Bank of Ireland’s Marketing Gimmick

Recently, the Bank of Ireland has been accused of a marketing gimmick. The Bank of Ireland has launched a new mortgage product that does not offer cash back. The bank has maintained a high market share. Bank of Ireland has been offering up to 3% in cash back of the value of the mortgage taken out. However, the Bank does not have the lowest rates in the market.

Cash back can be defined as money back from a mortgage. For example, if an individual borrows €200,000 he or she may get back €6,000. The first 2% of cash back is paid at the time the mortgage is taken out. The other 1% is paid at the end of year five.

However, the bank has now introduced a High Value Mortgage Interest Rate with no cash back. The new mortgage product is the first fixed rate product without cash back that the Bank of Ireland has one since the introduction of cash back in 2014.

The High Value Mortgage Interest Rate only applies to people borrowing more than €400,000. The product is also …

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Mortgages on the rise

A sense of impending doom has been a huge part of economic and political decisions within the last few months due to the ever uncertain Brexit debacle. These feelings are slowly beginning to fade in Ireland due to the increased time that Irish businesses and banks have had to prepare for the EU split. Although this event is bound to cause slight fluctuations, economists have noted that the economic future for Ireland is still bright. 

Banks and buyers alike are taking note of this promise, which has been obvious through the most recent data in relation to mortgage approvals and house prices. According to recent bank data, there has been a  significant rise in the number of home related mortgage applications and acceptances. 

The Irish Bank and Payment Federation found that from April to June, there were 10,157 mortgages taken out, which is an 8.8pc rise from the previous period. Using yearly comparisons, it has been shown that the issued mortgage rate this time last year was around 800 acceptances lower. It topped the approvals for the first three months …

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Mortgage Switching is More Common than Central Bank States

Competition between mortgage providers has increased dramatically over the past couple of years. People are switching more frequently than every before trying to find the best mortgage rate for themselves. Over the last three years, the percentage of mortgage holders prepared to switch providers has doubled according to a banking sector report. Additionally, these figures are higher than what the official figures from the Central Bank are. Also, the Irish Banking & Payments Federation (IBPF) marks the rate of switching at over 15% which compares to the slightly more than 1% rate that the Central Bank has pit forward.

The federation suggests that the much lower calculations from the Central Bank could have a negative effect on how willing consumers are to search around for value. The IBPF notes the difference in numbers is caused by the Central Bank using the number of mortgages being switched as a percentage of total outstanding private dwelling house credit. IBPF stated, “This gives rise to a figure of less than 1 per cent for the current level of mortgage-switching activity” and “Crucially, this …

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Parent’s continue to pay

Mortgages can be extremely overwhelming to any buyer, but especially those new to the market. Competition in the market is at extremely high levels, especially within the major Irish cities. This is due to rising house prices, little availability, and the intensity that comes with making an offer against other prepared competitors. In order to make an offer on any property, there are many hurdles that you must be able to jump through to even begin being an eligible purchaser. 

Loans have become much harder to get approval for as a first time buyer, especially if your credit history is not as detailed or robust as another person applying for the same type of loan. With high intensity competition beginning at stage one of getting a loan, many possible home buyers feel distressed from the get go. 

With Brexit on the horizon, banks have an iron hold on most of their funding; they are being extra selective about loan recipients in the hopes that they will have no issues in the repayment process.

Under the Central Bank rules, first time …

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Mortgage cuts are nearing

The anticipation of cuts in mortgage rates has been increased. Ulster Bank recently stunned the mortgage market with the first cut in its variable rate in more than a year. This recent decrease in its variable rates will increase savings for first time buyers. According to the Independent the typical first time buyer will be saving around €50 a month.

Tracker and fixed mortgage rates are also supposed to fall. There are increasing expectations that the European Central Bank (ECB) will also cut key rates. Cutting key rates will allow banks to reprice their mortgage books. Mortgage rates are being cut in response to weak growth within the Eurozone and inflation declining.

As of yesterday, the European Commission lowered its forecast for growth again. The lowering of growth forecasts contributes to greater pressure on the ECB to cut interest rates it charges banks.

Ulster bank is dropping one of its key variable rates by .4%. The new key variable rate is defined as 3.9% for those whose loan is less than 90% of the properties value. This has a huge impact …

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Mortgage lending trends

Bank’s lending practices have been on a rollercoaster ride that has yet to have slowed down. Due to many different economic factors, the trends tend to increase and then decrease with ease over short periods of time. The factor that has the most influence on these decisions by the bank is Brexit. Behind this name, there lies an endless amount of disruptions that are unpredictable in categorical and economic related areas and loom over every decision that the bank makes.

In general, Brexit has slowed down the lending process. That being said, there are some times in which Brexit brings about significant positive changes in the market. After the Brexit deadline was extended to October 31, 2019, there was a significant rise in the amount of lending. This change in some ways rebooted the market, given that the beginning of 2019 had a slow start. 

After the extension, approvals for mortgages increased by 10pc for the year on year comparisons. There were 4,926 loans that had been approved, totaling up to €1.14 billion according to the Banking and Payments Federation …

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May 2019 mortgage approvals offer high hopes

The mortgage scene is finally beginning to see some positive growth, especially for first time buyers. Recent figures have just been released for May 2019, which have shown substantial upward traction in regards to the approval of loans. 

The statistics indicated that there has been a 10pc increase in approvals when comparing May 2018 to May 2019. During May 2019, 4926 applications for loans were approved by at least one of the banks. Additionally, there was a 19.9pc increase from April to May of this year. 

Most of the approvals from May seem to have been heavily dominated by first time buyers, who made up 51pc. This demographic  is heavily marked to via social media and other online platforms. Additionally, banks advertise to this untapped market by offering exemptions that make getting a loan more affordable. 

This seems to have been effective, give that approvals are high for this month. If approvals are high, this indicated that there were also a very large number of first time buyer applications that the bank saw during the previous months. Mover purchases also …

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Vulture funds and Ulster Bank

Ulster Bank has recently created a portfolio of €900 million of problem mortgages for sale. This portfolio includes an immense number in which borrowers had short term forbearance deals with Ulster Bank. Forbearance is a special agreement formed with a lender and borrower to delay a foreclosure. This occurs when mortgage borrowers are unable to repay according to terms and lender may choose to foreclose the property or asset.

Many of the affected borrowers for loan sales were engaged with the bank to secure least short term debt deals. However, Ulster Bank has claims that past customers who engages with the bank to make repayments of loans even on loans in the past are far less likely to see their loan sold to a vulture fund.

Vulture funds are generally private equity firms or a form of financing that is provided by firms to invest in properties that are performing poorly. These poor performance properties are likely to be undervalued and thus the vulture funds take advantage of the underestimated properties.

Private home mortgages on average in the current sale have …

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Housing in half of all counties are unaffordable

According to the Irish independent, homes are becoming so expensive that first time buyers cannot afford to purchase a home in half of the counties in Ireland. Not only are the housing prices too high to quantify as affordable, but mortgage requirements do not make buying homes possible for first time buyers. In other words, a buyers average income does not amount to the fund needed to deposit. A buyer’s income on average also does not quantify to high enough earnings to qualify for a mortgage.

The lack of affordable homes have always been an issue in Dublin and Cork, but the trends in the housing market are causing widespread housing unaffordability throughout the state. Recently, a survey conducted by the EY-DKM economic advisory determined Co Roscommon, Co Clare and Co Offlay have been defined as additional counties that are now too expensive for buyers.

The most unaffordable counties of Co Wicklow, Co Kildare, and Co Meath have been defined as the most unaffordable in terms of saving for a deposit. These counties take an average of 15 plus years …

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New Offers for Social Housing at Staggering Prices

A developer by the name of Pat Crean has offered 36 apartment for social housing to a local Dublin authority. Pat Crean’s Marlet development group offered to construct the apartments for the Dundrum area of Dublin. The Marlet group comprises of one of two fast-track housing applications for the Dundrum area of Dublin. The other part of the fast track housing application is formed by the Crekav Trading GP. Crekav Trading GP has proposed to sell 25 apartments from its overall planned 253 apartments in Greenacres, Longacre and Drumahill house. These 25 apartments have an estimated cost of €8.346 million.

The 36 apartments have been estimated at a cost to construct of €11.8 million. Meaning that on average the cost per apartment amounts to €327,888. In comparison, the Crekav trading GP’s 25 apartments have an average cost of €333,840.

The median home value in the Republic equates to €237,000. In comparison to the united states the median home value is $226,800. Adjusted to euros the median cost of a home in the US amounts to only €200,363.09. While the average price per …

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