A loan may be offered to vacant-home owners

In reference to Loan scheme aims to bring vacant homes into use by Paul Melia on 29 June 2017 in Independent.

A possible solution to the shortage of housing in Ireland: a local authority loan could be offered to property owners of vacant housing. This solution came about when it was heard that 80,000 vacant housing was available in high demand urban areas from the 2016 Census. About 100,000 units are vacant in non-urban areas, excluding holiday homes. Data shows Ireland’s vacancy rate is at 9 percent while UK is only at 2.5 percent.

Chairman of the Housing Agency Conor Skehan worries about the impact on Ireland’s competitiveness if the housing shortage issue is not addressed. Affordability is essential to Ireland’s competitiveness and the housing costs drives wage costs so if housing is imbalanced Ireland’s competitiveness may be in trouble.

The one stipulation of this loan is it has to be affordable housing. This could raise the issue to some houses in areas not usually affordable.

This loan, however, can be just what an owner needs to get a …

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Moody’s bumps up ratings on Irish banks

Credit rating agency Moody’s has upgraded the long term debt and deposit ratings of Irish Banks: Bank of Ireland (BOI) and Allied Irish Banks (AIB). It also upgraded each bank’s baseline credit assessment by one level. Irakli Pipia, Vice President-Senior Credit Officer at AIB said “the rating upgrades reflect a range of positive factors, including further reduction in non-preforming loans, improved capital ratios and achievement of stable core profitability”.

 

From the end of 2015 to the end of 2016, BOI’s problem loan ratio fell from 11% to 7.9% and the  loan to deposit ratio fell from 112% to 108%, signalling improvements in asset quality and a better funding ratio. The bank’s BAC was upgraded from ba1 to baa3, the 10th tier of Moody’s rating scale.

 

Moody’s also bumped its baselines credit assessment of AIB by one tier from ba1 to ba2. It cites a reduction in the percentage of the bank’s problem loans from 18.6% last year to 14% at the end of 2016 and the bank’s more liquid position.

 

Various other ratings were also affected in …

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Loan to Value ratio – a video which explains what you need to know about it

The ‘loan to value’ ratio is a key concept in mortgage lending, it is also extremely simple which makes the concept very easy to understand and calculate. What is a little more complex is ‘why’ it matters and what the view of a lender is when it come to the risk associated with the loan to value. This video is just over a minute long and explains what you need to know.

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Moncrieff Show: news review on economic matters 25th August 2014

The Moncrieff Show on Newstalk had us on to talk about interest rates, economics and taxation. In the unmistakable style that Sean Moncrieff is known for, suffice to say, he kept Karl on his toes!

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Today with Sean O’Rourke on ‘coming out of negative equity’

We spoke about the up and down sides of coming out of negative equity 0n Today with Sean O’Rourke on RTE1 where Keelin Shanley was sitting in.

There are winners and losers in every economy, and many things in economic terms come with a series of trade offs. So to think that rising house prices are a good thing is only taking the view from one pre-determined set of assumptions, there are many losers when we create winners and that needs to be remembered. We are hopeful that those points were well made.

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Disintermediation – can you beat the banks with alternatives?

Banks take money from depositors, lend it to borrowers and keep the difference between what they pay the depositors and what they lend at, this is the most basic model of banking, and it’s called ‘financial intermediation’.

This doesn’t mean anybody else couldn’t do something similar if they had money and wanted to lend it to another person, the whole idea of letting banks do it is ease of use, that they have risk taking ability, and some indemnity because unless huge tranches of the loans they do go bad you don’t lose your money, on a one to one basis you only need one bad loan to have 100% losses.

It is sometimes a risk worth considering. Take for instance if you have a family member who has substantial money and they want to help out a relative. Depending on the type of relationship they can’t ‘gift’ them the money, nor may they want to, but they can lend them the money.

Doing this means you have to …

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How ‘Shared Equity’ in an arrears cases would(n’t) work

This piece is a demonstration of the way in which a a bank will opt for ‘shared equity’ with a home owner who is in arrears as means to keeping them in the property. It is important to remember, the ‘big bad bank’ wants people to stay in a property with arrears, only during a strong upward cycle do they tend to repossess property rapidly. What you will see next is in effect, a legal accounting trick, and one which actually leverages the individual even more.

So the situation at the start shows the asset value versus the value of the underlying security (in fact it is a little more complicated than this but for the sake of explanation the property and asset are the same value). Then along comes a property crash (we had a banking crisis thrown in for good measure).

Now the borrower is 200% leveraged, or at 50% in negative equity (their …

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Things can only get better

Don’t be too unhappy, because although January was the worst stock market since the January of 1990, the S&P was down by 6.1% and the MSCI world index said goodbye to 7.7% of its value, markets in India and China are down (at one stage India actually had to suspend trading on their market), despite all of these things the good news is that bad times don’t last forever.

Market commentators sometimes remind me of psycho ex-girlfriends who just can’t let go, (if you want to see one of the old Internet comic phenomenons type ‘psycho ex-girlfriend into your search engine) they are the type where by the time they realise whats happened its like the whole world is falling and its never going to get any better, they’ll NEVER love anybody again! Keep the faith.

Around the world the reaction was indeed just that, a reaction, it was reactive to results and not pro-active. The fed held an emergency meeting and slashed 75 basis points off rates and then at a regular meeting they cut another 50 basis points. …

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