The pincer of fixed rates while in negative equity

A recent article in the Independent stated that ‘fixed rate borrowers are taking all the pain’. The base rate has fallen from 4.25% to 1.25% with a further rate reduction expectation taking the EU to a base of 1%. What this means is that people who felt the drop off in base rates (tracker mortgage holders & most variable rate holders) are now better off to the tune of about €425 per month.

However, for those on fixed rates the story is the reverse of this, they have not felt any reduction in the amounts they are spending monthly while at the same time many have had to live on less due to wage cuts, levies, and job loss. The fees for ‘breaking’ a fixed rate are usually from 3 to 6 months of payments.

So what can you do? If you have the savings to pay for the move you can go that route, but if you have been …

Read More →

Irish variable rates March 2009

Here are the variable rates on offer at present from Irish lenders

AIB variable 2.79% ICS variable <50% LTV 2.90% BOI variable <50% LTV 2.90% AIB LTV 50-80% 3.00% EBS variable 3.13% Halifax LTV<50% 3.15% KBC (12mth disc.std.var) 3.98% Haven variable 3.7% PTsb LTV<80% 4.1% PTsb LTV>80% 4.2% NIB variable 4.23% Bank of Scotland 4.23% First Active 4.5% Ulsterbank 5.4%

These variable mortgage rates are as of March 2009 ranked according to prices.

Read More →

The 'Rich Man' died a 'Pauper'… LTV's and Life Cover

There is a risk creeping into the lives of many that they are not aware of, one that every generation has continually faced and also one that is the greatest wealth destroyer of all, namely death and debt. Nothing kills wealth quicker than death and in particular in circumstances where the estate is not settled correctly in advance or where there are large debts that were not covered.

Every person I know is bulletproof in theory but corporeal in practice and that means that many of us have risks that we are not covering, you can’t cover 100% of the bases 100% of the time but some do need to be covered and it doesn’t have to be rocket science.

How did the rich man die a pauper? We’ll take an example of a person with a home and two RIP’s (residential investment properties), We’ll say that the lady of the house is a solicitor earning €120,000 a year her name is Jane Doe, and the man of …

Read More →

The ‘Rich Man’ died a ‘Pauper’… LTV’s and Life Cover

There is a risk creeping into the lives of many that they are not aware of, one that every generation has continually faced and also one that is the greatest wealth destroyer of all, namely death and debt. Nothing kills wealth quicker than death and in particular in circumstances where the estate is not settled correctly in advance or where there are large debts that were not covered.

Every person I know is bulletproof in theory but corporeal in practice and that means that many of us have risks that we are not covering, you can’t cover 100% of the bases 100% of the time but some do need to be covered and it doesn’t have to be rocket science.

How did the rich man die a pauper? We’ll take an example of a person with a home and two RIP’s (residential investment properties), We’ll say that the lady of the house is a solicitor earning €120,000 a year her name is Jane Doe, and the man of …

Read More →

Banks: give you an umberella when its sunny and take it back when it rains

Samuel Clemens (aka Tom Sawyer) brought us the quote which is the title of this post, ‘banks give you an umbrella when its sunny out and take it back when it rains’, his simply worded expression held as true in Missouri of the late 1800’s as it does today.

Recently we had a client who is on an interest only mortgage, their circumstances have changed right when their interest only period was about to run out, naturally we suggested that they ask for a continuance of an interest only period, while this won’t work down the capital amount owed it will keep their cash flow alive and if you have to chose between owing more and being unable to pay then the former is preferable. Sitting in a pot might not sound great but it beats the raw fire.

The bank were happy to comply and they sent out a letter, it was at this …

Read More →

Beware of Expert Opinion from Promoters.

Lately we have been witnessing a resurfacing of property promoters in the press after a long period of silence. We want to reassert our advice that people should do their own homework before embarking on a large asset purchase be it property or otherwise.

How can you tell if it makes sense to buy a property? Our suggestion, as a financial firm, is that you talk to a financial adviser, you determine your own circumstances, you look at your own unique situation, and that you don’t base your opinion on what you hear on the radio or TV from people in the property business. The people who are restarting to champion property now are doing so under the banner that ‘it is cheap to buy’, part of the ‘cheap’ is due to exceptionally low interest rates, which invariably will go up some day.

That is not to say ‘don’t buy property‘, far from it, what we are trying to tell people is ‘make prudent decisions’, don’t buy any asset you can’t afford …

Read More →

Understanding Deposit & Lending Margin relationships

Part of the way you can get a view of a lenders margins is by looking at the deposit margins they offer because deposit margins usually reflect – at least to some degree – lending margins. This is because there are two sides to a balance sheet with any bank, on one hand you have deposits which you attract in order to fund lending so if you have low deposit margins that is probably indicative of having low lending margins (although not always!), however, if you have higher deposit margins it is almost certain that you have high lending margins.

NIB released their results today so we’ll take them as an example as well as Anglo Irish Bank to demonstrate the way that you can read into certain elements of how a bank is run from the outside and also on the type of business they engage in.

For a start you’ll need to know that average margin on a mortgage with many banks is less than 1% and that is from …

Read More →

Understanding Deposit & Lending Margin relationships

Part of the way you can get a view of a lenders margins is by looking at the deposit margins they offer because deposit margins usually reflect – at least to some degree – lending margins. This is because there are two sides to a balance sheet with any bank, on one hand you have deposits which you attract in order to fund lending so if you have low deposit margins that is probably indicative of having low lending margins (although not always!), however, if you have higher deposit margins it is almost certain that you have high lending margins.

NIB released their results today so we’ll take them as an example as well as Anglo Irish Bank to demonstrate the way that you can read into certain elements of how a bank is run from the outside and also on the type of business they engage in.

For a start you’ll need to know that average margin on a mortgage with many banks is less than 1% and that is from …

Read More →

The 'Crunch' is nearly over, but what lies in its wake?

The Euribor 3 month money is at 2.822% which means the margin on interbank money is now at 0.322% (the current base rate is 2.5%) over the base. The Credit Crunch by definition is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from the banks. One of the biggest hallmarks of the whole financial crisis was the disjointed relationship of the Euribor from the ECB.

Traditionally the Euribor (we are talking about the 3 month money generally) trailed the ECB at c. 0.1 to 0.2%, so if the ECB base rate was 4% then the Euribor was (approximately) 4.13% or something like that. In July of 2007 this all changed and margins on interbank lending shot through the roof, to such an extent that literally thousands of loans in Ireland alone turned into negative …

Read More →

The ‘Crunch’ is nearly over, but what lies in its wake?

The Euribor 3 month money is at 2.822% which means the margin on interbank money is now at 0.322% (the current base rate is 2.5%) over the base. The Credit Crunch by definition is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from the banks. One of the biggest hallmarks of the whole financial crisis was the disjointed relationship of the Euribor from the ECB.

Traditionally the Euribor (we are talking about the 3 month money generally) trailed the ECB at c. 0.1 to 0.2%, so if the ECB base rate was 4% then the Euribor was (approximately) 4.13% or something like that. In July of 2007 this all changed and margins on interbank lending shot through the roof, to such an extent that literally thousands of loans in Ireland alone turned into negative …

Read More →
  1. Pages:
  3. 1
  4. 2
  5. 3
  6. 4
← Older Entries
Newer Entries →