetime’ Karl spoke about how mortgages being ‘cross boarder’ may not result in better prices for Irish consumers any time soon.

Obviously it would be great for the broker industry who are the natural distributors of such products, but there are many other factors at play including the largely under utilized Insurance Mediation Directive.

The piece finishes with some thoughts on rent control (or ‘certainty’) which are being suggested by Alan Kelly.

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