Mortgage rates set to drop and competition to increase in 2015

We have commented several times since last year that the trend for mortgage rates in 2015 will be to see them drop. With spreads of c. 300bp’s on lending it makes it one of the reliably profitable sectors of banking given the stringent underwriting being applied.

With the Central Bank looking to curtail first time buyers but doing nothing about incumbent borrowers getting restricted it means that they have directed the market towards refinancing.

This is because one of the niches left on the table is that of existing variable rate holders, which banks will now try to tempt away from one another in an effort to grow market share.

There are many who cannot take part and below is a list of the mortgage holders who won’t benefit.

Those in negative equity, they are going to be stuck when it comes to refinance, they can trade up with a negative equity mortgage but they won’t be able to ‘switch’. Those on fixed rates which accounts for in the region of 50,000 mortgage accounts, they face break penalties, and only …

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Newstalk Breakfast: Ivan Yates & Karl Deeter on PTsb rate increase

Today Ivan Yates spoke to Karl Deeter about the PTsb rate increase. There were several points to consider surrounding this and Ivan touched on perhaps the most important which is about credit provision in general.

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PTsb buy from abroad criteria

PTsb have sent out the criteria for buyers from abroad, listed below.

Applicants who are Irish or UK Citizens resident outside of the Republic of Ireland AND who are earning in excess of 100,000 Euro equivalent per annum (joint or sole basis) may be considered for BTL facilities, a maximum LTV of 60% applies.

Standard valuation & rental income confirmation requirements apply.

All qualifying applicants / properties will be required to comply with the standard 1.2 times RCR requirement.All applicants will be required to provide acceptable proof of their compliance with the €100k minimum income requirement. Income may be verified with reference to one or more of the following:

Payslips (2 of most recent 3); Salary Certificate; Statement of Taxes (P60 equivalent or Tax Balancing Statements); Audited / Certified Accounts; 3 months Bank Statements showing minimum 3 salary credits at the required level; Balance of funds must be evidenced by way of a Bank/ Savings/ Investment statement.

In the normal course a Net Income / Lifestyle Expenditure assessment is not required. However it is acknowledged that circumstances may occur where …

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Don’t be late! Banks announcing cut off dates for mortgage cheques

Every year Santa brings a few unlucky kids some coal, the banks have a similar deal for people who are late with their paperwork and it’s called a ‘cut off date’.

This means that irrespective of what you do, you won’t be able to get a mortgage cheque if you submit paperwork after a certain date (we’ll list them as they come in). The problem for some people is that they might be reliant on closing in 2013 in order to get a legal property tax avoidance for owner occupiers so if you are going to try to draw down in December do yourself a favour and get everything sorted out ASAP.

And also remember, by ‘documents in’ that means ‘on the system’ and from the time a document arrives to when it gets scanned up can take a few days depending on the institution.

Cut off dates announced thus far:

BOI and ICS: Tuesday 17th

KBC: Friday 20th

(edit: 28/11/13 10:51am)

AIB/Haven: Monday 16th

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PTsb – catching us off guard with well thought out new offerings

If you weren’t in the industry since before 2008 you could be for thinking that we only see bad banking decisions and negativity on a one way journey through the crash.

Today though Ptsb came out with what we believe is a deeply pragmatic broker offering that is rooted in good ethics and common business sense.

The first thing is the return of the Service Level Agreements which have been largely absent in the market of late, given recent backlogs in many lenders this is a very positive development for both industry and clients of financial firms. It’s frustrating waiting weeks on end for a credit decision.

The other thing they have done is follow AIB’s lead by removing the cap on procurement fees. When we are brokering loans and do one (for instance) for €1,000,000 the maximum we can earn at present is €1,500 although this may take 40 hours of work to perform, plus costs, administration and all other fixed and variable overheads. It has been one of the key drivers of brokers out of …

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Some Irish mortgage statistics worth considering

We all know the headline [glossary id=’6898′ slug=’mortgage’ /] arrears figures and that they are a disaster. Take a look at some of the other figures which don’t make it into general reporting (other than when they come out during Oireachtas committees and the like). Something that still isn’t widely known is that huge numbers of arrears cases are not engaged and haven’t filled in the most basic Standard Financial Statement required to get an arrears resolution.

AIB

6,000 mortgages 2.5 to 3 years behind and not engaging 16,000 Standard Financial Statements (SFS) analysed to collate ‘strategic figures’ 50 per cent of arrears cases haven’t yet filled in an SFS, the founding document of resolutions 2,000 re-engagements after legal threats 2,000 arrears cases have money on deposit greater than arrears 1,000 buy-to-let mortgages with nothing paid in last six months or more 4,000 accounts where customer could pay full mortgage from net disposable income allowing for living expenses (insolvency guidelines plus 20 per cent on top) but do not

Ulster Bank

35 per cent of arrears cases either not engaging …

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Arrears solution for a strategic defaulter: here’s a new plan you can ignore

We make no secret of dealing with strategic defaulters, depending on the client we don’t necessarily say that they are in that category, but with most of them we try to be forthright enough to make it clear that what they are doing is intentional and doesn’t have to be this way. That aside, the banks are still trying to find ways to resolve the issues.

One such offer came to one client from PTsb. The interesting thing here is that the client did fill in an SFS and was refused split mortgages and other such options because they didn’t qualify but continued to pay zero.

Then they get an offer to capitalise the arrears. That’s wonderful, they are now no longer in arrears once they sign up to this! What a great outcome, now they can go back to repaying zero and start the whole clock all over again.

So, having racked up about 18 months of un-paids on interest only the arrears will now be (upon signing) back …

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Banking flim-flam, ‘We’ll huff and puff and may or may not blow your house down!’

The banks are constantly issuing threatening letters, we have posted many of them here. We have seen it all at this stage, couples in their 60’s with lots of equity being told to sell up when they clearly didn’t have to, others who are able to get massive write downs and every other combination of fact you can imagine.

Today we will look at the huffing and puffing portion of banks chasing a person for debts. The page to the left is a chronological example of letters a borrower will get from the bank. In this instance the person is defaulting because they don’t want to go on capital and interest and are engaging in what amounts to a game of ‘chicken’ with the banks.

The first letter is standard, it came after the client missed about 4 months of payments, to this point there were two calls then this letter.

The letter starts off fairly heavy, in terms of implications, they …

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Spin me right round’ – some thoughts on IBF data

In statistics there are two key components, the first is the actual ‘data’ the second is the ‘inference’ or what the data actually means. If you saw that one summer was hotter than the last by collecting daily average temperatures that would have statistical significance, if on the other other hand you saw that July was 56% hotter than January then you’d be stating the obvious and your ‘inference’ would be laughable.

That we can see this when it comes to meteorology is obvious, and almost nobody would take such news as having any significance, but when it happens in finance it can go unchecked although Eamon Quinn at the Wall Street Journal caught the IBF out on their release which is about mortgage lending being ‘56% up this quarter’.

Here’s the actual quote they lead with ‘The latest figures from the IBF/PwC Mortgage Market Profile, published today, show that the number of new mortgages issued in Q2 2013 has increased by 56.1% on the previous quarter.’ And it …

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Talking with a strategic defaulter…

That strategic defaulters do or don’t is just a sideshow about quantifying their numbers, for several years we have been dealing with them on the advisory side of our company. Banks have large legal departments and teams chasing borrowers, and in turn the borrowers will from time to time hire their own professionals as a counterweight to the process, what you are about to read isn’t intended as justification, ethical reasoning or anything else, it’s just an insight into the thoughts of a strategic defaulter, why they did it and what has happened so far.

The person in question is a white collar professional and the director of a relatively well known company, she agreed to speak to us on the basis that we kept her identity private. She has a family home and six investment properties.

Karl: Did you make a concious decision to default on your loans? If so why?

Yes, because the bank were insisting I go on interest and capital repayments on the investment properties and the figures just wouldn’t add up so I chose to …

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