On September 21, 2010 By Karl Deeter In mortgagesWith 2 CommentsTags: 100 % mortgages ireland, 100% morgage, 100% mortgage, 100% mortgages, 2nd mortgages KBC move to 90% LTV
For sure, property prices are related to nothing else but what the banks are ABLE and willing to lend out in each particular case. It’s not inconceivable either that they have now accumulated enough funding through the various recapitalisations; NAMA and the taxpayer making good on the worst and most uncollectable of their loans; and their ability to borrow whatever they need from the ECB with the backing of the state. If they have, and they are able to fund plentiful purchasers at a certain price level, then that repairs their balance sheets in terms of the property collateral they hold. All well and good… Is it? Ricardo pointed out that “No wealth can be created by banking operations. Rather, they are an important device to bring about a better arrangement of productive forces”… By using their newly acquired ‘capital’ to continue funding inflated property purchases (taking the base value as being the mean between 1973 and 1997, adjusted for inflation, because the property boom quite obviously goes back to 1997 if you investigate the data), they are continuing with the decimation of our productive forces. It can only end in tears further down the line…
Or is it that KBC having absorbed significant losses for the last two years and heading for €1b profits this year, are thinking that :
i) Ireland is a great place to make some money. We have no idea at what rate they will ultimately lend, certainly no trackers, indemnity bonds are a given and no doubt some other high cost low value product tucked in at the back of it.
ii) They do not have large tranches of former development land not fit even for agricultural use and can focus on obtaining a larger share of a less risky market.
iii) They have had enough of the Irish navel gazing and are trying to change the chicken little outlook that has pervaded our society for the last two years. (unlikely as they are a bank)
iv) They can set their own agenda without having to hear the words “we bailed you out and so can tell you how to run your business”
On the whole it is a very positive move. Anything that increases spending is fine by me. By my reading money under deposit has increased by over 400% over the last two years. That would say to me that there is plenty of money but nobody is willing to spend due to fear of loss. The next sure fire get rich quick scheme like the last property pyramid scheme we had will make a fortune.
Ultimately when confidence returns so will bragging about the top of the range SUV, holiday home in Marbella and yacht in the Maldives as nobody really cares that you may have earned 5.23%aer less dirt on your deposit and you cannot flaunt a deposit certificate.
What the rest of us have to look forward to is : complaining that you make more than us, have more holidays than us, own more property than us, particularly as we knew you when you didn’t have an arse in your trousers and we certainly will look forward to seeing said SUV being towed away on the back of a truck.