Proportion of buyers with mortgages surpass those who buy in cash in first time since market crash

Recent data reveals that the percentage of home buyers with mortgages have surpassed that of those who buy in cash. This is the first time this has happened since the property bubble and subsequent crash. On July 26th 2016, an Irish Independent/Real Estate Alliance survey reported that 60% of houses are bought with cash, now, roughly a year later, the same survey concluded that less than 30% of homes are purchased by cash buyers.

 

During the years after the housing crash, the high percentages of cash buyers was caused by higher interest rates, stricter restrictions on lending, higher rates of unemployment, and the large amount of speculators purchasing properties as assets after the original home owners have defaulted on their loans. This indicated a general distrust in the market and the squeezing out of mortgage buyers who have defaulted on their homes.

 

Central Bank economist Dermot Coates predicted in 2016 that the proportion of cash buyers was “neither sustainable nor likely to continue into the future”. …

Read More

Bank of England limits consumer lending & borrowing

Bank of England has voiced concerns over the increasing level of consumer credit in the UK, and has instituted various restrictions on banks regarding capital buffers, mortgage lending requirements and stress testing.

 

Levels of consumer debt have been rising rapidly, well beyond the rise in income, and bank lending has facilitated it’s growth. Since last April, personal lending has increased by 7% and credit card loans have risen by 9%.

 

The central bank expressed concerns in its most recent financial stability report that lends have grown used to benign economic conditions, and thus have loosened their lending standards. The Bank of England’s Financial Policy Committee warned that though current risks to the financial system remains low, banks should still remain watchful for shocks that could be caused by economic downturns.

 

It has asked banks to increase their capital by £11.4 billion over the next 18 months, thus having a greater buffer if an economic downturn causes a shock to occur, and …

Read More

The mortgage market for returning expats

The government has pushed hard in recent years to bring professional workers back into Ireland, welcoming plenty of new construction and dozens of foreign tech companies into the docklands. With many talented workers finding jobs elsewhere in the EU and in countries such as USA and Australia in the aftermath of the financial crisis, it is essential to Ireland’s future as a highly advanced and modern nation that its own professional workforce be well employed at home. Well government initiatives have already seen great success, many returning expats are faced with various complications when attempting to bring their families back home. Amongst these complications is the difficult process these Irish citizens have to go through to get mortgages.

 

Expats currently working and paying tax in another country are considered non-residents. Thus in the books of most major lenders, they are segregated from all other Irish citizens and placed into similar categories as foreign nationals. Thus, returning expats face stricter limits on income and on Loan to Value ratios when apply for …

Read More

Mortgage Market Update

The Financial Broker gives readers an overview on currently property prices and mortgage market conditions.

The Central Statistics Office published a report showing price inflation on property had increased 10.7% in the past year up to February. A similar report reveal how the number of newly build housing last year was 14,932 units when estimates denote a demand of up to 50,000 units. These numbers illustrate a problem in the current mortgage market, which this article pinpoints the causes of. The author laments about rising property prices, arguing that many potential home buyers have missed out on the prime time to purchase property, and are currently no long capable of affording the housing of their choice at an acceptable price.

The author attributes the current housing price and rent inflation in Ireland as consequences of a lack of supply in urban areas instead of lax macro-prudential regulations. In fact, she argues that current Central Bank regulations are too restrictive, and thus have prevented demanders from being able to locate and buy affordable housing. While the prudential regulations have lowered the …

Read More

More scandals from Wells Fargo: extending mortgages without customer knowledge

A series of new legal allegations have been bought against the bank, once again regarding its improper handling of customer accounts. This time, light has been shed on the company’s mortgage business, in which unauthorized changes were made to the loan terms on the mortgages of customers in bankruptcy.

 

Wells Fargo, a major American Bank headquartered in San Francisco, has been plagued by scandals and bad publicity in the past year. On September 8 of 2016, it was forced to pay $185 million in fines for its activities in opening more than 1.5 million bank accounts without its customers’ consent. The company’s culture demands its managers and employees to reach incredibly high quotas and targets, and directives stems from the very highest levels of management. CEO John Stumpf encouraged employees to create as many accounts from each customer as they possibly can, his infamously motto being “eight is great”.

 

Clearly, the bank still hasn’t learned from its past mistakes. New class action lawsuits filed by multiple …

Read More

Highlights from the 2017 Macro-Financial Review

The Central Bank of Ireland published today it’s 2017 Macro-Financial Review. The report gives an overview of the Irish economy and the state of its financial environment. The aim of the report is to help protect the interests of the Bank’s stakeholders, these include: the Irish people, national and international authorities, and other participants in the financial market.

Sharon Donnery, the Central Bank’s deputy governor, introduced the report in a speech this morning. She states that the state of the general economy is improving, but also mentions a few outstanding issues that have the potential to negatively impact the economy’s improvement.

The report notes that much of the uncertainty in the Irish economy is a consequence of Brexit. The depreciation of the sterling against the euro and decreasing consumer spending in the UK has already put a burden on export industries. Uncertainties relating to Brexit may also arise from new trade barriers, trade policies and changes in international taxation.

Read More

Bank of Ireland cuts mortgage rates

Bank of Ireland recently announced new and reduced mortgage rates, which will be available starting Friday the 16th. The highlight is cuts of fixed mortgages rates up to 0.35% for both existing customers and for first-time buyers. The bank decision ups its competition in Ireland’s reviving property market and marks Bank of Ireland as the fourth lender that has cut its rates within the last two months. KBC Bank cut its fixed rate in April, and currently has one of the lowest rates on the market. Permanent TSB and Ulster Bank are the other two lenders who have also taken similar measures.

 

Bank of Ireland’s fixed rate mortgages are based on a property’s loan to value ratio. It has cut its rates for first time buyers with an Loan to Value ratio of 81-90% by 0.25%. Customers with greater down payments and lower Loan to Values ratios also see their mortgage rates cut between 0.1%-0.25%. The greatest reductions however have been for Bank of Ireland’s existing customers, who see their mortgage rates fall by 0.35% if they have a …

Read More

Pepper Money Expands Lending in Ireland

Pepper Money, an Australian lender, will soon begin offering commercial property loans ranging in value from €250,000 to €7.5 million to borrowers in Ireland. It hopes to extend €300 million worth of commercial loans within the next two years, roughly half of what the Strategic Banking Corporation of Ireland has extended at the end of March 2017. These loans will meet the demand of professional buy-to-let borrowers hoping to refinance and the demands by first time buyers for properties with various commercial uses.

 

Pepper Money has been keen on taking risks in lending and exploring new markets, being the first new lender to enter the Irish Market for residential mortgages after the market crash and financial crisis, offering small home loans through brokers and direct channels. While entering the market for commercial mortgages, Pepper also plans to lend to borrowers with historical credit issues who have had trouble meeting criteria to obtain loans from banks and other lending institutions in Ireland. It will offer loans to borrowers as long as they are up to date for the past 18 …

Read More

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 …

Read More