Noleen Blackwell of Free Legal Advice Centre and Karl spoke to Mark Cagney and Sinead Desmond about mortgage arrears, default and what the issues were in the current market.
Banks won’t offer 25% off your mortgage for your tracker
The story today from the Examiner by Stephen Rogers is worth a read, but at one point the IBA chief Ciaran Phelan states “Banks may still attempt to offer terms to customers to woo them off trackers, but we believe that tracker customers would need a break-deal offer in excess of 25% to make it worth their while.”
I don’t know where that calculation comes from – because it ignores the time value of money on a future debt and also doesn’t take into account current debt pricing issues. For instance, rates on all sorts of financial products are rising, if you have non mortgage debt this is a concern. It is the ‘weight’ of debt rather than the ‘rate’ which is the problem for the majority of people.
By that I mean: a person who is struggling with several debts may be well served by letting go of their current tracker, but that doesn’t mean they have to abandon it, a bank could just as easy turn around and say ‘we’ll give you …
Are banks lending?
A highly debated element of the recapitalisations to date and the NAMA debate have to do with credit flow, that if banks are given money that they will start to lend it out, the problem being that we currently have a rapid credit contraction.
The new Financial Regulator Matthew Elderfield made his first public appearance since arriving nearly three months ago, and he said “A robust recapitalisation exercise will ensure that Ireland’s banks start this process in a stronger position and with a better funding outlook”. He is alluding to the thing that many people are forgetting, that when a bank has as high loan to deposit ratio they naturally hoard credit during times of widespread credit deterioration in order to ensure they have sufficient capital to face the impairments.
NAMA won’t ‘force lending out’, this is the aspect of fiscal policy not being able to ‘push on a string’, fiscal and monetary policy can pull a string and reign credit …
Apply for a mortgage online
There has been so much progress in the mortgage market, and nowadays so many companies have your information on file that many people reckon you can easily apply for a mortgage online, surely it wouldn’t be that big a deal right? In many cases you should also be able to get your conveyancing done in a similar manner with minimal upset, but in every respect there is almost no progress in terms of online trading for mortgages.
There are several software solutions that send information to a lender but none of them offer an actual ‘suite’ solution, by that we mean sending information, property auto-tagged pdf scans of documents, and the ability to synchronise updates so that a person can effectively deal with a lender over the web.
Every site you go to that says ‘apply online‘ is really saying ‘fill in our form and we’ll call you’ because there isn’t a way to fully apply for a mortgage online at present, and the job of …
Who has the best mortgage rates?
The ‘best rate’ is a misnomer because interpretation of what is the ‘best’ is a subjective question, for a very conservative person a 10 year fixed rate is ‘the best’ and from that point the ‘best’ will likely be whatever is the cheapest ten year fixed rate, having said that, after careful consideration the best 10 year fixed rate mortgage might be one that allows you to pay off a lump sum during the fixed period without any penalty thereby ensuring that you can eat into your capital quicker, is a feature like that worth extra money each month if it isn’t the cheapest? To some people it may be, to others it isn’t.
If you are considering a property purchase and are not a cash buyer then you will need financing, and this comes at a ‘price’, the interpretation of that price is generally the rate, so which rate is better (we’ll assume you want a 1 year fixed rate), 2.5% or 2.6%? Naturally you’d be inclined to say it is …
Why is the bank asking for my marraige licence?
The approach of underwriting in banks is an ever changing beast, sometimes they seem to focus only on payslips and p60’s, at other times its Salary certs and bank accounts for the last six months, recently we have seen a rise in the number of people who are being asked for marriage certificates or ‘marriage licences’.
Initially it seemed a bit odd and then (this is one of the times where you grin realising the world has changed and failed to inform you) we saw that it was always coming up in married couples where the woman hadn’t changed her last name to that of the husbands.
In our office its a 100% change from the old way, none of the women have their husbands names, and of the married men, none of their spouses took their names (myself included). It seems there is a serious social shift in place with the current generation of people getting married, it would seem that fewer and fewer women are taking the …
Moving paper or ‘selling your mortgage’.
In the USA and Canada they sometimes refer to a process of ‘moving paper’ which is where a person sells their mortgage – the actual debt and all the conditions that go with it. That might sound kind of pointless but it would certainly be a valuable option in Ireland and could perhaps offer (if it existed: it doesn’t) a selling advantage of debt holders over non-debt holders in selling a property.
Take an example of a person selling a house for €200,000 if they were able to offer their current mortgage of ECB+1% to the prospective buyer then it might be an attractive proposition! In particular, the bank might benefit because even if the person was in negative equity it might be worthwhile to buy such a debt product at a premium.
People don’t think about buying or selling mortgages (institutions do it all the time), and yet we readily consider buying and selling debt (which is what the bond market is). Why can’t we do the same for the individual …
WE HAVE MOVED! To 33 Pearse Street.
We have moved our offices to a new location (still on Pearse Street) to 33 Pearse Street. It’s about 250 metres towards the city centre from our old offices, and three doors down from O’Neills pub (everybody in Ireland seems to use pubs as landmarks!).
The new office decision came when our lease on our old office came up for review, we felt that there were deals to be had on the market and it didn’t make any sense to stay put, if you drive down Pearse Street aiming to go to the north side then you’ll have to pass our offices, its the place painted red and yellow.
Other than our location everything else has stayed the same (our broadband is temporarily down), you can email us at our regular email addresses and our phone number is still 01 679 0990. Individual broker direct dial phone numbers have changed but we’ll publish them soon on our website and make sure that everybody gets an email.
The blog will be back up to full speed as of next week and …
Survival of the weakest, only in Ireland.
If the State can’t organise a bailout effectively then what hope have they of running a bank? A simple and yet profound question: if the bankers who run banks for a living (many having survived the 70’s and 80’s) can’t find the answers then what hope have the state who have no track record in doing so?
This is not a simple situation, banks that survived the Great Depression have crashed and burned, given this, is it vital to save every bank? Is a bank going to make it even with a slush fund? Thus far I remain unconvinced.
Anglo Irish Bank was set to get a bailout to the tune of 1.5 billion Euro. This couldn’t be arranged in time to save the bank and they have been nationalised, the speed of their fall from grace tells us at least some basic facts:
Anglo were not the strongest bank in the bunch, I won’t get into balance sheets, loans, impairments or anything else, the mere fact that they fell first …