Mortgage Questions: I am not in permanent employment. Can I get a mortgage?

Answer: If you are not in Permanent employment no mainstream mortgage lender will consider a mortgage application from you, while that may sound harsh, it reflects the reality in lending that the main thing a lender needs is security that the borrower has the capacity to pay back the loan in the future. Sub-prime Lender Start Mortgages may consider an application, but if you opt for a specialist lender you will pay  for it via the margin on their lending, they take on risky applications but they charge accordingly. The maximum loan they will lend is 75% of the purchase price. This type of application is assessed on a case by case basis & will depend on the length of your contract served etc. the length of contract remaining and your previous employment history.

However, to give a short concise answer – generally banks won’t lend to you if you are not in permanent employment, this is a question you will be asked by your mortgage adviser and it also appears on your salary cert.

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US Recession over.

Recession in the US has come to an end as  US GDP increased in the third quarter. The US saw an expansion of 3.5 per cent between July and September according to figures from the US Department of Commerce.

The US growth follows recent news that Japan, China, Germany, and France have all climbed out of their recessions. The UK may now be the only top economy to remain officially in the slump. Just a reminder of what a ‘recession is’, its two or more quarters of negative or stagnant GDP.

The Obama administration stated that the news is a “welcome milestone,” but stopped short of celebrating a complete recovery. The ‘end of a recession’ is exactly that, a milestone, it doesn’t undo the damage but it is the first step on the road to recovery the issue now will be one of continuing on that path.

The American stimulus packages rolled out this year are probably a major catalyst to the quarter’s growth – increasing consumer spending which the US economy is so reliant …

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Supply, Demand, & Prices of Irish Property – A talk by Ronan Lyons

Ronan Lyons gave a talk to CFA Ireland on the 9th of July on the topic ‘Supply, Demand, & Prices in Irish Property’.

Ronan is one of the most respected voices on the property commentary circuit in Ireland due to his careful analysis and long term association with the nations largest property website daft.ie (from which he gathers his datasets).

This video (click here to go and watch the full play-list) is required viewing for anybody with an interest in the Irish property market.

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Bill Gross, talking about US jobless figures

Bill Gross talks about the US jobless figures for June, while there is the need to realise that bad news makes bond prices rise, Mr. Gross of PIMCO (the worlds largest bond fund) make some excellent points.

Anaemic wage growth, a savings rate jumping from 0% towards 8%, the people with jobs are not getting raises, he picture he paints is grim, he says there will be suppressed demand and spending for a generation. The contents of his takes on the market can be found on the Pimco website here.

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Track that Yield Curve! ECB effects.

Today the FT has reported that the ECB will offer unlimited 12 mth repo facilities to banks, this is a big step for the generally hawkish bank. Note: Unlimited.

We have said on this blog/radio/national papers that the 1% mark is not likely to be passed due to the compression it causes on banking profits (the ZIRP policy was one of the inherent issues with Japan’s lost decade). So the opportunity to get in at what is being touted as the historic low, not to be repeated, will have an effect and the belief – at least in this house – is that it will be on the right hand side of the yield curve.

Undoubtedly banks will now gather every available piece of collateral and cash it in. Remember you heard it hear first: this will cause a problem in about 12 months time when the piper has to be paid and everybody is cashing out/back in …

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Infrastructure: Costing too much and rewarding so few

I am not about to say the Luas isn’t great, having used the service several times I find it to be more efficient than the Dart or bus and in the areas that it serves it beats other forms of transport hands down for speed in getting there, that is really the golden aim of public transport, make it cheap, fast, reliable and it will work.

The issue I have however, and that we will cover today is that the Luas went well over budget and in terms of a capital project we have rewarded the people along the Luas line with unearned capital gains which will never be taxed and that gain came implicitly at the expense of the taxpayer.

I was thinking of canvassing the houses along the Luas line to ask them if they felt that ‘bank bailouts’ were a rip off and if the tax payer should be rewarded for such actions given that the state were paying for it, then to ask them if they …

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The pincer of fixed rates while in negative equity

A recent article in the Independent stated that ‘fixed rate borrowers are taking all the pain’. The base rate has fallen from 4.25% to 1.25% with a further rate reduction expectation taking the EU to a base of 1%. What this means is that people who felt the drop off in base rates (tracker mortgage holders & most variable rate holders) are now better off to the tune of about €425 per month.

However, for those on fixed rates the story is the reverse of this, they have not felt any reduction in the amounts they are spending monthly while at the same time many have had to live on less due to wage cuts, levies, and job loss. The fees for ‘breaking’ a fixed rate are usually from 3 to 6 months of payments.

So what can you do? If you have the savings to pay for the move you can go that route, but if you have been …

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Property market meddling is a mistake

I am dismayed at Brian Lenihan’s new measure that we are told will be implemented in the Budget regarding the provision of loans from the Government to ensure first time buyers can get mortgages for properties on which the banks can’t/refused to provide mortgages.

This is an attempt to put a floor under the housing-correction, and it is also a flawed error meddling with a market that is going through a perfectly healthy correction. I am aware that since it only applies to new builds it only benefits members of the CIF and actually acts as a handicap to private seller. If I wish to sell my house I will be at a distinct disadvantage to somebody who has a ‘new house’ to sell, this is a distortion and is of no benefit to the buyer who may in fact not wish to purchase a newly built house.

Effectively the Government has decided to provide loans that the banks won’t, in the past we used to refer to these loans as ‘sub-prime’, this was where a person could get a …

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