Generic overview of the market 2009: by sector

I was asked by a colleague in the UK to provide an overview of the Irish mortgage market, he has often advised the Bank of England in the past on the UK buy to let market, however this time it is in relation to a talk he was due to give to an international financial services group on the Irish economy. Below are the contents of my correspondence which is a no holds barred view of the mortgage market in 2009.

Remortgage: This area is finally starting to see some life again, the rate drops are filtering through and many of the people on fixed rates taken out in 2005/2006/2007  are shopping around, as always new business attracts better rates than existing customers so there is once again an argument for switching.

However, the many people who took out trackers are basically out of the market in the long term as every single lender has removed tracker mortgages from the market, in fact, if you know of a lender willing …

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Approval in Principle, the flaws.

Our firm [and I am sure many brokerage firms] are witnessing a conundrum in the market which is causing both clients and the broker a huge amount of heartache. It is that of the ‘AIP’ or ‘Approval In Principle’ not being honoured by banks over short periods of time. One lender in particular [we can’t name names] is doing that on so many cases that we no longer consider their approvals as holding any relevance.

What is an approval in principle (A.I.P. is the broker-speak we use to describe them)? It generally means that you have given a bank enough information to make a strong [and yet preliminary] decision on a case, sometimes it is subject to further documentation, or they want to get a valuation report before making a full offer, in any case an AIP is NOT a loan offer but it is as strong an indication as one can get without dealing with solicitors, in the past an AIP was honoured almost exclusively and they were seen as fundamental to …

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Irish Mortgage Lenders, who provides mortgages in Ireland

This post is a brief account of the residential mortgage providers in the Irish mortgage market, a brief look at who they are and what kind of lending they are involved in. Many people have no idea who is who, or who owns who so this should help to clarify some of that. Of course, as a broker we can help guide you through the myriad of lenders and options, but even our expertise is not an adequate replacement

The list of lenders in residential mortgages are (in no particular order)

1. IIB Homeloans 2. Haven 3. PTsb 4. First Active 5. EBS 6. Irish Nationwide 7. ACC Bank 8. Bank of Ireland 9. Springboard 10. Start Mortgages 11. Nua Homeloans 12. GE Money 13. Leeds Building Society 14. Bank of Scotland 15. ICS 16. NIB 17. Ulsterbank 18. AIB

Who they are and what kind of lending do they do?

1. IIB Homeloans: This is ‘Irish Intercontinental Bank’ and they were once owned by Irish Life, they then got bought out by

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Mortgages in Ireland, a little bit about mortgage brokers.

Just a quick note to readers, Irish Mortgage Brokers is an intermediary, we go between you and the bank to arrange finance. You can go direct yourself and get the same mortgage, however, over half of the market uses and intermediary to arrange their finance, this is normally because they don’t really how to get a mortgage in Ireland or because they find using a broker easier than dealing with the job directly. And some people just prefer the personal touch of a broker over that of call centres and branches.

If you want to find the best Irish mortgage rates you can do so in a simple phone call or online application, click on the ‘home’ button above and apply over the web or call us on 01 6790990 and an agent will be able to assist you. The people we tend to work with are clients looking for a First Time mortgage in Ireland, people who want to find out how to remortgage a property, commercial lending, and trading up/down.

We are regulated by the Financial Regulator as …

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Euribor, the distant cousin of the ECB base rate

We have written in the past about tracker mortgages becoming an endangered species. It seems that now we are witnessing the demise of them, the interbank rates and the ECB have become so disparate to each other that one is no longer an accurate gauge of the other. What does that mean?

The ECB is the rate set by the European Central Bank, and it is the ‘base rate’ (currently 4.25%), but banks can’t generally borrow at that price and instead they buy on the ‘interbank‘ market, this is the largest market in the world in which over 1.9 Trillion is traded every single day! It is how banks access the ‘Euribor‘ market (European interbank offered rate). This is basically run as an auction and because liquidity is an issue we have seen the prices of the Euribor rise and rise, demand is outstripping supply.

Why is the Euribor rising? Simply put, fractional banking means that banks must have a constant inflow of money …

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House prices are on the move!

Sherry FitzGerald said yesterday that property prices fell 4.5% in the second quarter of the year having fallen 1.9% in the first quarter. The results to the 12 months to June showed that prices fell 10.2%. So house prices are moving, albeit down.

The factors that are affecting property are mixed and many, primarily the prices are/were too high, and any time assets receive valuations above and beyond what they merit you will see market corrections. We are also seeing a unique time in banking history, and in many respects the property price correction is not dissimilar to the 1929 crash because both of them focus around leverage, I’ll continue on that point in a later blog about ‘similarities in economic history’.

Cheap money from central banks is also on the wane, in fact almost every economy has increased rates in an effort to bring inflation under control, mixed in with the lending liquidity issues we see a two fold effect. First is that there is not as much money to lend, even …

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A tale of two commissions.

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.

Some of you may recognise this line from ‘A Tale of Two Cities’ by Charles Dickens, however, I am not a classical scholar, instead it sums up my monetary sentiments for 2008. On one hand we are seeing property prices [the very foundation of the majority of Irish wealth] wither away, as global conditions worse, especially in the USA where house prices are now falling quicker than they did during the Great Depression.

There has been more than a few articles in this blog about the current issues in the broker market, the description I would use to describe it at the moment tends to modulate between ‘ugly’ and …

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Branch distribution by banks is dead.

We have seen headlines heralding the ‘death’ of brokers, however perhaps we need to look at the whole financial distribution market and instead of worrying about brokers take an objective view of enterprise, efficiency, and distribution in general. I did some research on this by looking at the American market, talking to other brokers, by looking at operational efficiency planning in other countries and markets, and lastly was by putting up a post on www.thepropertypin.com which is a site where regular folks who are bearish on property (and into economics) hang out.

There are a few sites out there that I like to browse in order to gauge public sentiment, but the ‘Pin’ as its referred to by the folks who frequent it is perhaps the most open and honest, and it tends to have some heavy economic technicians frequenting it. Granted, the tone of the site is not one that perhaps everybody agrees with but the calibre of the posters knowledge is well above the average Internet forum.

Regarding the …

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Lose your collusion… Irish Banks show just how little they care.

As George Bush once said ‘Fool me once, shame on you, fool me twice…shame…well you’re not gonna fool me twice’. Banks however have done this and so much more in the last few weeks that how it’s not front page news has me flabbergasted! Are the Irish public meant to really believe the picture we are seeing unfold? Apparently so…..

Let’s look at the picture so far and put it in a time-line, then we can look at that time-line and try to discern if it was sheer co-incidence or opportunism that has lead to the moves in the market.

Tuesday 4th December: Ulsterbank cut brokers income by 50%, no explanation, and done by email. It would be laughable if it were not so serious.

Tuesday 11th December: PermanentTSB announce brokers income will be cut, to be fair they gave a lot of warning, because of the size of PTsb this action kicked off an industrial dispute, nobody cared about ulsterbank but PTsb was a market giant.

Then came the waiting game, to see what the result of the industrial …

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