We spoke with Mary Wilson on Drivetime about the Budget 2015 announcements and agree that it wasn’t a ‘budget for builders’ because it was more like a budget for land bankers.
Matt Cooper from ‘The Last Word’ had Charlie Weston (Irish Independent) on his show along with Karl Deeter to discuss mortgages, loan rates and some of the developments that are starting to happen in the marketplace.
Some of the main points of interest were that switching is available again, rates are likely to lower and that some lenders are coming out with longer term fixed rates.
This week on RTE Radio 1’s ‘Drivetime’ our regular Monday edition of ‘Talking Money’ covered the issue of buying a home. Many first time buyers are starting to feel pushed into the home buyer cohort when they have other options such as renting or buying in a cheaper area, this can make a huge difference and we outlined some of the costs and concerns.
The Central Bank released some findings on interest only mortgages (below), we’ll follow up with some commentary and interpretation soon.
The research analyses the loan characteristics, including loan performance, of mortgages originated on interest-only terms in Ireland.
The main findings of the research are:
While interest-only arrangements have been widely used as a means of temporary forbearance to deal with the current mortgage arrears crisis, mortgages were also originated on interest-only terms during the height of the boom. Between 2005 and 2008, interest-only mortgages were mainly issued to buy-to-let investors on tracker mortgages and at high loan-to-value ratios. Interest-only mortgages were more likely to be issued to buy-to-let borrowers in Dublin and for the purchase of apartments than standard mortgages. The arrears rates on these mortgages are higher than standard mortgages. A significant number of interest-only mortgages are due to revert to principal-and-interest repayments in the next 2 years. The resulting higher repayments for these borrowers could lead to an increase in mortgage arrears. 44 per cent of the buy-to-let interest only borrowers will …
Will Faulkner spoke to Karl Deeter about the proposed government plan on 95% mortgages.
The idea of getting more people credit in an easier fashion in order to afford more homes is questionable. A good analogy is if it was decided that the Leaving Cert should be marked easier in order to help more people get into college.
What would likely happen is that the limited college places would still be taken up but that the points required for any one course would go up, it doesn’t resolve any shortage of college spaces (for instance), and in this respect more credit will probably do the same to housing, it won’t fix anything other than if by ‘fix’ you mean ‘make prices rise’.
That banks are lending enough is evidenced in gross lending contraction, that they simply ‘aren’t lending’ is factually incorrect.
We encounter all kinds of strange paths to homeownership with our clients and thought it might be worth showing a recent example which probably never would have made it through without a broker, branch banking typically run a mile from this type of case or don’t spot the angle.
In this instance we had a permanent worker with a child and no savings. This instantly has a few negatives, having children reduces your borrowing capacity and not having savings diminishes any hope left.
With this case in particular though, there were other aspects that swayed it. The client lived with a relative who was selling a property and moving in with a sibling, some of the profits were going to go towards helping our client make a purchase.
A gift alone normally won’t help you get a loan, you have to prove repayment capacity, some lenders will let the whole deposit come from a gift but you still …
Audrey Carville hosted another lively and informative ‘Late Debate’ where we were part of a panel discussing the role of retail, its performance and the big run up to Christmas.
On the 31st of July we spoke to Myles Duggan who was covering for Pat Kenny (same day as Pat’s big announcement!) about mortgage defaults, compliance and changes to the ability of banks to repossess homes.
My best laid plans have often blown up in my face, so chances are the idea I had which I mentioned to Pat Kenny last week has lots of snags built in; but today it was discussed on the Pat Kenny show (I wasn’t there for it) and given some additional context.
The thrust of the idea is that having something that is more process or practice based rather than principles based would work better in terms of fast and efficient negotiation.
You can listen to the concept in the link above which has the audio clip, but I’ll lay it out here too. When banks lend money they underwrite a person based on their affordability. My idea is that you re-establish a persons disposable income in their new financial circumstances and use the banks own calculations (albeit this time against them) to ‘re-underwrite’ the loan and in that respect reverse their own criteria against them.
This way if banks are conservative on lending they get conservative payments back …