KBC move to 90% LTV

This is a very healthy sign for the mortgage market, and in our opinion it could mean that 2010 might mark the low point for credit that we have been watching out for.

In 2009 KBC under-lent, they had €1bn and didn’t lend out anywhere near that, they are also here to stay, and prior to the crisis they had about 1/8th of the market share. The fact that they are rolling out a higher loan to value is a very confident sign that

Banks have a few internal policy tools to control lending 1.    Curtailing the amount of lending – we see that already, mortgage lending is about 85% down from the peak of 40bn p.a. , peak wasn’t exactly a gauge of normal, but half of that would be normal, and even on that basis it’s down 75% – that story still has to play out 2.    Rate increases: this has the same effect as central bank rate increases, it reduces lending and everybody has increased their margins by at least 1% in the last year, you and …

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Concerns surrounding people coming off tracker rates

The Financial Regulator has voiced ‘concerns’ over the manner in which disclosure and transparency are enacted when people move from a tracker rate onto any other rate in a press release yesterday.

There were no firm figures given, and no direct accusations (although the Financial Services Ombudsman has received c. 60 complaints). The release comes on the back of a story in the Sunday Business Post by Emma Kennedy which outlined that PTsb ‘misclassified’ up to 300 mortgages and put them on standard variable rates rather than trackers. The issue was spotted by PTsb and rectified by them, customers have been refunded (on average €5,000) the difference they paid plus interest.

The way in which people ‘come off’ trackers tends to be by their own volition, if they opted for a fixed rate while on a tracker contract they do not need to be re-offered their tracker rate at the end. If they were on a fixed rate and are coming …

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EBS rate hikes, the benefit of mutuality?

EBS have announced a rate hike of 0.6% which is a follow on from their last 0.6% hike that was levied against variable rate mortgage holders on the 1st of May, this brings their margin increases to a total of 1.2% for the year to date.

Today’s Indo lead with this story (by Charlie Weston) and rightly pointed out that by the time this is over, a person with a €300,000 mortgage over 30 years could expect to pay just over €3,000 a year (after tax) in increased mortgage payments. For a person on the average industrial wage this is like a full months wages before tax being sucked away by the financial system. Tax hikes and wage cuts aside, this will ultimately reduce the money that is being spent in the economy and it will disappear into the financial system where banks will use it to de-lever further.

The contention for many people is that they are being punished, not for what they have done …

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Who cheats more? Politicians or bankers? With Dan Ariely

Legendary Behavioral Economist Dan Ariely presents a piece about trade off’s between instant gratification versus long term gratification, reward substitution, cheating, trust/revenge, global warming, executive pay and many other fascinating topics. This video is fascinating and for me is a real insight into the psychology behind economics that is so often over looked in classical economics. This is explained in simple terms that we can all understand and relate to, hope you enjoy!

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Regulation failure: Independent brokers unable to be ‘independent’

We were thinking of changing the way that brokers operate, by saying to our clients ‘our service comes at a price, we’ll advise you on any lender in the market and be totally independent, if we place your loan with one that pays commission you can set that against your fee, and if not then pay the fee’, doing so in the belief that totally transparent and independent advice is a good thing, and something that everybody wants, the broker, the consumer and the Regulator.

Sadly this is not the case, instead the Regulator (soon due another name change to ‘Central Bank Financial Services Authority of Ireland’) is relying on the letter of the law in the Consumer Credit Act of 1995 to ensure that brokers can’t give best advice. This is an example of total regulatory failure.

The actual portion of the code is S. 116.1.b which states ‘A person shall not engage in the business of being a mortgage intermediary unless— ( a ) he is the holder of an authorisation (“a …

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Are 100% mortgages the problem? Is LTV a symptom or a cause?

An article in the Independent yesterday pointed toward 100% mortgages being a significant attributer to the bubble, I would wager it was a symptom rather than a cause, the IBA meanwhile has called for all mortgages to be made on a non-recourse basis.

The good thing is that people and organisations are trying to find a way to avoid a repeat of the property bubble, and they are not one off events as the UK can testify.  There are however, significant factors contributing to what happened.

1: lenders didn’t price risk, they didn’t even ‘price at all’: Banks have utterly failed to do the job they were designed to do, namely that of profitable intermediation, we had huge amounts of competition on lending, that drove down criteria requirements and also compressed margins, then along came trackers, these had low margin price promises – Bank of Scotland brought them into Ireland and have since left. I spoke with a Bank exec. yesterday and he …

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Irish Mortgage Brokers in the press, May 2010

We had a busy month in the financial commentary world. A list of our press mentions is below

23rd May 2010: Sunday Tribune: Safe for a while against rate hikes

23rd May 2010: Sunday Times: A bad time to invest? Q & A with Jill Kerby

23rd May 2010: Sunday Tribune: Mortgage rate increases

16th May 2010: Sunday Times: Keep hold of your home

16th May 2010: Sunday Tribune: Mortgage group mull over Negative Equity Loans

16th May 2010: Sunday Tribune: Recession Rates

14th May 2010: Newstalk 106: Ivan Yates talks to Karl Deeter about Property Prices

15th May 2010: Independent: Property prices must fall to attract investors

13th …

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RTE 9 O’Clock News with Martina Fitzgerald, 22nd April 2010

Martina Fitzgerald of RTE 9 O’Clock news did a piece on the Government backed lender Home Choice Loan, critiquing the fact that they have only advanced 5 mortgages since their inception in autumn of 2008. Home Choice Loan was set up to alleviate the absence of lending in the Irish mortgage market but it has failed to do this which is evident in the numbers.

We believe that Home Choice Loan does have a very relevant and meaningful role in the mortgage market, but not in the guise of being another lender competing with the rest of the high street, rather in facilitating people in negative equity or arrears.

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