The nasty cycle of high-interest rate loans

Many of us had started from the bottom, working day and nights, and depending on government assistance to pull them through. Many individuals and families are stuck in a vicious cycle unable to break free of their chains. If you are stuck in this situation right now, it is crucial to learn the mistakes other low-income individuals have made and try to avoid them. Not only avoid them but to also improve your money mistakes.

You may be wondering what is causing these people to be stuck in the low-income bracket? The main culprit is your community Payday Loans centres and pawnbrokers. Although there may not be many payday loans in Ireland, they have grown to have a bad reputation in the UK already.

Debt never sounds good, but there are the good and bad. Of course, if an individual is investing in a new restaurant or new company there will start off with debt. With time they can potentially pay it off and earn more from the situation.  But in this case, hearing high interest is one of the …

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What does Quarantine’s End Mean for Property Prices?

Dublin property agents predict that local property prices can see as large as a 5% increase as the lockdown regulations are lifted in the upcoming months. Many agencies have reported a large influx of registered potential buyers, some firms even registering nearly tripe the number as the same period in past years. This rush of buyers is largely due to the pandemic putting stops to many families’ plans of setting and signing mortgages. For others, it may be the desire to invest in a discounted property before prices skyrocket. Regardless, the sudden increase in demand for properties is sure to cause discrepancies within the real estate market.

Several factors driving demand include the strength of new mortgage approvals in the last quarter of 2020, and the growing availability and willingness of mortgage-lending rule exemptions of banks to offer to potential borrowers in 2021. There has also been a large group of potential buyers who have recently obtained loan approvals and are potential targets for these mortgage-lending rule exemptions in the past 6 months.

As for the number of properties in …

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Quarantine Leading to a Rise in Property Prices

As the COVID quarantine still impacts our daily lives by forcing people to work from home and limit public interaction, the predicted property prices in Ireland are said to skyrocket as much as 6% this upcoming year. In the newly released annual review today by The Society of Chartered Surveyors Ireland (SCSI), out of their three agents, two of them predicted an increase in property rates in 2021.

While that 6% is said to be an average across Ireland, different areas are predicted to have slightly varying inflated rates. For example, Dublin, as the area with the highest current prices, is predicted to see an average increase of 3% in property prices. But for other areas such as Leinster and Munster, are predicted to have price increases of 4% and 5 % respectively. Some areas are predicted to see price increase reflecting this past year within the range of 1-3%, yet other areas are predicted to experience price increases that could even reach 8%.

According to SCSI’s vice president; TJ Cronin, many of these seen increases in prices are said …

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Social Media tips for Mortgage Brokers

Social media opens so many opportunities for mortgage brokers to expand and gain new clients. This is also an inexpensive way for brokers to reach advertise and target potential clients. It is a great idea for brokers to use all types of social media such as Facebook, Twitter, and LinkedIn. Each of these have unique ways of benefiting a mortgage broker and their business.

Facebook

Facebook is one of the most well-known types of social media that can be utilized. Over 2.4 billion people are using Facebook every month. When using Facebook for your business, you must make sure to advertise in the countries and cities that you are wanting to serve. Also picking your audience is another thing that brokers will want to pay attention to. Who are you trying to reach? What age, gender, or educational background. If you have any types of tips for clients on your company website, you can start sharing those one your Facebook page. Not only are these tips helpful for potential clients but they can also bring more traffic to your website …

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How are online mortgages changing the mortgage industry?

How are online mortgages changing the mortgage industry? Not long ago, the idea of doing a mortgage online seemed almost impossible, yet here we are seeing mortgages being done online. They may not be for everyone but with so many things moving online, why not mortgages? With COVID 19, it seems to be the perfect time for this industry to grow.

You can simply link your bank account or upload your bank statements, tax information, proof of assets, and any other documents that are needed securely online. This saves the time of having to collect these documents and is much more efficient. Being able to apply online, takes away the manual work of entering data which can also help reduce the number of errors that can occur with traditional ways of applying. You are also able to sign online which keeps you from having to interact in person during these times.

For those of you who are not the best at keeping your paperwork organized, this may be the answer for you. It is much easier to organize and find …

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Today FM The Last Word features Irish Mortgage Brokers talking about Ulsterbank loan sale

We were happy to take part in a conversation on the Last Word with Matt Cooper about the recent Ulsterbank loan sale, Karl Deeter was there for Irish Mortgage Brokers and Mick Barry TD was also part of the interview.

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Non-credit fuelled booms

There has been an ongoing narrative that the last housing boom (and many others) was only possible due to excessive credit. We have argued for a long time that this is a mistaken interpretation. While credit can make a bad situation worse, just like adding fuel to a flame, it is not the genesis of the problem.

We were pleased to see this view articulated by the Central Bank Governor Philip Lane recently. He stated that “cash buyers of property are limiting the ability of the Central Bank to control house prices through mortgage lending rules” he “singled out cash buyers as one of the key drivers of inflation in the Irish property market. Cash buyers used to account for about 25 per cent of house purchases in Ireland, but since the crash and ensuing credit crunch this figure has risen to 60 per cent“.

This is a point we have been making for years, firstly was that first time buyers are not, and have not been the problem. That was part of why we were specifically …

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One Big Switch findings on mortgage holders

There was an interesting infographic out today from One Big Switch showing what people have done in order to make their mortgage repayments.

It ranged from working extra hours, to taking fewer holidays and socializing less. What is interesting about this, is that nobody tends to look at the wider economy effects of high mortgage rates, and the Central Bank while saying they want to examine them, cannot and will not do anything about it.

Higher rates act like an informal ‘tax’, and as some banks are foreign owned it means taking income out of the Irish economy and funnelling it elsewhere, this affects our balance of trade and was a reason we always questioned the Patrick Honohan diktat of not having an issue if all banks were foreign owned.

This informal tax reduces expenditure in the productive economy and goes towards rationalizing zombie balance sheets, so lower rates should be a priority for everybody, but the way to get there isn’t force, it’s competition and for that reason we are hopeful that the switching campaign will be a successful …

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The rich will prosper when the rules make sure they do.

We have been critics of the Central Bank mortgage lending caps, believing instead that a rule similar to section 149 of the Consumer Credit Act could be used on underwriting to ensure that banks can’t find any way to loosen standards rather than employing ‘hard caps’.

What’s more, it has kept many people out, caused a chaotic 4th quarter and ensures that well off people are unaffected while those most harmed are the less well off. Our submission to CP87 was ignored in its entirety but that doesn’t matter because the results speak for themselves.

Mortgage lending is still mainly going to first time buyers, 57% of draw-downs were to first time buyers, but then look at the income multiple and you see that this is nearly five times average earnings.

What does that mean? For a start, that people on high wages with high savings were doing a lot of the lending, of course that’s fine because it was always a case that they had access to credit.

The issue is more …

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Two identical first time buyers walk into a bar, one qualifies, the other doesn’t

The Central Bank rules on curtailing mortgage lending have had an interesting effect, first is that we are seeing more loans draw down that might not have because people are bringing forward consumption due to the fact they won’t qualify for the same amount again in the future. This is literally the opposite of the intended effect.

Second is that it’s causing chaos for prospective buyers who may hold an exemption or need an exemption because there are quarterly reporting rules that mean banks can’t offer a new loan until they know if an old one will be drawn or become an NTU (not taken up).

Perhaps the easiest thing to do is explain it, currently you can’t get an exemption from Ulsterbank or AIB/EBS/Haven or BOI, but you can from PTsb and KBC. The banks that can’t give you one (and remember it’s only one of LTV or LTI not both) are hogtied because they have given the limit of exemptions (c. 15%-20% of lending) already in loan offers and they have to estimate both the annual and quarterly …

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