Mortgage approvals

Analysing figures released by the Banking and Payments Federation, the article sends a somewhat contradictory message. On the one hand, first time buyer mortgage approval volumes increased 19% this April compared to April of 2016. However, this volume also represents a 8.4% drop from the number of mortgages approved last month in March.

The decrease in the number of first time buyer mortgages this month is not indicative of the generally increasing annual trend, and may be due to the lack of buyer discounts offered in the month of April, when there isn’t many major holidays or events. April is generally the worst time of the year to finance a house (Business Insider).

On a larger scale, the trend in approval volumes for all mortgages follows that of first time buyer mortgages, but to a less exaggerated extent. The number in April represents an increase of 11.7% compared to April of 2016, and a decrease of 11.6% compared to March of this year.

The greater increase in first time buyer mortgages as compared to all mortgages could indicate that more …

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First time buyers who don’t buy new homes

First time buyers have been asking ‘what about those of us who are not buying a new home? Why don’t we get any help like the people using help to buy?’. The answer is that you do, at least for the remainder of 2017.

There is still a DIRT relief for first time buyers scheme in action, it started in 2014 and is ongoing until the 31st of December.

The scheme doesn’t help you get a deposit, rather it’s a refund after you buy, see the notes below taken from the Revenue.ie website:

Section 266A of the Taxes Consolidation Act 1997 provides for refunds of Deposit Interest Retention Tax (DIRT) for first-time buyers who purchase a house or apartment to live in as their home. It also applies to first time buyers who self-build a home to live in.

Who can claim it?

A first-time buyer of a house or apartment who purchases or self-builds a property between 14 October 2014 and 31 December 2017 may be entitled to claim a refund of DIRT.

The first-time buyer must not have …

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Two identical first time buyers walk into a bar, one qualifies, the other doesn’t

The Central Bank rules on curtailing mortgage lending have had an interesting effect, first is that we are seeing more loans draw down that might not have because people are bringing forward consumption due to the fact they won’t qualify for the same amount again in the future. This is literally the opposite of the intended effect.

Second is that it’s causing chaos for prospective buyers who may hold an exemption or need an exemption because there are quarterly reporting rules that mean banks can’t offer a new loan until they know if an old one will be drawn or become an NTU (not taken up).

Perhaps the easiest thing to do is explain it, currently you can’t get an exemption from Ulsterbank or AIB/EBS/Haven or BOI, but you can from PTsb and KBC. The banks that can’t give you one (and remember it’s only one of LTV or LTI not both) are hogtied because they have given the limit of exemptions (c. 15%-20% of lending) already in loan offers and they have to estimate both the annual and quarterly …

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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 …

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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!

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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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Who has the best mortgage rates?

The ‘best rate’ is a misnomer because interpretation of what is the ‘best’ is a subjective question, for a very conservative person a 10 year fixed rate is ‘the best’ and from that point the ‘best’ will likely be whatever is the cheapest ten year fixed rate, having said that, after careful consideration the best 10 year fixed rate mortgage might be one that allows you to pay off a lump sum during the fixed period without any penalty thereby ensuring that you can eat into your capital quicker, is a feature like that worth extra money each month if it isn’t the cheapest? To some people it may be, to others it isn’t.

If you are considering a property purchase and are not a cash buyer then you will need financing, and this comes at a ‘price’, the interpretation of that price is generally the rate, so which rate is better (we’ll assume you want a 1 year fixed rate), 2.5% or 2.6%? Naturally you’d be inclined to say it is …

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How much of a deposit do I need?

When making a mortgage application this is a question that many first time buyers want to know, how much money do I must I have for a deposit? Well, that kind of depends on which bank provides the mortgage finance!

Lending criteria is different for every bank/building society/lender, this goes for rates, the general underwriting criteria as well as the ‘loan to value‘, the deposit you need is 100% minus the Maximum LTV and that will give you the deposit amount you require. For instance, ICS have a maximum LTV of 92% so the deposit you need – if you are obtaining finance through them – is 100% – 92% = 8%.

What is interesting in that example is that when you go ‘sale agreed’ on a property the estate agent will ask for a security deposit and the balance of 10% at the signing of contracts, this is an example …

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‘Fix or forever hold your tongue!’, A floor on Rates (with a rise likely!)

Rates likely to rise as per AIB’s statement, and PTsbs actions, what we are trying to tell everybody, in clear English is this: ‘If you don’t have a price guarantee on your mortgage via a tracker or fixed rate agreement then you will be paying greater margin over ECB in the near future than you are now’. If you don’t act upon that information then it is your own decision but you can’t say you weren’t forewarned.

Forewarning doesn’t stop disaster, the historical evidence on that is overwhelming, in particular in the military arena, today however, we will look at some of the potential changes we might see in the market.

Floor Rate: This would be a variable agreement whereby the rate will never dip below a certain level. For instance, a bank might say that in a low rate environment it will (in the future) never allow its variable rate to drop below 4%, …

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