The future is refinancing

Getting a loan can be extremely hard to achieve, especially in today’s Irish economy. With higher interest rates than usual, many people who have successfully gotten a loan may be looking for an opportunity to refinance in a few years to come.

Refinancing would not be beneficial for those people who are repaying loans. This is largely due to the banks uncertainty as the Brexit date draws closer. Banks are afraid that there will be an economic crash that will leave people with loans unable to pay the banks back at their projected rate. These fears are outwardly displayed in the form of high interest rates and low amounts of accepted loan applications.

The current interest rates rely heavily on the type of loan that you are receiving, but can vary significantly. The most common forms of loans are mortgage, auto, and personal. In any of these agreements, the interest rates are high in comparison to previous years.

Refinancing in the future may be key for many of the people who are currently being approved to take out …

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Pepper Money Expands Lending in Ireland

Pepper Money, an Australian lender, will soon begin offering commercial property loans ranging in value from €250,000 to €7.5 million to borrowers in Ireland. It hopes to extend €300 million worth of commercial loans within the next two years, roughly half of what the Strategic Banking Corporation of Ireland has extended at the end of March 2017. These loans will meet the demand of professional buy-to-let borrowers hoping to refinance and the demands by first time buyers for properties with various commercial uses.

 

Pepper Money has been keen on taking risks in lending and exploring new markets, being the first new lender to enter the Irish Market for residential mortgages after the market crash and financial crisis, offering small home loans through brokers and direct channels. While entering the market for commercial mortgages, Pepper also plans to lend to borrowers with historical credit issues who have had trouble meeting criteria to obtain loans from banks and other lending institutions in Ireland. It will offer loans to borrowers as long as they are up to date for the past 18 …

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Newstalk Breakfast interview Irish Mortgage Brokers

We were pleased to be part of an interview by Newstalk featuring Karl Deeter of Irish Mortgage Brokers and Ross Maguire (SC) of New Beginnings.

The conversation was around the newly published Competition & Consumer Protection Commission (CCPC) consultation on the Irish Mortgage Market.

Our general view (tl;dr) is that competition alone cannot explain the issues inherent in the Irish mortgage market, that there are many other forces at play.

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How to knock €138,000 off your mortgage?!

This was an interesting piece by Louise McBride in the Sunday Independent. The assumptions were based on a fairly hefty mortgage figure, but the general idea remains strong, that if you get a lower mortgage rate you can save money.

Our contribution was to say that in an ere of low interest rates and with rates falling that “The banks all know that interest rates are coming down – and that one way to kill the switcher market is to get more people onto fixed rate mortgages,” said Karl Deeter of Irish Mortgage Brokers. “Banks are playing a defensive game. They’re not competing on variable rates – they’re competing on fixed rates instead.”

To us this is simplistic but also true, if banks fear attrition of their performing loan book the best thing you can do is take high variable margin from those willing to pay it, or who aren’t bothered by it (as is common with older loans) or to defend your position by locking in potential switchers seeking value by offering them value in return for commitment …

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Independent Newspaper mentions Irish Mortgage Brokers

In an article today about mortgages by John Cradden of the Irish Independent we were quoted extensively regarding our thoughts on loans, extracts are below:

Last month saw the official launch of a new mortgage lender here in the form of Australian firm Pepper, who will be lending to the self-employed and those who got into arrears during the downturn but are now back on track.

“Up to now, if you had credit issues you were virtually unbankable, that is set to change,” said Karl Deeter of Irish Mortgage Brokers. “Equally, as banks add bells and whistles to their product suite, you’ll see some will be about flexibility rather than price and that’s a sign of competition in product differentiation coming through.”

He adds that rates will improve with the new competition. “This was what happened in the last credit cycle and will happen again so time will take care of that, but Ireland also has unusually high risk associated with our loans so that has to be factored in.”

The cashback offers are another popular incentive, with …

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Mortgage rates falling and set to head even lower

We were never advocates or in agreement with the ‘make government force mortgage rates down’ campaign (albeit on very friendly terms with the campaign promoters). The reason was that rates needed to come down in a natural way or banks would curtail credit or charge more elsewhere, this was a balancing act between sorting out operational costs and back book issues.

The belief we had, and one that does seem to be bearing fruit, was a slower (ie: less popular) road to lower rates, brought about by competition.

This has been happening, it doesn’t make headlines because it’s a slower burn but the trend is under way and it goes like this: more competition equals lower rates, the higher rates spur competition as it attracts new entrants and in time, when matched with a low yield curve, rates will fall.

The introduction of Pepper into the market, along with general competition has meant that the rate reduction cycle has begun. The hallmarks are that firstly, rates are high after a financial crash, that always happens, those high rates bring in …

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The big switch

The time is coming near where One Big Switch say they will be shaking up the mortgage market in Ireland by using the power of group persuasion to get a bank to make an offer that is lower than that which is currently available.

Is this likely to succeed? In particular given that even the Central Bank and Government have failed when it comes to demanding that banks lower their rates?

We would think ‘yes’, because this campaign speaks to banks in the language they understand most, that of customers and money. With loan growth becoming much slower and aggregate credit continuously shrinking for the last eight years, it means that banks don’t have a large amount of choices for new business.

Attrition will be part of the plan and it isn’t one shackled by the Central Bank lending rules because they don’t apply to switcher loans where there is not a top up element to the loan. This means you take a proven credit track record and equity in the property and you obtain what we refer to as …

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Central Bank report on Switching mortgages

That so many people can switch their mortgage and don’t was always something that puzzled us as professional advisors.

(dowload the report here)

They found many of the things we intuitively knew but put numbers on it, issues such as inertia, complexity of product, and other issues like naive procrastination.

The numbers are not small either, savings of over €10,000 are being passed by and Irish consumers seem to be willingly paying about €65,000,000 more than they should to the lenders simply by not being more pro-active with their own finances.

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Talking Money – Switch your mortgage to save

This week on ‘Talking Money’ Karl Deeter and Jill Kerby were discussing ‘switching’ with Cormac on RTE’s Drivetime. It was coincidental that many of the points we made were reinforced by the Central Bank findings this week on mortgage switching on points such as assertive customer behaviour being important and not allowing inertia to hold people back.

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Newstalk: Pat Kenny Show on variable rates

We were asked to speak with Pat Kenny today about variable rates and the government plan to intervene to make banks drop them. This was, after considering various pieces of evidence shown to be a deeply political rather than pragmatic move. We also demonstrated that there are documents which the Minister for Finance had drafted up with the banks specifically stating that he would not intervene on matters of pricing, the recent round of ‘meetings’ is in direct contravention of that.

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