Banks taking a ‘Stake’ in property deals.

There were several articles about this in the press recently, mentioning banks taking an ‘interest’ or ‘equity stake’ in certain developments. Something that the articles failed to talk about was the underlying cause? When property was booming banks were not taking an equity stake, they would finance the deals but they didn’t tend to get in on the action, so why is it that during the downturn they would start to do this?

There are two ways of looking at this, one is the way that a lender would have you believe, the others is to aim for fair comment on what is an objective view.

First of all though, it is important to look at how debt affects liquidity, if a bank is seen to have any problems people start to withdraw money, that’s not speculation, that’s fact, it happened to Northern Rock, IndyMac and several other banks since. So there is no part of the market that is fully convinced when banks say that ‘we are …

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Banks taking a 'Stake' in property deals.

There were several articles about this in the press recently, mentioning banks taking an ‘interest’ or ‘equity stake’ in certain developments. Something that the articles failed to talk about was the underlying cause? When property was booming banks were not taking an equity stake, they would finance the deals but they didn’t tend to get in on the action, so why is it that during the downturn they would start to do this?

There are two ways of looking at this, one is the way that a lender would have you believe, the others is to aim for fair comment on what is an objective view.

First of all though, it is important to look at how debt affects liquidity, if a bank is seen to have any problems people start to withdraw money, that’s not speculation, that’s fact, it happened to Northern Rock, IndyMac and several other banks since. So there is no part of the market that is fully convinced when banks say that ‘we are …

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FSA warns banks, but will the Irish Regulator follow suit?

The FSA (Financial Services Authority) has warned specialist lenders that it has extreme reservations over how they are handling some arrears cases which may ultimately end in repossession. They felt that many lenders were overly ready to take court action against borrowers irrespective of their individual circumstances and that they focused purely on regaining the arrears.

From a lenders perspective this is a concern, if the FSA starts to come out in support of people who don’t repay their loans it can spell disaster for the financial institutions who lent out the money in good faith, if there is a prevailing belief that ‘you dont’ have to repay because the government is behind you’ it will send out the wrong message and creating an ‘unwillingness’ to repay debts and that won’t stop with banks, it can permeate into many aspects of the economy, right down to companies not paying eachother. Thankfully, the FSA stopped short of saying that they would get behind people in arrears and instead tried to keep …

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Changing bank trends

Today we will highlight some changes that we may see come into the Irish mortgage market in the near future, as well as some suggestions from the think tank here in Irish Mortgage Brokers. The current economic climate is one where it is easy to look back and spot errors that were made, but rather than focus on the blame game we hope to consider ideas that will prevent a property asset bubble from occuring again as well as some ideas that could help promote sustainable lending, these ideas won’t beat the recession this time around but it may be good medicine for the future housing market.

1. Long term fixed rates: In the USA the prime mortgage sector is not going into the same kind of default as the rest of the sub-prime and Alt-A loans are, in the cases that they do it is down to redundancy and the other things that generally cause bad debt irrespective of the wider economy. One reason that this is happening is because loans there are taken out on a long term …

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Every which way but loose. The economy speaks….

The Irish economy is in a downturn, if you don’t know this then you have already died and either gone to heaven (where the boom is still on) or to hell (in which you are living halfway through 2009 already).

The factors involved in the Irish economic slowdown are multi-faceted, on one hand there was the property boom, then there was the corresponding financial expansion, as well as a strong dosage of greed thrown in by Joe Public. All of this was the foundation for the explosive cocktail we will one day look back upon and refer to as the ‘credit crunch’.

Mortgages are harder to place with lenders, the lenders themselves don’t have the liquidity to keep giving out money, that is the downside of fractional reserve banking. Yesterdays ESRI report showed that property, construction, and lending are all down at serious lows for the same period last year. The forecast for 2007 was to see total lending rise by €25 billion, figures for the first quarter show that only 4.4 billion was drawn, assuming the slow down continues …

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Mortgages in Ireland, a little bit about mortgage brokers.

Just a quick note to readers, Irish Mortgage Brokers is an intermediary, we go between you and the bank to arrange finance. You can go direct yourself and get the same mortgage, however, over half of the market uses and intermediary to arrange their finance, this is normally because they don’t really how to get a mortgage in Ireland or because they find using a broker easier than dealing with the job directly. And some people just prefer the personal touch of a broker over that of call centres and branches.

If you want to find the best Irish mortgage rates you can do so in a simple phone call or online application, click on the ‘home’ button above and apply over the web or call us on 01 6790990 and an agent will be able to assist you. The people we tend to work with are clients looking for a First Time mortgage in Ireland, people who want to find out how to remortgage a property, commercial lending, and trading up/down.

We are regulated by the Financial Regulator as …

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Average loan life set to rise as we witness the death of the 'Switcher' mortgage.

For almost the last decade we saw a market develop where customers were king, and where banks competed for their business, this was an era where ‘refinancing’, ‘switching’, and ‘re-mortgaging’ became a common occurrence, in the 1990’s the re-mortgage market was very small in comparison to where it went from 2000 onwards. The reason for the upsurge was that loyalty doesn’t pay when it comes to the Irish banks, they were giving new borrowers better rates and charging existing borrowers more, the choice of fixed rates for an existing borrower were always more expensive than for the person who had jumped ship elsewhere and come to a bank as a fresh client.

Today we are seeing something that has long been unfamiliar, banks are intentionally being uncompetitive, pushing rates to the point where they are not doing any marginal lending and where their average loan is reaching higher and higher above the ECB currently several banks have broken the 6% mark meaning that rates are now at the highest they have been in almost a decade.

This means that lenders …

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Average loan life set to rise as we witness the death of the ‘Switcher’ mortgage.

For almost the last decade we saw a market develop where customers were king, and where banks competed for their business, this was an era where ‘refinancing’, ‘switching’, and ‘re-mortgaging’ became a common occurrence, in the 1990’s the re-mortgage market was very small in comparison to where it went from 2000 onwards. The reason for the upsurge was that loyalty doesn’t pay when it comes to the Irish banks, they were giving new borrowers better rates and charging existing borrowers more, the choice of fixed rates for an existing borrower were always more expensive than for the person who had jumped ship elsewhere and come to a bank as a fresh client.

Today we are seeing something that has long been unfamiliar, banks are intentionally being uncompetitive, pushing rates to the point where they are not doing any marginal lending and where their average loan is reaching higher and higher above the ECB currently several banks have broken the 6% mark meaning that rates are now at the highest they have been in almost a decade.

This means that lenders …

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UBS write down €37 Billion, wait…How much is a billion?

When you hear people talking about ‘A Billion’ be it a Bank talking about a billion in write-downs, or a politician talking about a billion in tax spending, it’s important to put the number of one billion in perspective.

One Billion seconds ago it was 1959, one billion minutes ago Jesus was alive, a billion hours ago our ancestors were in the stone age eating raw meat and dying of common colds. A billion days ago there we were not walking on two feet. However in monetary terms a billion dollars ago was 8 hours and 20 minutes ago at the rate it is being spent by the US Government, it’s 5 days ago at the rate the ECB has been printing it in order to avoid the credit crunch and it is also almost as much as Sierra Leone’s GDP (at the official exchange rate), that’s for the whole country for a whole year.

So when UBS came out and said that it has ‘written …

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'Clearance sale, prices 20% off!', not in shops, on property….

Last week Capel Construction made news when they made a massive reduction in asking price on properties in D15, now more developers are jumping on board both the Albany Group and Abbey Group have reduced asking prices by up to 25% in an effort to get buyers back into the market, I’m sure there is a shortage of smug estate agents ‘taking orders’ for these homes, I think the market is truly at a point where they will have to ‘sell’ these units if they want to shift them. Prices in Holywell (the place where Baiba Saulite was shot) are now at 2005 levels,

The method clearly works as Capel sold 56 units once they dropped the price, so perhaps there is demand out there but its from a public so worried about price falls that they will only purchase if there are considerable reductions in asking price. Personally I don’t believe that some of these prices even represent true value, how will the 56 purchasers feel if the prices get reduced yet again to attract more buyers? They would …

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