Newstalk Lunchtime: Ciara Kelly talks to Karl Deeter about mortgage prices being high

Ciara Kelly interviewed Karl Deeter from Irish Mortgage Brokers in a very comprehensive manner regarding mortgage rates in Ireland and why they are so high. The interview covered a lot of ground, from default risks, to competition, and also why brokers are so important in the mortgage market.

It ended with a suggestion that perhaps banks can’t be entrusted to deal with mortgages in the absence of independent advice and that on that basis they should not be allowed to advertise them and that we should offer new lenders coming into the market some benefit in order to increase competition here.

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Proportion of buyers with mortgages surpass those who buy in cash in first time since market crash

Recent data reveals that the percentage of home buyers with mortgages have surpassed that of those who buy in cash. This is the first time this has happened since the property bubble and subsequent crash. On July 26th 2016, an Irish Independent/Real Estate Alliance survey reported that 60% of houses are bought with cash, now, roughly a year later, the same survey concluded that less than 30% of homes are purchased by cash buyers.

 

During the years after the housing crash, the high percentages of cash buyers was caused by higher interest rates, stricter restrictions on lending, higher rates of unemployment, and the large amount of speculators purchasing properties as assets after the original home owners have defaulted on their loans. This indicated a general distrust in the market and the squeezing out of mortgage buyers who have defaulted on their homes.

 

Central Bank economist Dermot Coates predicted in 2016 that the proportion of cash buyers was “neither sustainable nor likely to continue into the future”. …

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Mortgage approvals up 45% in May

Data released by the Banking and Payments Federation Ireland revealed that mortgage approvals have gone up 35% May of this year in comparison to May of 2016.

 

There were a total of 4,124 mortgages approved in May, with a combined value of €884 million. This represents an increase of 1,078 mortgages and a €275 value compared to May of 2016.

 

This increase in mortgage approvals is likely caused by lower interest rates and by greater general confidence in the economy. It also represents a continuously growing demand in the housing market, and a supply that is slowly but surely catching up.

 

First time buyer mortgage approvals in particular are up 45.8%, the value of such mortgages also saw an even more dramatic increase of 60.7% compared to May of last year. This indicates growing confidence on the part of borrowers. First time buyers are purchasing more expensive housing and are seeing housing prices rise.

 

It is …

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Mortgage Market Update

The Financial Broker gives readers an overview on currently property prices and mortgage market conditions.

The Central Statistics Office published a report showing price inflation on property had increased 10.7% in the past year up to February. A similar report reveal how the number of newly build housing last year was 14,932 units when estimates denote a demand of up to 50,000 units. These numbers illustrate a problem in the current mortgage market, which this article pinpoints the causes of. The author laments about rising property prices, arguing that many potential home buyers have missed out on the prime time to purchase property, and are currently no long capable of affording the housing of their choice at an acceptable price.

The author attributes the current housing price and rent inflation in Ireland as consequences of a lack of supply in urban areas instead of lax macro-prudential regulations. In fact, she argues that current Central Bank regulations are too restrictive, and thus have prevented demanders from being able to locate and buy affordable housing. While the prudential regulations have lowered the …

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Dublin property prices 2012-2013

This post is a guest blog by a person who doesn’t want to be named.

The two year period between January 2012 and December 2013 was a remarkable period in the movement of the prices of houses and apartments in Dublin. The period started in January 2012 with house prices dropping by -21.7% from a year earlier while apartments dropped slightly less at -18.4% and yet by the end of the period.

In December 2013 house prices were rising by 15.3% annually with apartments rising further to 20.8% annually. Another feature of this period was the manner in which the prices moved, with house prices steadily slowing down their annual decline all through 2012 and from January 2013 to December 2013 having continuous positive increases in annual prices.

However apartment prices showed a lot more volatility over the period entering positive territory in February 2013 when compared to a year earlier but dipping back into negative figures for the next three months with the result that it was June before apartment prices showed increases on the same month a year …

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Primetime: excessive interest rates

Last night’s Primetime had a well thought out piece on variable interest rates.

The general thesis was that variable rates are ‘too high’ and that banks should not be allowed to charge them, the figure of 1% of a ‘cost of funds’ was mentioned several times and various suggestions were made as to making the banks stop the practice of setting their own prices.

To begin with, the ‘cost of funds’ at 1% may be what a bank buys their raw materials at, but then you have to make more on top of it to allow for operational costs, to provide for losses, regulatory burdens, margin and the like. It is worth noting that in AIB’s interim statement which was only made yesterday that they noted that “Net Interest Margin (NIM), excluding ELG, expanded to c.1.64% year to date (YTD) September 2014”.

This means the idea of 4.5% minus the 1% ‘cost’ equating to a 3.5% ‘profit’ doesn’t stack up. If it did the net interest margin …

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Moncrieff Show: news review on economic matters 25th August 2014

The Moncrieff Show on Newstalk had us on to talk about interest rates, economics and taxation. In the unmistakable style that Sean Moncrieff is known for, suffice to say, he kept Karl on his toes!

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Best mortgage rates September 2012

Mortgage rates are constantly under review and even though we might be expecting an ECB rate cut this week to 0.5% (which will be a historic low) it is highly likely that rates will sit still or even rise. The conundrum for consumers is about the rate choice, banks have just upped rates prior to any rate cut and by doing this then not passing on a rate cut they actually increase their margin significantly.

The best mortgage rates at present are below:

<50% LTV: AIB 3.34% >80% LTV: AIB 3.79% 1yr fixed: AIB 4.15% 2yr fixed: BOI 4.49% 5yr fixed: PTsb 3.7%*

*The PTsb 5 year fixed rate is a good example of a pricing discrepancy that is related to the PTsb loan book, this rate is excellent, lower than the standard AIB variable and fixed for 5 years! The reason for this is that by lending on this type of property PTsb will increase their assets (to fix the loan to deposit ratio that is too high) quicker and in return they will give up some margin.

If …

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