How a bank might undo your tracker mortgage

‘I have a tracker mortgage so I don’t care’ a man recently said to me when I was talking about the near definite increase in margins that we will start to see in mortgages as lenders seek margin and reprice risk.

It was almost said in a smug manner, a kind of ‘yeah, times are hard but I have my tracker mortgage’, and then it struck me, most banks have a get out clause, they don’t have to use it, but they might. So I thought it might be interesting to point out exactly how this could come about, and essentially the relationship it has with falling property values, so if your lender ever calls you out of the blue asking you to let a valuer into your gaff be sure to say ‘no’.

The way that trackers could be wholesale removed from borrowers is via an up to date valuation where the tracker rate is connected to the loan to value (LTV) of the property, many tracker mortgages only …

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Making money from death, is it moral?

Financial innovation has meant you can make money from many things which may or may not be considered morally correct, there are ‘short sellers’ who make money when the price of a stock drops, some people consider that a bad thing, others feel that it is proof of an efficient market working correctly. Then you have the likes of ‘vice funds’ which invest only in things considered immoral such as weapons manufacturers, liquor distilleries, beer brewers and gambling. Then there are those that literally make money from death and today we will consider that group of investors, the SLS traders [naturally there are other non-market groups such as those dealing in blood diamonds but they are not tradable and fall outside of the remit of our description].

There is a thing called a ‘secondary life settlement’ (SLS), and it is a financial trade where an investor buys a persons life insurance policy from them and continues to pay the premiums on it, then when the seller dies the buyer gets the …

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Dealing with arrears – a collectors tale

Today’s post is by a guest writer who we cannot name, but we can tell you that this person works in the collections department of a major Irish lender, this person (or somebody like this person) is the one who will call you if you are in arrears on your mortgage. In this post we will reveal some of the inner workings of a collections official and the various things that they do as well as letting you know some of the unpublished things that you should do to protect yourself. Our guest writer has many years of experience in collections, during both the boom times and the downturn.

So now, over to our guest writer…..

There are a lot of buzzwords in the press at the moment and a few of them are regarding what to ask your lender for if you are in arrears. At this stage we have all been told that if you fall into arrears you should ask for payment breaks and interest only periods etc. However, simply asking does not guarantee that you will …

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Solicitor fees likely to rise.

At present any practising solicitor is required to have professional indemnity insurance up to a value of €2.5 million (per claim) this is a cover that allows the solicitor to pay out if they have a claimable fault in their business – such as a mistake in reading title or other such issues. This insurance is not optional, they have to have it in order to practice and the minimums are set out by the Law Society of Ireland.

Recently professional indemnity insurance has gone through a serious repricing, it has to do with the COR (combined operating revenues) of firms offering insurance. COR is part of the way that insurance companies make money, say the actual cost of providing a person with insurance (the type doesn’t matter) is €100, the insurer takes that money and generally invests it, if they make 8% on the markets with that €100 then they make €8 and in turn they can offer you insurance for less (eg: €95) the next year and …

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Bank margins after NAMA

The current debate is raging over NAMA and the pricing of loans, much of it centres on the value of the properties in question and about the way in which a ‘loan’ is valued (as opposed to the underlying asset). This makes for good headlines, but it doesn’t help the average person who is not shaping policy and who’s sole role in this mess will be to carry the can and pay their part in the tax pool which will ultimately fund the bailout.

However, you may be affected in other ways, and these are things which you have the choice of opting out of, namely that of the margin you are paying if you currently have any debt/credit outstanding.

Once NAMA comes in it will be extremely likely that banks increase their margins, it is important to consider the ‘why’ as much as the ‘when’ though so we’ll take a look at those.

Why?

PTsb lead the way on this, because they are not getting NAMA protection they have no need to worry …

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Fast Track Repossessions, what does it mean?

There has been an interesting development in the area of repossessions in recent weeks in which a property can be taken back (repossessed) without a full court procedure having taken place. Today we will consider how this will work.

First of all, there are several things which tie in together in 2009 and they form part of reason behind the new ruling. The use of circuit courts to repossess a home used to be commonplace because the decision was set in a court depending on the ‘rateable value’, but the domestic rates system was discontinued in 1978, thus, the hearings started to default into the higher echelons of judicial decision making and today the common court for repossession hearings is the High Court.

The new rule means that a Registrar will decide what is seen or not by the court and a side effect of this is that a house can be repossessed without actually going before a judge. It is important to note that a registrar is not merely a …

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Vlog on the Irish Economy – Ronan Lyons & Karl Deeter

I met up with Ronan Lyons (economist with Daft.ie) to talk about the ideas of property tax in Ireland, how it might be a fairer way to tax people than stamp duty, or indeed the abscence of property tax [because it rewards/doesn’t tax holding certain assets]. The discussion spread to other ideas in taxation, and eventually we made some predictions (I can already say they are bound to be wrong!) and then we took to the streets and asked Joe Public about their thoughts on the economy and whether or not they had any hope for the future.

If you want to watch the full conversation you can check out the playlist on youtube.

Ronan writes a very interesting blog, you can check it out at http://www.ronanlyons.com what I personally like best about Ronan (other than his affable good nature) is the unique take he has on many topics on Irish Propert (a subject I am very fond of), by utilising the daft database he is …

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Irrational banking, non-competition creating profits unexpectedly.

That banking in Ireland is a little irrational at present is a given, however, there are occurrences in the market which will change pricing structures in the near future, interestingly, by trying not to compete for business, several banks will ultimately make the market more profitable for all of the banks, achieving almost the opposite of what they had hoped to do.

I’ll explain, at the moment we have seen widespread Sovereign Credit Retrenchment, that’s a fancy way of saying that banks who are bailed out by certain countries are only really focusing on their indigenous markets because it is those markets that bailed them out. Irish banks have done this, Irish owned UK operations are closed. Equally, UK banks here are doing this by making their existing business rates higher and their new business rates exceptionally high.

Bank of Scotland’s new business variable rate is 6.19%, a whopping 5.19% over the ECB, they are doing this to avoid lending, and they are also paring back LTVs so that you have to have greater equity in the deal to borrow, …

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