Pat Kenny interviewed Karl Deeter about the Central Bank lending rules and why, in his view, they could have been done slightly differently and better. It’s an interesting insight into the difference between control-lead regulation and results-oriented regulation.
We spoke with Mary Wilson of Drivetime on RTE about mortgage rates and what the implications were of the changes Michael Noonan (Irish Minister of Finance) announced that day. We also read through the Central Bank report on the subject and considered the findings of their analysis in terms of the impact it might have on borrowers.
Anton had Karl Deeter on to discuss the proposed mortgage loan caps that were being discussed by the Central Bank. Our view is that something more nuanced was needed, thankfully, at the time of posting this we now know the details and they did opt for a more carefully balanced solution.
On talking Money on the 24th of November we looked at the issue of mortgage arrears and the role of the Insolvency Service in terms of finding ways to get solutions with guaranteed end dates. There is a mismatch between the goal of banks and borrowers and it is resulting in solutions that often don’t work.
Miriam O’Callaghan from Primetime spoke to Karl Deeter of Irish Mortgage Brokers and Ronan Lyons from Trinity College and Daft about the idea of mortgage limits as well whether they are a good idea or not.
We were asked to speak to Fionn Davenport & Kieran Cuddihy on Davenport After Dark about the changes in the Land Conveyance Law Reform Act 2013 which may result in more repossessions in the future, we agree with this view, the question is what [glossary id=’6898′ slug=’mortgage’ /] holders will be targeted first?
A new low has been set in how ridiculous the area of debt mediation can be when dealing with banks. The most recent one is where re-arranged a clients finances to the point where they could make full repayments.
You would think such a proposal would be immediately accepted? Think again, Ulsterbank rejected this proposal for a client of ours. While we cannot reveal specifics what we can say was that the client merely needed some arrears re-capitalised and for a tiny proportion of arrears interest to be waived because there were delays caused by Ulsterbank not returning proposal letters our client sent them (which separately has CPC, CCMA and MARP implications), and was only requested as a way of accepting that both sides had short comings.
They could have said no to that part, as they ‘don’t do debt forgiveness’ (even when they create the problem), but instead they even refused to capitalise arrears which would be repaid in full as per the terms of the existing loan.
It isn’t often that our jaws drop, but when they do …
AIB currently have four lending channels, there is AIB direct (their branches), AIB Broker (via the Ballsbridge HQ), EBS (done through branches and administered via the AIB direct system) and finally Haven Mortgages (another broker channel currently still located in the old EBS offices on Burlington Road).
There are four channels all operating off of the same credit pricing and all with different rates! Meaning where you choose to apply will make a big difference, even though under the hood you are getting an identical product. This is a classic example of having a brand name product sold at one price then the ‘own brand’ which is made by the same people as the first one, put into a different package and sold at a different price.
At the moment Haven only lend up to 80% meaning you need a 20% deposit, EBS have gone up to 92% which matches them with AIB (direct and brokerage), so the next rational step is for Haven to go to 92% which we are tipped off will be happening in Q1 of 2013, …
I think Ciaran Lynch hit the nail on the head when he said the ‘mortgage to rent’ scheme risks ‘becoming a flop‘. The issue here comes down to the creditors treatment of borrowers.
We have already posted a letter from Pepper showing how they are willing to do write-downs for customers. This is there for anybody to see, it isn’t here-say or rumour. In that case the loans of GE Money (a sub-prime lender) were sold to another company at a big loss.
The buyer of the loan buys it for say, 36c on the Euro meaning a loan for €100,000 is purchased for €36,000. What happens next is that they write to the borrower and say ‘hey borrower, if you pay me €50,000 and make all of your payments then we’ll call it quits’. Meaning the borrower gets a €50,000 debt write off for either paying their loan or selling up.
This is a strong incentive to do the right thing, and it …
I often complain that banks are ‘not lending’, they say this isn’t true. The Central Bank then says that lending criteria is tightening (report here). This at first seems to support the first statement, but could it be that they are lending and reining in on underwriting criteria at the same time?
It could be, AIB stated that they wanted to lend €800m this year (that was said at the end of 2011 at an in house conference), they are on track to lend €1,050m which is about 25% higher than previously expected. Bank of Ireland/ICS are saying the same thing, at the same time, the main lenders have jacked up rates and made more conservative estimations of who does or doesn’t get loans.
With the fall out in lending from 06/07′ to now, it means that there are plenty of borrowers of a high quality who are seeking finance, when you raise interest rates the stress-testing gets harder to pass, so that cuts out a lot of borrowers, as …