David McWilliams’s show ‘Ireland’ looked at the issue of property prices here and asked if we are in a ‘bubble’. He spoke to Karl Deeter from Irish Mortgage Brokers about this who made two points. The first was that we are too late to change the outcome of the property cycle, the second was that the biggest land hoarders in the state is the state itself and that Government should release land to flood the land market and drive down the primary costs of construction.
We had a lot of press covering budget 2018, our contributions are listed below:
Here is a piece from The Irish Sun. “You literally couldn’t hope for a better small country to do lobbying in because we managed to give nothing to anybody, everything to somebody, nobody is happy about it and everybody knows it was a fiscal version of the most average-looking horse in the glue factory”.
The Irish Independent also featured an article by Karl Deeter: It would take a special type of fool to fall for anything you hear in the Budget as being “in your favour”.
We were mentioned in the Independent today in a story relating to the Central Bank, it hinged upon the fact that they had a ‘whistleblower’ line for people wanting to report financial wrongdoing and it wasn’t operating correctly which means they couldn’t take a call.
The story quoted us as follows: Compliance officer with Irish Mortgage Brokers Karl Deeter said it was not good enough that the whistleblower phone line was not being answered and emails not getting a response.
“Imagine if you called 999 to report a crime and no one answered. What would you think of our police service?” he said. A Central Bank spokesman claimed the problem had been rectified after the situation was raised with it by the Irish Independent.
On the 25th of August we were featured on RTE’s ‘Drivetime’ with Mary Wilson to discuss Home Choice Loan which is a state run mortgage lender. The state lender has only done 21 loans to date or about 3 loans a year.
There are many reasons that HomeChoiceLoan should be popular but in practice they are not lending and there are many questions about the validity and use the scheme has.
This post is a guest blog by a person who doesn’t want to be named.
The two year period between January 2012 and December 2013 was a remarkable period in the movement of the prices of houses and apartments in Dublin. The period started in January 2012 with house prices dropping by -21.7% from a year earlier while apartments dropped slightly less at -18.4% and yet by the end of the period.
In December 2013 house prices were rising by 15.3% annually with apartments rising further to 20.8% annually. Another feature of this period was the manner in which the prices moved, with house prices steadily slowing down their annual decline all through 2012 and from January 2013 to December 2013 having continuous positive increases in annual prices.
However apartment prices showed a lot more volatility over the period entering positive territory in February 2013 when compared to a year earlier but dipping back into negative figures for the next three months with the result that it was June before apartment prices showed increases on the same month a year …
We were never advocates or in agreement with the ‘make government force mortgage rates down’ campaign (albeit on very friendly terms with the campaign promoters). The reason was that rates needed to come down in a natural way or banks would curtail credit or charge more elsewhere, this was a balancing act between sorting out operational costs and back book issues.
The belief we had, and one that does seem to be bearing fruit, was a slower (ie: less popular) road to lower rates, brought about by competition.
This has been happening, it doesn’t make headlines because it’s a slower burn but the trend is under way and it goes like this: more competition equals lower rates, the higher rates spur competition as it attracts new entrants and in time, when matched with a low yield curve, rates will fall.
The introduction of Pepper into the market, along with general competition has meant that the rate reduction cycle has begun. The hallmarks are that firstly, rates are high after a financial crash, that always happens, those high rates bring in …
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 …
In this piece on RTE’s flagship evening show ‘Drivetime’ Karl spoke about how mortgages being ‘cross boarder’ may not result in better prices for Irish consumers any time soon.
Obviously it would be great for the broker industry who are the natural distributors of such products, but there are many other factors at play including the largely under utilized Insurance Mediation Directive.
The piece finishes with some thoughts on rent control (or ‘certainty’) which are being suggested by Alan Kelly.
We submitted a paper to the Central Bank on the mortgage cap proposal they have put out for consultation. Our view is that apart from being a crude instrument that it doesn’t work, Hong Kong is being used as an ‘example’ when in fact they are the very example that demonstrates best that the policy is misguided.
As practitioners we think a far more nuanced approach with other solutions such as higher stress tests, a freeze on underwriting criteria and mortgage insurance should the lender wish to avail of it are better.
I don’t understand why a person would want to pay for something they could get for near free or where the charge for said thing is difficult to enforce. You see this every day when people park illegally or don’t put money in the meter, there are clamper’s out there but they don’t catch the vast majority of offenders.
That is why I see two articles in the Irish time that seem to contradict the likelihood of the each other.
Article 1: Council flat purchase scheme to start in 2012 Article 2: Tenants owe city council €21m in rent arrears
In the first one we are told that Dublin City Council (in particular) are close to bringing out a ‘tenant purchase scheme’ via the 2009 Housing Act for people who live in flats. The scheme has a few things that may hamper it…
For a start 65% of …
