Is it Getting easier to be approved for a mortgage in Ireland?

The COVID-19 pandemic and subsequent lockdowns have had many effects on business throughout the world and in Ireland. Every industry has been affected by this pandemic, and many in negative ways. However, this is not exactly the case with the mortgage industry in Ireland.

 

The mortgage industry in Ireland has remained remarkably buoyant over the past year. This is especially significant due to the fact that the country has been under level 5 lockdowns since March of 2020. While one would expect mortgage drawdowns and approvals to decrease like most economic activity, what happened instead was surprising. For the first quarter of 2021, BPFI reports that there were 9,091 new mortgages worth €2.1 billion drawn down by borrowers. These numbers represent a 4.5% increase in volume and a 7.3% increase in value when compared to the corresponding quarter of 2020. This was also the most drawdowns approved in Q1 of any year since 2009. 

bpf

March 2021 was also a strong month for mortgage approvals, especially when considering First Time Buyers (FTBs). In March of 2021, a …

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Mortgage switching: how, when, why

What does it mean to switch mortgages? Why would someone want to switch? What can be gained from switching? Finally, if one wants to switch, how should they go about doing it?

The first question is easy to answer, though oftentimes “switching” can get conflated with “remortgaging.” Don’t be fooled; these refer to two different things that, while similar in concept, can have different implications for the borrower.

“Remortgaging” simply refers to getting a new mortgage to replace a previous one; this can be done with one’s existing lender or a new one.

“Switching” is the process of taking one’s existing mortgage and moving it to a new lender.

Now, for the next question: why would a borrower want to switch mortgages? There are a number of reasons for doing so. Firstly, a borrower might be dissatisfied with their current lender for one reason or another, like poor service or lack of responsiveness to inquiries. If borrowers think another lender will provide better service, tat would be a good reason for switching mortgages to said lender.

Another reason for switching …

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Could harsher punishments for mortgages in arrears lead to lower rates?

Mortgages are notoriously expensive in Ireland, with rates twice those of the Eurozone average. How best to address this problem has been a hot-button issue in Ireland for some time. Now, some are putting forward a new solution: harsher punishments for borrowers with mortgages in arrears. One of Irish banks’ stated reasons for rates being so high is that failing to meet mortgage payments doesn’t have high enough consequences for borrowers. For example, home repossessions in Ireland aren’t very common, since the process is so complex and can take several years. As a result, loans are riskier investments for lenders in Ireland relative to other Eurozone countries. If this is indeed the reason for rates being high, it follows that tougher treatment of such borrowers would lead to lower rates for everyone else.

Regarding the number of borrowers this would affect, statistics from the Central Bank of Ireland show that 5.3% of all principle dwelling house (PDH) mortgage accounts were in arrears as of December 2020. This percentage includes a total of 38,785 accounts. However, it’s also worth noting …

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Covid-19’s impact on mortgages

The covid-19 pandemic has had a massive impact on all areas of the financial world, including banks, loans, and mortgages. Mortgage arrears, or payments failed to be made by their original specified due date, had been consistently falling every year since 2013. However, Fitch predicts that arrears of at least 90 days will constitute about 14-16% of Irish home loans this year, their highest rate since the financial crisis.

Additionally, the pandemic has led to widespread payment breaks for mortgages in Ireland. Payment breaks involve the deferring of repayment of a loan to a later date; they do not change, however, reduce the total amount to be paid. In March of last year, the major banks in Ireland agreed to industry-wide payment breaks for those facing financial hardship as a result of the pandemic. This was done out of consideration for borrowers’ situations and lenders’ own desire to avoid high default rates. Ultimately, by May 2020, one in nine owner-occupier mortgage payments was on such a break.

Though this measure was taken of the industry’s own volition, soon after, the …

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Types of mortgages and lending rules

Irish law has specialized sets of lending rules depending on the type of mortgage application. Types of applications are split into three different categories: first-time buyers, remortgaging or switching, and buy-to-let buyers. Depending on which of these categories an application falls under, different loan-to-value (LTV) and loan-to-income (LTI) limits will be used. The former refers to the minimum deposit a borrower must have on a home before getting a mortgage loan. The latter refers to the maximum amount of money borrowers can receive in relation to their yearly gross income; while this is normally capped at 3.5 times one’s income, lenders can provide additional allowances of varying amount depending on the type of application.

Firstly, there are first-time buyers. These applicants are those buying a house for the first time, so the deposit required by LTV limits is understandably less steep. They will need to have a minimum deposit of 10% of the home’s total value. For example, if the price of a home is listed as €250,000, a 10% deposit would amount to €25,000. Lenders are allowed to have …

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The fastest way to get a mortgage

What is the fastest way to get a mortgage in Ireland today? To those unfamiliar and/or engaging with the process for the first time, it can seem drawn out and overly complicated. However, it doesn’t have to be that way. While different people will likely want to use different approaches, but there are some general rules that everyone can follow to ensure their application goes as smoothly as possible.

The first thing one should do is make sure their financial situation is otherwise well and accounted for. In addition to employment and income, this can include things like home insurance and valuation of the property. One should also consider how long they’ve lived in Ireland; depending on the lender, this may be important in their consideration of an application. Borrowers should furthermore ensure that they have good credit and are not too heavily in debt. Lenders are likely to be more apprehensive regarding borrowers with unstable financial backgrounds, as they seem less likely to be able to ultimately repay their loans.

The next things one should keep in mind are …

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Dublin Rent prices on office apartments have fallen since the beginning of the pandemic

In the past year, we’ve seen the Dublin office market prices in rent fall to the lowest they’ve been since 2016. The COVID pandemic has caused the economy to slow to a standstill, and with that, the majority of such companies are postponing their long term executive decisions due to the uncertainty the pandemic has brought about. Office rents have fallen from the high of €65 per square foot down to €59 near the end of 2020.

Even so, there have been signs of economic recovery near the end of the last quarter of 2020. This is expected to grow and continue as the vaccinations for the virus begin to become publicly accessible to the general public. The vacancy rate in the Dublin offices ended at around 9.5% due to reduced demand and office hours during the pandemic. This grey space comes into the market and accounts for nearly 25% of the available office space in the capital. These spaces are continuing to compete with traditional landlords as they offer more flexible terms of lend to their customers. There have …

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The interest rate will kill you.

No, not physically but they will hurt your financial goals if you do not completely understand them. When you are starting out on your financial journey you are not trained to look at interest rates. Most of us are just happy we got fifty euros in our pocket when we first start earning money. We know money comes in and goes out. Once we start going to university or getting a credit card that’s when interest rates start coming into play.

Although 2.5% on the paper might look like a small number on the paper, do not be fooled. Interest rates can be one of the biggest deciding factors in your financial life. The difference between a good and a bad interest rate to a car, credit card, mortgage, and so much more can literally be the difference between tens of thousands of euros! It might not seem to be a lot, in the beginning, take caution to your calculations. Even a cellular phone bill can hit you with a damaging interest rate which if you’re straight out of secondary …

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What does Ireland truly stand economically compared to other European powers? (pt. 3)

Another form of measurement used when accessing the healthiness and prosperity of a country is the state of its citizens. In this case, a national indicator of household welfare is known as “actual individual consumption” or AIC. This measurement is also a part of the GDP, where it takes into account the consumption of households on services such as healthcare, education, and housing. What AIC does not take into account is the collective government spending such as defence, policing, debt services etc…

Internationally, AIC includes about 2/3 of all GDP. AIC seems to be the best fit measurement of current living standards of households, which can also e adjusted for price differentials across different countries. Ireland currently ranks less high on this measure than compared to others. Ireland’s AIC rank in the European Union has jumped around quite a bit. At 11th place in the 1990’s up to 6th in 20078. But then afterwards it fell to 14th place in 2009 and returned up to 12th place by 2019. Using this measurement, Ireland actually falls behind all six of the …

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Five Things to look at Before Switching your Mortgage

 

Switching your mortgage can be a lot of work but it can also save you a large amount of money. Before switching, you should pay attention to the following:

It is important to know what your repayment history looks like. Have you been making your payments on time or has this been a problem for you? This will be shown on your credit history as well which is something that will be looked at by the banks. You should also check to make sure that you do not owe more than what your property is now worth. Switching your mortgage may be difficult for you if this is the case. Figure out your LTV which is the loan to value. This is a ratio that lenders use to figure out how much risk is being taken on the loan. You can figure out this number by dividing the barrowed amount by the appraised value and multiply that amount by one hundred. Lets say for example that the property that you are looking to buy is €300,000 and you deposit …

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