Housing Bubble Bursting

danbohan · 08-03-2011 2:31pm

Caoimhín wrote: »

Eh, what about renting?

nonsense man , that BS is for them Germans or swiss or whatever that cant afford their houses !

catbear · 08-03-2011 2:36pm

Those Germans putting societal needs first rather than landlord rights, down with that sort of stuff!

Monty Burnz · 08-03-2011 2:40pm

JJJJNR wrote: »

Everyones going to be paying "life assurance, maintenance, decoration, insurance, upcoming property taxes, water charges, bin charges etc " unless you live in your mammys, and if you are well then fcuk off out of this thread.

Not true. Maintenance is the responsibility of the landlord, as are property taxes.

danbohan · 08-03-2011 2:43pm

catbear wrote: »

Those Germans putting societal needs first rather than landlord rights, down with that sort of stuff!

true , so why is nobody looking to change our rental culture along german /swiss lines rather than bail out thousands of people who through their own greed /stupidly/bad luck are now in negative equity /mortgage default so that another generation will make same mistakes and expect to be bailed out as well , mind boggling

niallers1 · 08-03-2011 2:53pm

danbohan wrote: »

true , so why is nobody looking to change our rental culture along german /swiss lines rather than bail out thousands of people who through their own greed /stupidly/bad luck are now in negative equity /mortgage default so that another generation will make same mistakes and expect to be bailed out as well , mind boggling

So people who wanted to buy shelter for themselves and their familily are greedy..who maybe wanted to put down roots in a neighbourhood near their family, friends are greedy..

Are you saying that these people deserve what they got..

Treehouse72 · 08-03-2011 2:54pm

JJJJNR wrote: »

Everyones going to be paying "life assurance, maintenance, decoration, insurance, upcoming property taxes, water charges, bin charges etc " unless you live in your mammys, and if you are well then fcuk off out of this thread.

One of the more interesting posts in this thread for the psychological insight it gives.

And I mean that comment to be every bit as condescending as it sounds by the way.

Zamboni · 08-03-2011 3:02pm

niallers1 wrote: »

So people who wanted to buy shelter for themselves and their familily are greedy..who maybe wanted to put down roots in a neighbourhood near their family, friends are gready..

Are you saying that these people deserve what they got..

Why did they have to buy?
They could easily have rented instead.

Who cares if they wanted to put down roots?
What do peoples wants have to do with anything anyway?

Wanting what you cannot afford and getting a loan to get it anyway is a form of greed.

It's not about them deserving what they got. They created the circumstances which have resulted in their current situation.

danbohan · 08-03-2011 3:09pm

niallers1 wrote: »

So people who wanted to buy shelter for themselves and their familily are greedy..who maybe wanted to put down roots in a neighbourhood near their family, friends are greedy..

Are you saying that these people deserve what they got..

''Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it."

what they got is a property price collapse , it happens . anybody that thought it could not happen was a fool

niallers1 · 08-03-2011 3:11pm

Zamboni wrote: »

Why did they have to buy?
They could easily have rented instead.

Who cares if they wanted to put down roots?
What do peoples wants have to do with anything anyway?

Wanting what you cannot afford and getting a loan to get it anyway is a form of greed.

It's not about them deserving what they got. They created the circumstances which have resulted in their current situation.

But they could afford it up until the point where they lost their jobs..This is why they're having difficulty..

Why shouldn't they be helped out..If they were long term unemployed their accomodation would be paid for and probably given a house. Do you not think it's better to help people out short term or would you prefer to pay for a house for them(as a tax payer) and their dole and other entitlements indefinetly..

There are some really harsh black and white thinking people on this thread.. My guess is that the people making those comments do not have much life experience..

niallers1 · 08-03-2011 3:15pm

Zamboni wrote: »

Why did they have to buy?
They could easily have rented instead.

Who cares if they wanted to put down roots?
What do peoples wants have to do with anything anyway?

Wanting what you cannot afford and getting a loan to get it anyway is a form of greed.

It's not about them deserving what they got. They created the circumstances which have resulted in their current situation.

Fianna Fail Government policy created the current situation by failing to oversee banking practice/governance. Fianna Fail fuelled the bubble..

Treehouse72 · 08-03-2011 3:17pm

niallers1 wrote: »

Fianna Fail fuelled the bubble..

And who got in the driver's seat, turned the key and drove off into the sunset?

niallers1 · 08-03-2011 3:18pm

Am I the only person over 25 posting here today?

Zamboni · 08-03-2011 3:20pm

niallers1 wrote: »

But they could afford it up until the point where they lost their jobs..This is why they're having difficulty..

So they knew in advance that signing up to a 20-35 year loan was gamble as absolutely nobody's employment is 100% secure.
They took a gamble and lost.

They could have just rented.
Then if they lost their jobs they could get RA and not have NE.

20goto10 · 08-03-2011 3:24pm

danbohan wrote: »

true , so why is nobody looking to change our rental culture along german /swiss lines rather than bail out thousands of people who through their own greed /stupidly/bad luck are now in negative equity /mortgage default so that another generation will make same mistakes and expect to be bailed out as well , mind boggling

It's not about bailing out mortgage holders. The banks have lent out money with the only security in most cases being the house itself. Mortgage holders should be allowed to simply hand back the keys. Thanks for the loan but sorry I can't afford the repayments anymore so here's the keys to the house, asta la vista. This whole business of a mortgage being for life is just plain wrong. A bank can take your house, sell it and you still owe them the remainder. It's wrong wrong wrong and is one of the first obvious changes needed to reform our economy to help prevent reckless lending. And the only way to apply it is to back date it otherwise it's only worthwhile for the next housing bubble, which could be generations away.

Rabidlamb · 08-03-2011 3:26pm

Treehouse72 wrote: »

In the meantime, enjoy the negative equity. Enjoy being stuck where you are with no ability to sell and move.

Good news on that front old bean, I put up a healthy deposit back in the day, I actually got a bit of a bargain truth be told. No NE yet.

Treehouse72 wrote: »

Enjoy paying the bank interest that over time will almost double the price you paid for the house in the first place.

Err no, I have a .95% tracker & have spent most of the 6 years of my mortgage paying at historically low rates.
I'm fortunate that my mortgage repayment is about the same as what rental properties get in my area.
For me to pay back double the original principal I'd have to be paying 6.5% over the lifetime of the mortgage (Karl Jeacle), not looking likely.

Treehouse72 wrote: »

Enjoy the tsunami of interest rate rises coming from next month on. Enjoy your TRS and MIR for the 1 or 2 or 3 years it exists before the IMF tell us to ditch it.

The worst estimates predict 6x .25% rises over the next 18 months.
So I'll be paying 3.45% interest, hardly penal relative to someone on a variable.

Treehouse72 wrote: »

Enjoy the fact your property will probably be worth less in 14 years than you paid for it in real terms.

It may be worth less but compare it to someone who rented for those same 14 years.
Would the difference between renting & paying a mortgage allow the renter to save the price of a house in 14 years time.
Plus they are at the whims of a landlord during this period.

Treehouse72 wrote: »

Enjoy your considerable costs of ownership - life assurance, maintenance, decoration, insurance, upcoming property taxes, water charges, bin charges - that the MIR will hardly even put a dent in.

Cost of living old bean, do you enjoy licking the lichen off the dripping wall in your cave.
Shine on you crazy diamond.

Treehouse72 wrote: »

Above all, enjoy the fact that you are a fully signed-up fellow-traveller with the stupidest generation of politicians, bankers and voters in the history of the state. You seem inordinately proud of your financial acumen, when in truth buying a property during the biggest property bubble in world history puts your judgements on these matters on a par with an innumerate toddler.

Nope, I am testament to the fact that not all of us who bought during the bubble got fleeced.
Back in 2005 there was still value to be had if you were willing to move down the country.
While you have been waiting to make your move I'm 6 years into my mortgage & all is well.
Until we cross swords again Treehouse old bean, have a good one.

Rabidlamb · 08-03-2011 3:35pm

niallers1 wrote: »

There are some really harsh black and white thinking people on this thread.. My guess is that the people making those comments do not have much life experience..

niallers1 wrote: »

Am I the only person over 25 posting here today?

I agree with the thoughts of this gentleman.
I believe many of our wise sages didn't buy during the bubble cause it was hard to get a mortgage when sitting the inter cert (purposely showing my age).

Highly Salami · 08-03-2011 3:37pm

Zamboni wrote: »

So they knew in advance that signing up to a 20-35 year loan was gamble as absolutely nobody's employment is 100% secure.
They took a gamble and lost.

They should have got a job in the public sector or a semi state!

quozl · 08-03-2011 4:12pm

20goto10 wrote: »

And the only way to apply it is to back date it otherwise it's only worthwhile for the next housing bubble, which could be generations away.

Care to declare an interest, 20goto10?

I agree non-recourse mortgages are a good idea, for the future, to prevent another housing bubble.

Back dating them is a ludicrous idea, it does not bring in the main benefit of non-recourse mortgages - encouraging banks to lend less recklessly as the losses of a property crash will be their's to a much larger degree. Instead it merely socialises private loses. Do you have large private loses you would like socialised?

danbohan · 08-03-2011 4:16pm

20goto10 wrote: »

It's not about bailing out mortgage holders. The banks have lent out money with the only security in most cases being the house itself. Mortgage holders should be allowed to simply hand back the keys. Thanks for the loan but sorry I can't afford the repayments anymore so here's the keys to the house, asta la vista. This whole business of a mortgage being for life is just plain wrong. A bank can take your house, sell it and you still owe them the remainder. It's wrong wrong wrong and is one of the first obvious changes needed to reform our economy to help prevent reckless lending. And the only way to apply it is to back date it otherwise it's only worthwhile for the next housing bubble, which could be generations away.

lets see , bank lends joe 300k , he cant pay , bank takes joes house , its worth 150k , bank loses 150k , joe needs house so his neighbour john the taxpayer has to provide him with one , john loses , the bank needs capital for its loss of 150k on joes house , again john the taxpayer must pay , john loses . john never owned a house , he rented and drove 10 year old car while his neighbors joe and mary bought new house ++ and nice new bmw to match , they looked down their noses on poor john , now he must house them and pay back the balance to the bank as well ,

this is fair ?. its total madness

Monty Burnz · 08-03-2011 4:26pm

20goto10 wrote: »

It's not about bailing out mortgage holders. The banks have lent out money with the only security in most cases being the house itself. Mortgage holders should be allowed to simply hand back the keys. Thanks for the loan but sorry I can't afford the repayments anymore so here's the keys to the house, asta la vista.

That might make sense in future, but expect banks to charge more for a non-recourse mortgage to cover the risks they are taking on. I'd happily opt for a recourse mortgage if I was borrowing a comfortable figure with a comfortable deposit.

20goto10 wrote: »

This whole business of a mortgage being for life is just plain wrong. A bank can take your house, sell it and you still owe them the remainder. It's wrong wrong wrong

In that case, don't agree to such a mortgage. Find another way to pay for housing - e.g. buy with cash, or rent, or whatever.

20goto10 wrote: »

and is one of the first obvious changes needed to reform our economy to help prevent reckless lending. And the only way to apply it is to back date it otherwise it's only worthwhile for the next housing bubble, which could be generations away.

Why backdate it? As far as I know, only adults were allowed to sign the legal documents agreeing to the loan terms. If non-recourse mortgages are introduced, adults will sign them too. I don't see the logic of trying to retrospectively change the law to benefit a minority at the cost of the majority.

Caoimhín · 08-03-2011 4:28pm

20goto10 wrote: »

The banks have lent out money with the only security in most cases being the house itself. A bank can take your house, sell it and you still owe them the remainder.

Historically, that was the whole point of a deposit. The idea was that if the borrower has invested his own money in the house, say 20% of the overall price that equity would mean that unless the value of the house dropped more than 20%, he would lose his own investment if he defaulted on the loan.

As we know though, the banks were dishing out 100% (or even 120%) mortgages without the regulator batting an eyelid and of course, house prices have dropped more than 20%.

As for a mortgage being for life, the history and origin of the word is interesting;

Mortgage: In the word mortgage, the mort- is from the Latin word mori (via old french mort) for death and -gage is from the sense of that word meaning a pledge to forfeit something of value if a debt is not repaid. So mortgage is literally a death pledge.

niallers1 · 08-03-2011 4:34pm

danbohan wrote: »

lets see , bank lends joe 300k , he cant pay , bank takes joes house , its worth 150k , bank loses 150k , joe needs house so his neighbour john the taxpayer has to provide him with one , john loses , the bank needs capital for its loss of 150k on joes house , again john the taxpayer must pay , john loses . john never owned a house , he rented and drove 10 year old car while his neighbors joe and mary bought new house ++ and nice new bmw to match , they looked down their noses on poor john , now he must house them and pay back the balance to the bank as well ,

this is fair ?. its total madness

Joe is on the dole now, couldn't get a job ..Joe gets dole weekly, medical card for free healthcare, childrens allowance, free house, back to school allowance..

Instead of giving Joe temporary assistance to help him get back on his feet to become a productive tax payer again we take everything off him that he worked for and give him a house in a area where his children will have a better opportunity to become heroin addicts and car thiefs.

Joe now likes the dole and realises that living off the tax payer is better than working for the man and being a tax payer..

Joes junky kids now see that long term life on the dole is not so bad and will encourage the next generation to do the same...

Joes Kids go to jail and cost the tax payer 45k per year each ... If only we gave Joe a dig out in the first place...

Monty Burnz · 08-03-2011 4:37pm

niallers1 wrote: »

John is on the dole now, couldn't get a job ..John gets dole weekly, medical card for free healthcare, childrens allowance, free house, back to school allowance..

Instead of giving John temporary assistance to help him get back on his feet to become a productive tax payer again we take everything off him that he worked for and give him a house in a area where his children will have a better opportunity to become a herion addicts and car thiefs.

John now likeS the dole and realises that living off the tax payer is better than working for the man and being a tax payer..

Sorry, I'm lost here: John lost his job because he couldn't repay his mortgage??

K-9 · 08-03-2011 4:39pm

Well you'll pay for Interest Relief through Water and Property rates that FG and Labour magically thought could be avoided and mysteriously turned up in the coalition agreement.

niallers1 · 08-03-2011 4:43pm

You were too quick off the mark...

It's Joe ..

Joe couldn't pay his mortgage because he lost his job... Some members of boards wouldn't help him out so he had to move to a dodgy estate and his lovely kids became heroin addicts....

Zamboni · 08-03-2011 4:44pm

niallers1 wrote: »

Joe is on the dole now, couldn't get a job ..Joe gets dole weekly, medical card for free healthcare, childrens allowance, free house, back to school allowance..

Instead of giving John temporary assistance to help him get back on his feet to become a productive tax payer again we take everything off him that he worked for and give him a house in a area where his children will have a better opportunity to become a herion addicts and car thiefs.

Joe now likes the dole and realises that living off the tax payer is better than working for the man and being a tax payer..

Joes junky kids now see that long tern life on the dole is not so bad and will encourage the next generation to do the same...

Joe is clearly a scourge to society.
Through his own financial mismanagment he has become a burden on the state.
If Joe had been prudent in his financial planning he may have had adequate resources to either a) retrain b) live comfortably until new employment was secured c) migrate to an area of better employment oppurtunities.

niallers1 · 08-03-2011 4:47pm

Zamboni,

Are you by any chance a southern states, US citizen who votes for the Republican party.. ?

Unrealistic · 08-03-2011 5:13pm

niallers1 wrote: »

Am I the only person over 25 posting here today?

niallers1 wrote: »

There are some really harsh black and white thinking people on this thread.. My guess is that the people making those comments do not have much life experience..

That's a bit arrogant isn't it? To imply that your own point of view is the only possible mature perspective? For the record I am well over 25 and did take out a mortgage during the past decade, but only borrowed a fraction of what I was approved for and consequently lived in a less desirable home than I could have in theory 'afforded', so I was able to pay off the mortgage within a few years.

niallers1 wrote: »

danbohan wrote: »

true , so why is nobody looking to change our rental culture along german /swiss lines rather than bail out thousands of people who through their own greed /stupidly/bad luck are now in negative equity /mortgage default so that another generation will make same mistakes and expect to be bailed out as well , mind boggling

So people who wanted to buy shelter for themselves and their familily are greedy..who maybe wanted to put down roots in a neighbourhood near their family, friends are greedy..

Are you saying that these people deserve what they got..

Danbohan gave three options; greedy, stupid and unlucky. You are the one trying to manipulate his words to have the most negative of those terms apply to the most sympathetic situation. As someone who didn't put down roots in a neighbourhood near family and friends during the boom, because I thought the level of indebtedness required would have been 'stupid', I think maybe the second option is the better description for the scenario you described. Or maybe even 'unlucky' would be more charitable if, for example, it was someone like Rabidlamb above who chose a better value home in a less sought after location over high levels of indebtedness, who then happened to lose their job. (I don't admire Rabidlamb's me fein attitude to a bailout but it's a pity that more people didn't exercise his level of prudence when purchasing property over the last 10 years.)

niallers1 wrote: »

But they could afford it up until the point where they lost their jobs..This is why they're having difficulty..

That is dangerous thinking because it encourages the myth that those currently struggling with mortgages are only those who have lost their jobs and can't keep up the mortgage on the family home. It ignores the fact that 50% of mortgages taken out between 2004 and 2007 were not for a family home but were for BTL's, second homes or equity release (to fund a car purchase etc.). It also ignores the fact that some of those in trouble have not lost their jobs but had over-borrowed so much that even a small decrease in their income was enough to put them over the edge. That is why, if any assistance is offered, it has to be finely targeted. It is one thing to have the taxpayer fund people who were unlucky enough to lose their jobs but should we really be funding someone who knowingly put their family home on the line in order to buy a second house or an SUV? What about someone who recklessly over-borrowed. If you are earning the same as the guy sitting beside you at work but you borrowed sensibly and bought a 3 bed semi in an OK area, but your colleague borrowed much more to buy a 6 bed McMansion, would you be happy to see your tax money used to keep him in that house rather than a solution that saw that him trading down to a property he could actually afford while the McMansion is sold by the bank to recoup at least part of the loss.

niallers1 wrote: »

If they were long term unemployed their accomodation would be paid for and probably given a house. Do you not think it's better to help people out short term or would you prefer to pay for a house for them(as a tax payer) and their dole and other entitlements indefinetly..

This is oversimplifying the situation again. It assumes that people who are in trouble with the mortgage cannot afford to rent. Certainly some cannot but there are others who are struggling to pay a mortgage at €2,000 per month but who could afford to rent at €1,000 per month. I would also question your classification of mortgage assistance as being short term but the dole would be indefinite. Mortgage assistance has effectively already been in place for two years or more because of the moratorium on repossessions. How many more years do you think it would be required before the tide turns? Why do you present it as an alternative between keeping people in their houses or forcing them onto the dole? ("help people out short term or pay for a house for them(as a tax payer) and their dole and other entitlements indefinetly"). Are you really suggesting that keeping people in houses they can't afford is going to mean their is less chance that they will be unemployed and have to draw the dole?

niallers1 wrote: »

Fianna Fail Government policy created the current situation by failing to oversee banking practice/governance. Fianna Fail fuelled the bubble..

- The Fianna Fail government helped to create the current situation by fuelling the bubble with tax breaks and corrupt planning practices and by failing to rein in excessive bank borrowing and mismanaging the fallout when bank financing was cut off.
- A majority of the electorate helped to create the current situation by continuing to return Fianna Fail to government even when their corruption and complicity was clear.
- The construction and property industries helped to create the current situation by borrowing excessively, manipulating market pricing and being the other side of the planning corruption coin.
- The banking industry helped to create the current situation by allowing lending standards to plummet and creating a timing mismatch between assets and liabilities on their balance sheets.
- House buyers helped to create the current situation by borrowing more than they could afford to buy overpriced house and apartments and by borrowing against theoretical increases in house values in order to fund luxury purchases.

If you are going to argue for help for those in trouble at least try to confine it to those who are deserving and please have the good grace to acknowledge that 99% were at least partially responsible for the situation in which they have found themselves.

Unrealistic · 08-03-2011 5:25pm

niallers1 wrote: »

You were too quick off the mark...

It's Joe ..

Joe couldn't pay his mortgage because he lost his job... Some members of boards wouldn't help him out so he had to move to a dodgy estate and his lovely kids became heroin addicts....

So you're saying that, when families find themselves in the unfortunate position that they need to be housed by the state, we should operate an apartheid system where the taxpayer who is stuck living in Clondalkin should have to pay for Joe's kids to stay living in Foxrock purely on the basis that Joe once spent way beyond his means and took out a crazy mortgage to buy an overpriced house there?

danbohan · 08-03-2011 5:32pm

niallers1 wrote: »

You were too quick off the mark...

It's Joe ..

Joe couldn't pay his mortgage because he lost his job... Some members of boards wouldn't help him out so he had to move to a dodgy estate and his lovely kids became heroin addicts....

AND MARY , mary had to sell herself , ogh god just give them the house !!!!

Housing Bubble Bursting

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