Tracker mortgages: make sure you don’t miss out!

Yesterday the Examiner broke a story about tracker mortgage holders potentially missing out because they are not reading their terms and conditions. This is an issue we have seen first hand in our company, but it wasn’t due to not reading the terms and conditions, it was down to a bank error.

Recently Bank of Ireland had to put 2,000 accounts back on trackers after they mistakenly took them off and onto variable rates. AIB made the same mistake 214 times and PTsb did it 53 times.

In our own brokerages case we saw something similar recently with PTsb, they insisted to a client that no tracker was available. Then, only after the client remortgaged did they admit their error and offer it back. We represented the client in this case and insisted that all costs were also covered in reinstating the mortgage. This means paying solicitor fees, losses on clawbacks, breakage fees for the fixed rate undertaken etc.

Where this happens has tended to be where …

Read More →

Loan refusal statistics: what do they mean?

There are two sets of statistics floating around; on one hand you have the banks who claim that they are lending and also that the demand for credit simply isn’t there – a belief further expounded by John Trethowan. Then on the other hand you have the likes of PIBA who counter claim that 80% of applications are being refused.

So it is important to break down the vital components. First of all, the debate often centres around Small Medium Enterprise (SME) lending; even if demand for that type of credit isn’t there it doesn’t automatically translate into a reduced demand for mortgages. The point being that we can’t compare SME loans/business loan demand to that for mortgage credit.

Secondly is ‘what constitutes a refusal’, and this is where common sense diverges. Even the bank accept that if you seek €200,000 and are only offered €100,000 that it is a loan not fit for purpose, this even goes …

Read More →

Nyberg report shows that Brokers had nothing to do with the crash

On page 21 of the report ([footnote 27]- available on BankingInquiry.gov.ie) the following appears:

Mortgage intermediaries began to emerge as a force in the residential mortgage market in the mid-1990’s, initially as a distribution channel for non-branch based mortgage lenders. Due in part to alliances with estate agents they exercised significant control over the “first time buyer” market in particular. This market was viewed by lenders as an attractive market segment and key for customer acquisition and exit financing for development lending.

At the peak of the market in 2005 mortgage intermediaries accounted for about 45% of new residential mortgage loans. Against this background, intermediaries were able to leverage their relationships with lenders pushing for better mortgage terms (and sometimes larger loans). This led to a considerable reduction in bank margins (interest and commission). Many banks sought to compensate by increasing loan volumes to maintain earnings. While these changes impacted on the mortgage market, mortgage intermediaries had only a limited and indirect impact on the banking problems which are the subject of this …

Read More →

News of the World: Money expert on Debt

IRELAND is in payback mode at the moment. As a country we’re experiencing “deleveraging”, which means that many people are using most of their money to pay back excessive borrowing. However, that practice only puts cash into the banking system and not the real economy.

This is because banks aren’t lending — they’re too busy using the cash to put out fires within their own institutions. There are 786,000 Irish households with a mortgage, and six per cent of them are in trouble. The vast majority of that six per cent haven’t paid the bank a single cent in more than six months.

SOLUTION

Our Government-led solution is to encourage that to continue. They’ve made it almost impossible for banks to repossess homes — Labour’s solution of a two-year moratorium on repossessions reeks of “delay and pray”. A further 24,000 mortgages have been restructured and are still not performing, while 35,000 are only staying afloat due to a change in their conditions — mainly by not paying back the loan, only servicing the …

Read More →

Irish Mortgage Brokers and MyHome.ie on TV3’s ‘The Morning Show’, 2nd March 2011

We were delighted to feature again on TV’s ‘The Morning Show with Sybil and Martin’ (although Brian was sitting in for Martin) on their monthly property slot.

This week we spoke about the necessity of price drops to get a property sold, it is likely the single most important factor, it is also overlooked that there is often a carry cost or opportunity cost loss if sellers don’t drop prices.

Next month we are likely to cover ’empties’, that will be a fascinating show worth tuning in for!

Read More →

The first time buyer conundrum, to buy or not to buy?

At the moment in Ireland there is a conundrum for first time buyers: should you buy now and potentially over-pay on purpose?

It’s an unusual one and it partly related to property prices, it is a combination of taxation changes that will occur from the start of 2012 and expectations of interest rate changes from both banks and the ECB.

The argument of ‘rent or buy‘ is well established, we produced report on it with Peter Stafford (now of the IAVI/SCS) and Frank Quinn of Senior College Dun Laoghaire, but this is different – buy now or buy later isn’t taking the default of renting as an assumed continuous option, rather it is a case of delaying for the sake of market timing.

The changes in tax are on the tax expenditure side, namely TRS (tax relief at source).

Currently it is applicable to a maximum of €10,000 p.a. and the rates applicable are …

Read More →

Bank cost of funds versus mortgage prices

Eurodollar or LIBOR cost of funds is a common phrase in banking, what does it mean or do though?

Banks borrow short term and lend out long term, they call it ‘maturity transformation’ and in doing so they aim to make a mark up on the money, it’s the same concept that a shop uses in selling cartons of milk, fundamentally the idea is the same.

The LIBOR rate is ‘London interbank offer rate’ and represents the cost of funds for a high quality non-governmental institutional borrower.

To get an idea of the cost of funds (and this is currently speculative because Irish banks don’t get offered funds at Euribor [euro equivalent of Libor]) all you have to do is a simple calculation.

We know that banks tend to use three month money and that means that any calculation will always have the interest rate reduced by multiplying it by 90/360 (3 months = 90 days, and 360 = 1 year [I know that in real life 1 year is 365 days but that small change of 5 days gives …

Read More →

Property prices and property costs, they are not the same, so do you rent or buy?

We have seen a growing trend in our brokerage of people getting mortgage approvals (mainly first time buyers) and not drawing down, this might indicate some pent up demand in housing – which if it comes will be regular houses as opposed to apartments – or it indicates fear of buying in general.

The thing that is pervasive is the ‘price’ of housing, and the idea is to wait until we reach the bottom. That is a perfectly rational concept, and when you are not purchasing over a long term then the price now (we’ll take from financial market vernacular and call it the ‘spot price’ of housing) is the main thing to focus on.

However, that is only one part of the ‘price’ because the majority of new buyers are not buying for cash. The other price is the price of money, the financing costs. We indicated in our annual outlook that banks would, in 2011 alone, increase rates by a further 100bps or 1%, that any bank which isn’t government owned will have variable rates in the region …

Read More →

Debt forgiveness & Writedowns, one in the same?

Below is a comment made by the Regulator at UCC while talking to a group of compliance officers.

“Reform of the bankruptcy regime could allow borrowers to earn a fresh start by discharging their debt over a reasonable period of time, Mr Elderfield said. However, he cautioned against debt forgiveness for the thousands of mortgage holders currently behind with payments on their loans.

Addressing compliance officers in Cork, he said it was understandable that some people wanted to go beyond rescheduling debt to consider some form of debt forgiveness.

“However, the cost of any support will need to be borne by the taxpayers or by the banks and therefore, in many cases, effectively the taxpayer as well, and this raises questions of fairness for taxpayers who are not in debt and, at a time of immense budgetary pressure, affordability for government finances.

“There is also the risk that any scheme would create perverse incentives and in fact make …

Read More →
  1. Pages:
  3. 1
  4. 2
  5. 3
  6. 4
  7. 5
  8. 6
  9. 7
  10. ...
  11. 16
← Older Entries
Newer Entries →