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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House prices are on the move!

Sherry FitzGerald said yesterday that property prices fell 4.5% in the second quarter of the year having fallen 1.9% in the first quarter. The results to the 12 months to June showed that prices fell 10.2%. So house prices are moving, albeit down.

The factors that are affecting property are mixed and many, primarily the prices are/were too high, and any time assets receive valuations above and beyond what they merit you will see market corrections. We are also seeing a unique time in banking history, and in many respects the property price correction is not dissimilar to the 1929 crash because both of them focus around leverage, I’ll continue on that point in a later blog about ‘similarities in economic history’.

Cheap money from central banks is also on the wane, in fact almost every economy has increased rates in an effort to bring inflation under control, mixed in with the lending liquidity issues we see a two fold effect. First is that there is not as much money to lend, even …

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The upside to Negative Equity?

Sometimes I write articles that are inflammatory, today’s is of that ilk, I want to point out some of the upsides to Negative Equity. They are going to be put in a list with the upsides to getting hit by the number 47 bus. Anyways… The theme of this article is that for every downside there is an upside so today I will seek to find the benefits of Negative Equity, my gut feeling is that I definitely have my work cut out for me on this post!

100% mortgage, if you took out a 100% mortgage during 2007 and put down no deposit and in turn you bought for €300,000 then what you didn’t have to do was save up 30k of a deposit – what actually have to earn to save a deposit? If you are on the higher band of tax then you paid tax at 41% and of course there is about 5% of PRSI so we’ll say that you paid almost 46% in total. A €30,000 deposit would mean you had to earn about €55,000. …

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