Hugh Hendry, my favourite sceptic

There is almost nothing that Hugh Hendry isn’t sceptical about, and that makes for an excellent sounding board, when you want to double check a bullish premise listen in, the same goes for a bear call. I watched him go toe to toe with Joe Stiglitz once and was impressed, he knows his brief. In this clip from Bloomberg he talks about his belief that the Euro is finished. (hat tip on the clip to creditwritedowns)

Hendry also talks about his belief that the noose is getting tighter in Asia, I would concur, there has to be a rebalancing and even a managed economy like China’s cannot stop that from happening, the Euro will go through a competitive devaluation and we can all go back to competing in the ‘new normal’.

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Mortgage Mediation, a solution for mortgage holders in Florida (could it work in Ireland?)

Currently about 25% of the mortgages in Florida are delinquent, there is a huge amount of foreclosed property on the market, short sellers can’t offload fast enough, property prices are falling, and it is also a judicial foreclosure market meaning people have similar issues to the problems we have here when a home in negative equity is repossessed, they owe the difference.

A possible solution being tried there is that of mortgage mediation. This is vastly different than the scheme in place in Ireland, and perhaps active mediation with a set point of contact and a set representative would be a good idea, chances are we’ll never know because it is not likely to be rolled out in Ireland.

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Dichotomy in property – apartments versus houses

The recent liquidation sales have possibly started a new trend in the property market in Ireland, one whereby there is an increasing divide between the valuations in different types of property, we have long been saying that the only market worth considering is non-apartment second hand homes in cities, the liquidation sales have reinforced this belief.

While we may be part of Europe, when it comes to living spaces we believe that Irish people favour houses to apartments, we have not crossed that particular Rubicon just yet and unlike our European counterparts, there is still a wish to own the land under the dwelling, over time this may change, but with the exception of the bubble-times the overwhelming mortgage for a first time buyer was used to purchase a house and not an apartment.

The situation regarding the property market in Dublin (for instance) will likely be one where apartments are seen as a totally separate market, in the past many newly built apartments were not priced on a totally dissimilar basis to houses of comparable square footage in the …

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Behavioral Economics & Arrears – avoid repossession by reward

I had an interesting conversation with Frank Pallotta of Loan Value Group in New Jersey earlier today. Loan Value Group is an organisation that was set up to help avoid foreclosures, they use the expertise of behavioural economists from Wharton, mortgage finance experts, mortgage advisers, and consumer marketing experts, to work with lenders at risk of strategic default and likely default.

There are really only two classifications of borrowers in difficulty, those who can’t pay and those who won’t pay – Loan Value Group can both identify and work with either cohort.

We share a common view on principle reduction, Loan Value Group’s opinion is that ‘blind principle reduction’ is very negative, it addresses the consumers balance sheet, but from a working point of view for every other stakeholder its a mess. And if people are willing to lie for a 0.5 to 1% – reduction in rate then imagine the incentive if there was 10k or more in principle reduction? Therefore, we need solutions that don’t disadvantage the …

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Taxing Banks & Taxing Risk

In the first clip, James Galbraith (son of the famous JK), economics professor at University of Texas, discusses whether a new tax on big banks is justified. Ken Bentsen, of the Securities Industry & Financial Markets Association, and Mark Calabria, of the Cato Institute, share their insight as well.

In the second clip Mark Walsh, of ‘Left Jab,’ and Dan Mitchell, of the Cato Institute, discuss taxing banks based on their risk to the system.

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Ways to reduce the asking price when buying a property (part 1)

Today we will cover some very practical tips which may help you get a better price when you are looking at a property. We suggest you take this list and print it, then as you are looking at a property check the various sections and use it as a rationale for your asking price, there may be things that were overlooked as well, so at worst this will help to ensure you don’t make unnecessary errors in deciding whether or not a certain property is good or not.

1. Is the garden in need of work? – If so you could ask that they either correct it or that you want more money off, a garden is generally a good selling point so if it is not well presented it can be a ‘red light’ telling you to go through the place with a fine toothed comb.

2. Does the fencing/walls need repair? – again, if there are any issues ask that they are remedied or they can discount the price by what it may cost to put the issue …

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Understanding why mortgage rates MUST rise.

We have been saying for some time that interest rates on mortgages must rise, you can look at supply and demand, or you can look at the types of products that have ceased to exist such as tracker mortgages (removing fixed margin loan products) and then there is the proliferation of variable LTV products which set the stage for the ability to manipulate margin on more loans. The question is ‘what all of this means’, and the purpose of this post is to explain how deposits, business lending and mortgages are all interconnected parts of the banking system and how margins are set based upon them.

Last week PTsb finally came out and said that they were considering an

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