What is happening with interest rates, why, and what can you do?

What is happening with interest rates?

Interest rates rise and fall, we have been in a secular-ZIRP (zero interest rate policy) environment for quite some time and as people who subscribe to the monetarist school of thought, this would always lead to inflation which we are seeing now, albeit a fairly delayed response given how long this policy has been in place.

Why?

Not too long ago the yield curve was negative 20 years into the future such was the dismal outlook of markets for any level of inflation, but then you had a pandemic, the ‘great resignation’ and between labor and supply constraints along with monetary policy effects, there is inflation you haven’t seen in 40 years. Now the curve is negative only one year into the future and the price in the money markets has risen.

Just to clarify this, many mortgage providers get their money by buying it (you buy at X + interest rate and then ‘sell’ it to borrowers at X+margin [which is ideally above the price you bought it at]). In an oversimplified manner, …

Read More →

How to get the lowest rate on your mortgage

When applying for a mortgage, you will notice that rates vary greatly. These rates determine on a number of things, including the length of your mortgage term, the size of your deposit, your credit score, and which lender you choose. With so many different mortgage lenders available to choose from, this can be a daunting process, especially for first time buyers. Securing the lowest rate is incredibly important, as it will make your monthly payments smaller, thus saving you money over the whole lifetime of the loan. Here are a few things to focus on during your application process to ensure you get the lowest rate possible.

Shop Around

You wouldn’t buy a car without driving a few first, or a mattress without laying down on more than one, right? In a similar way, if you want the best mortgage rate, you should shop around with different lenders. This process should entail researching different lenders and the products they have to offer, as every lender has different loan types, terms, and interest rates. You also should apply for more than …

Read More →

How you can be approved for a mortgage in Ireland despite Central Bank’s rules

It’s no secret that house prices are continuing to rise in Ireland. Because of this, it is more important now than ever to maximize the amount that you are allowed to borrow. The Central Bank’s rules often do not make this process any easier, as many have criticized the Central Bank on its restrictive rules in terms of how much people are allowed to borrow. To be approved for a mortgage in Ireland, you first have to fall within the Central Bank’s income rules. Second, your lender will evaluate your repayment capacity.

First, the Central Bank restricts lenders to loans of 3.5 times the borrowers’ income (joint and single), unless they are granted an exemption. This means that someone making €40,000 can borrow up to €140,000, and a couple making €100,000 combined can borrow up to €350,000, respectively.  However, to be approved for a mortgage, they must also pass a stress test, per Central Bank rules. This tests the ability of the borrower to repay the loan each month should interest rates rise by 2 percent above what the lender …

Read More →

5 Ways to save for a Deposit

Saving up to buy a home can seem like a big challenge. Your home is likely the biggest purchase you will ever make, and unlike saving for retirement, this payment is a large sum of money that you will need to access soon. This may seem challenging, but with a solid savings plan, anyone can save enough to put a down payment on their dream home. In this article, we’ll cover 5 easy ways to start saving for your down payment today.

 

Budget your money wisely

The first and most important step in any savings plan is budgeting. To build your budget, examine your bank statements and credit card payments to see where your money is going. Make sure to keep track of how much you spend on necessary payments, such as rent, utilities, and student loan payments if you have them. Next, consider how much you spend on eating out, entertainment, and other nonessentials. While you are saving, it is a good idea to set limits on each of these categories and stick to it, setting aside the …

Read More →

Could harsher punishments for mortgages in arrears lead to lower rates?

Mortgages are notoriously expensive in Ireland, with rates twice those of the Eurozone average. How best to address this problem has been a hot-button issue in Ireland for some time. Now, some are putting forward a new solution: harsher punishments for borrowers with mortgages in arrears. One of Irish banks’ stated reasons for rates being so high is that failing to meet mortgage payments doesn’t have high enough consequences for borrowers. For example, home repossessions in Ireland aren’t very common, since the process is so complex and can take several years. As a result, loans are riskier investments for lenders in Ireland relative to other Eurozone countries. If this is indeed the reason for rates being high, it follows that tougher treatment of such borrowers would lead to lower rates for everyone else.

Regarding the number of borrowers this would affect, statistics from the Central Bank of Ireland show that 5.3% of all principle dwelling house (PDH) mortgage accounts were in arrears as of December 2020. This percentage includes a total of 38,785 accounts. However, it’s also worth noting …

Read More →

Covid-19’s impact on mortgages

The covid-19 pandemic has had a massive impact on all areas of the financial world, including banks, loans, and mortgages. Mortgage arrears, or payments failed to be made by their original specified due date, had been consistently falling every year since 2013. However, Fitch predicts that arrears of at least 90 days will constitute about 14-16% of Irish home loans this year, their highest rate since the financial crisis.

Additionally, the pandemic has led to widespread payment breaks for mortgages in Ireland. Payment breaks involve the deferring of repayment of a loan to a later date; they do not change, however, reduce the total amount to be paid. In March of last year, the major banks in Ireland agreed to industry-wide payment breaks for those facing financial hardship as a result of the pandemic. This was done out of consideration for borrowers’ situations and lenders’ own desire to avoid high default rates. Ultimately, by May 2020, one in nine owner-occupier mortgage payments was on such a break.

Though this measure was taken of the industry’s own volition, soon after, the …

Read More →

Types of mortgages and lending rules

Irish law has specialized sets of lending rules depending on the type of mortgage application. Types of applications are split into three different categories: first-time buyers, remortgaging or switching, and buy-to-let buyers. Depending on which of these categories an application falls under, different loan-to-value (LTV) and loan-to-income (LTI) limits will be used. The former refers to the minimum deposit a borrower must have on a home before getting a mortgage loan. The latter refers to the maximum amount of money borrowers can receive in relation to their yearly gross income; while this is normally capped at 3.5 times one’s income, lenders can provide additional allowances of varying amount depending on the type of application.

Firstly, there are first-time buyers. These applicants are those buying a house for the first time, so the deposit required by LTV limits is understandably less steep. They will need to have a minimum deposit of 10% of the home’s total value. For example, if the price of a home is listed as €250,000, a 10% deposit would amount to €25,000. Lenders are allowed to have …

Read More →

Tax Relief methods that you may be looking for

Taxes have and always will be the stress of most people’s adult life. And there are two sides of the same coin in terms of feelings you may receive when getting your Revenue yearly about your taxes. And last weeks, there are many people who are either ecstatic and relieved and then there are others who are scrambling around to find some way in order to lessen their tax liability.

Either way, you have most likely in one way or another been affected by the wage subsidies that the pandemic has caused. But there are still some things you can do to lessen that tax bill just a little. Of the following hints, if you have not claimed any of them since 2017, you can still be eligible for that period of time.

1: Tuition Fees

With children in third-level education, tuition can cost a fortune. But you can also benefit from tax relief on fees paid for undergraduate programs, postgraduate, IT, and foreign language courses. The relief starts at 20%, meaning that 20% will be returned to your pockets.

…

Read More →

Concern for Housing Supply in Ireland

COVID regulations have hit many markets hard, but possibly the worst be in the housing industry. Due to certain restrictions, the housing supply of homes built between 2020 and 2022 is predicted to be 23,000 fewer than normal. This, combined with the growing demand for housing as well as the built-up saving of household revenue during the pandemic could cause the demand for housing in Ireland to skyrocket, leading to higher pricing. Over the last year, it is predicted that over €13 billion have been saved up by families in Ireland, and with that many households are looking to improve their housing situation at the end of quarantine. The spending demand of these households far exceeds to the market supply of housing to be offered to said customers.

The Central Bank predicts that there will be 18,500 new housing completions in 2020, and in 2021 and 2022 that number will rise to around 22,000. This in total will be 23,000 fewer houses entering the market in these three years compared to the normal growth rate of housing supply prior to …

Read More →
  1. Pages:
  2. 1
  3. 2
  4. 3
  5. 4
  6. 5
  7. 6
  8. 7
  9. 8
← Older Entries