Housing Bubble Bursting

information

SimpleSam06 wrote:

Anyone with any knowledge of mortgages should know that you can't just hand over the keys to the bank if your house value is less than what you owe. You pay what you owe.

Do some research, thats what happens in a property crash.
People hand the keys to the bank and just walk away or leave the country, its not just a nieve, uneducated theory I posted its a fact.

SimpleSam06 wrote:

Shelling out "rewards" by cutting your profit margins for anything isn't part of any business model.

SimpleSam06 wrote:

The only time businesses do this is whats known as a "loss leader", where you offer a lower price on one product in the hope that customers stay and buy more.

Do you understand that you are doing here ?
First you say its not done, then
You give a reason why it is done.

SimpleSam06 wrote:

That has nothing to do with the lending business however.

Business is the same across the board its about getting and keeping customers.
You can apply the same marketing strategies to all market sectors.

Calina

Deleted User wrote:

....
Neither of us want to sell my house, but in the event that we do he will retain first time buyer status....

I remain open to correction on this but it is my understanding that if he buys with you, he will not be assessed as an FTB. For that to apply, he will have to buy separately.

SimpleSam06

information wrote:

Do some research, thats what happens in a property crash.
People hand the keys to the bank and just walk away or leave the country,

Well, if they never have any intention of returning, and move to one of the many high class non-EU-extradition treaty countries, I'm sure they will live happily ever after.

information wrote:

Do you understand that you are doing here ?
First you say its not done, then
You give a reason why it is done.

Jesus H. I gave two different systems entirely. Please re-read. What you can do in Dunnes doesn't work in the lending business, shockingly enough.

iguana

information wrote:

Do some research, thats what happens in a property crash.
People hand the keys to the bank and just walk away or leave the country, its not just a nieve, uneducated theory I posted its a fact.

That can only happen if the laws of the country allow it. In Ireland they don't. In a situation where you walk away from your house which sells for less than your debt, your future wages can be garnished or you can lose your pension in order to cover the remainder.

miju

Calina wrote:

I remain open to correction on this but it is my understanding that if he buys with you, he will not be assessed as an FTB. For that to apply, he will have to buy separately.

was about to post the same as you Calina. I'm nearlly 100% that once a partner co-habits for a certain amount of time then that first time buyer status is lost.

*me goes off to dig up more info*

information

SimpleSam06 wrote:

Well, if they never have any intention of returning, and move to one of the many high class non-EU-extradition treaty countries, I'm sure they will live happily ever after.

Stay with 100k debt or go to another country fresh.
It will happen if the crash is bad, just like it did in other crashes.
Are you saying this never happens or it will not happen?

SimpleSam06 wrote:

Jesus H. I gave two different systems entirely. Please re-read.

SimpleSam06 wrote:

Shelling out "rewards" by cutting your profit margins for anything isn't part of any business model. If you think that to be the case, I'd love to buy something from you.

I re-read this you state any business model.
When I pointed out this was incorrect you tried to change you arguement and say you where only talking about the lending business, which again hold no ground as lenders often cut margins to gain business.

SimpleSam06 wrote:

What you can do in Dunnes doesn't work in the lending business, shockingly enough.

Ask any marketing consultant.
The same principles apply across any business.
Dunnes wants to sell more milk they drop their price for milk.
Halifax wants to sell more mortgages they drop their rates.
Do you see how simple this is and how it can apply to any business?

miju

miju wrote:

was about to post the same as you Calina. I'm nearlly 100% that once a partner co-habits for a certain amount of time then that first time buyer status is lost.

*me goes off to dig up more info*

The mortgage is mine, in my name only. If my fiance has never owned a property and his name is not on my property how can his first time buyer status be lost?

Him living with me and contributing to the mortgage is no different to the rent-a-room scheme an owner-occupier can avail of.

He would only lose first time buyer status if he bought WITH me. But why would he want to do that?

Also, under the new stamp-duty legislation, it is possible for divorcees to have their status returned to that of first time buyer, according to the solicitor I spoke with today.

This is all way off topic, however! It brings me back to the original question I asked about how much people actually know about mortgages and home-buying.
Again, I wasn't trying to be a smart-ass, there just appears to be a lot of mis-information rolling around.

nesf

information wrote:

Ask any marketing consultant.
The same principles apply across any business.
Dunnes wants to sell more milk they drop their price for milk.
Halifax wants to sell more mortgages they drop their rates.
Do you see how simple this is and how it can apply to any business?

He is talking about loss leading which is not what you are talking about above and if you ask any marketing consultant worth their salt they will tell you that that priniciple doesn't apply in every market. There is more to many products than just their price unlike say your average carton of milk.

Calina

Deleted User wrote:

The mortgage is mine, in my name only. If my fiance has never owned a property and his name is not on my property how can his first time buyer status be lost?

Him living with me and contributing to the mortgage is no different to the rent-a-room scheme an owner-occupier can avail of.

He would only lose first time buyer status if he bought WITH me. But why would he want to do that?

Also, under the new stamp-duty legislation, it is possible for divorcees to have their status returned to that of first time buyer, according to the solicitor I spoke with today.

This is all way off topic, however! It brings me back to the original question I asked about how much people actually know about mortgages and home-buying.
Again, I wasn't trying to be a smart-ass, there just appears to be a lot of mis-information rolling around.

The key issue is "Buying with you"...then he loses his FTB status as far as I'm aware.

That being said - personally speaking, if I were to buy a property with someone that I was living with/engaged to/planning to marry, for my own economic protection I would want my name on the deeds. In the event of things going bad, having paid/supported payment of the mortgage, your position would be far improved in the division of assets.

Under the new stamp duty legislation, I understand it is possible for one member of a separating couple to reacquire FTB status if their interest in the property is bought out by the other party.

miju

info on FTB status here

daveirl

This post has been deleted.

daveirl

daveirl wrote:

This post has been deleted.

Nah, I'd dust off that Aussie passport and head Down Under!

information

nesf wrote:

He is talking about loss leading which is not what you are talking about above and if you ask any marketing consultant worth their salt they will tell you that that priniciple doesn't apply in every market. There is more to many products than just their price unlike say your average carton of milk.

I am talking about marketing strategy.
You can apply any marketing strategy to any market.

Loss leading can be applied to every market.
Milk Market.
It will work for the big supermarkets.
It will not work for the corner shop.

Just to clarify SimpleSam06 stated that no business model included cutting its profits. Then he realised he was wrong and started changing his arguement.

iguana

Deleted User wrote:

The mortgage is mine, in my name only. If my fiance has never owned a property and his name is not on my property how can his first time buyer status be lost?

Him living with me and contributing to the mortgage is no different to the rent-a-room scheme an owner-occupier can avail of.

He would only lose first time buyer status if he bought WITH me. But why would he want to do that?

Sorry but if he could be deemed as having a financial interest in your property, say for example you sold your property and where going to use any equity gained to finance a new property in his name, he would lose his ftb status. As much as it may often seem otherwise the government aren't complete and total idiots.

TCollins

information wrote:

Just to clarify SimpleSam06 stated that no business model included cutting its profits. Then he realised he was wrong and started changing his arguement.

Not the first time SimpleSam has done that in this thread - if you could be arsed to trawl back through it.

I find it shocking that some people who pretend to know what they are talking about with regard to property markets do not know anything about the mortgage market in Ireland. NIB, Halifax, AIB and many more all have LTV products. All you have to do is read their terms and conditions and product packages.

Also, there is an assumption among many here that anyone with a mortgage is in dire straights and crippled financially. Thats just not true. I dont know one person out of all my mates that are in trouble with their mortgages. The price of Dog food or petrol hurts them more than an interest rate increase.

Its just a pity that people have to be so polarized on the issue here. There is a middle ground here, which i think is where we are at -

The boom is over. House prices may be stalling or even dropping slightly. We dont know what way it is going to go, but right now we are far from a crash or a continued boom in property prices.

chump

TCollins wrote:

The boom is over. House prices may be stalling or even dropping slightly. We dont know what way it is going to go, but right now we are far from a crash or a continued boom in property prices.

This is the sort of speculation both sides are attacking the 'other side' about.
How can you make this assumption?

in essence what you have said here is 'ah sure it'll be grand bhoy'

Supercell

TCollins wrote:

The boom is over. House prices may be stalling or even dropping slightly. We dont know what way it is going to go, but right now we are far from a crash or a continued boom in property prices.

TCollins I think you're in the "denial" phase, look at this graph and tell me how it hasn't mirrored the Irish market so far?

iguana

iguana wrote:

Sorry but if he could be deemed as having a financial interest in your property, say for example you sold your property and where going to use any equity gained to finance a new property in his name, he would lose his ftb status. As much as it may often seem otherwise the government aren't complete and total idiots.

As I've pointed out twice, his FTB status won't be affected unless I or my funds are involved in his property purchase.
Believe me, I know the mechanics of this inside out!

indiewindy

Deleted User wrote:

As I've pointed out twice, his FTB status won't be affected unless I or my funds are involved in his property purchase.
Believe me, I know the mechanics of this inside out!

As you say that he is contributing to the mortgage, he therefore would appear to have a financial interest in the house. That is nothing to do with rent a room. This also doesnt have much to do with the original topic

Do-more

Deleted User wrote:

Seriously though, how many of the regular posters on here have a mortgage, or ever had one?
I'm just curious.

Can't speak for anyone else, but I have a mortgage with an LTV of just 15%, so I'm not worried about negative equity or the like.

My concern with the property market is how the wider economy will be effected as the property market unwinds. This country currently has a huge reliance on the production of housing. Vast amounts of the economy depends on it directly or indirectly. Whilst the private sector will most likely feel the greater pinch the public sector is not immune as it is also bound to be effected by falling tax revenues and increased demands on welfare payments.

What nobody can say for sure is how big the effect on the economy will be.

Having left college in 1986 when more than half my class mates had to emigrate to find work, I know what the downside looks like, I just hope I don't have to face the likes of that again...

Deleted User

Deleted User wrote:

Seriously though, how many of the regular posters on here have a mortgage, or ever had one?
I'm just curious.

Not a regular poster but I had a mortgage in the late eighties in the UK. I bought near the top of tha bubble, then had several years (1990 to 1996 or 2002 if you take inflation into account) of negative equaty.
I was fortunate that I had no need to sell during that time, I then sold and moved here I still have the same mortgage outstanding as in 1989 hut it is a relativly small percentage of the value of my current home as opposed to 90%+ on the previous house.

Glenbhoy

iguana wrote:

Sorry but if he could be deemed as having a financial interest in your property, say for example you sold your property and where going to use any equity gained to finance a new property in his name, he would lose his ftb status. As much as it may often seem otherwise the government aren't complete and total idiots.

Highly unlikely that he'd lose his FTB status in this situation, but it's a side issue to the thread.

The price of Dog food or petrol hurts them more than an interest rate increase.

Now we know where Benji went to!!

I find it shocking that some people who pretend to know what they are talking about with regard to property markets do not know anything about the mortgage market in Ireland. NIB, Halifax, AIB and many more all have LTV products. All you have to do is read their terms and conditions and product packages.

Yeah, there does seem to be a complete lack of understanding of just how competititive the market is out there at the moment. Surely people know that there are a number of new entrants to the market, unfortunately for the new entrants, they have arrived just when money being loaned is declining rapidly, so we have a huge increase in demand coupled with a huge decrease in supply, that can only lead to one thing, lower interest rate margins and better deals for mortgage holders.

One other thing, is anyone noticing any signs of the dead cat bounce, following on from the election??
I can't say for certain, but I am starting to see some more sale agreed signs going up on my morning commute - I don't know if it's a sign that vendors have possibly become a bit more realistic re selling prices, or if it's a little upsurge in demand caused by the economic stability we're assured of under our 'really, really stable govt'. Anyone else notice this? Will we see better numbers come Aug (presumably it takes a few months for events on the ground to filter through to the stats).

SimpleSam06

information wrote:

Just to clarify SimpleSam06 stated that no business model included cutting its profits. Then he realised he was wrong and started changing his arguement.

Hahaha, legend. I'm trying to figure out a way for you to understand what I'm saying, while still remaining within the charter, and its just not coming. The full sentence was:

Shelling out "rewards" by cutting your profit margins for anything isn't part of any business model.

This seems to be a bullish trick of cutting off bits of sentences and changing the context to mean something new. This is called a straw man, learn it off by heart there like good lads. Learn also what a loss leader is, and in doing so learn why it can't apply to mortgage lending, and in particular why its not a "reward" (that bit of the sentence you cut off).

TCollins wrote:

Not the first time SimpleSam has done that in this thread - if you could be arsed to trawl back through it.

This is like watching the blind leading the Helen Keller. How many bulls have been lurking this thread for the last hundred pages? Own up!

nesf

information wrote:

I am talking about marketing strategy.
You can apply any marketing strategy to any market.

Loss leading can be applied to every market.
Milk Market.
It will work for the big supermarkets.
It will not work for the corner shop.

Um, implicitly it can only be applied to markets that have more than one single product and not every market surely? What I quoted said that "Dunnes would reduce the price of milk in order to sell more milk" which is not what the goal of loss leading is (ie. it's about increasing secondary purchases enough to make a profit despite making a loss on the milk itself, if only milk is sold then the strategy of loss leading hasn't succeeded). That and, any marketing strategy to any market?

al_g

pjbrady1 wrote:

I would guess that most of the 'new' jobs created in last two year are either in unsustainable construction or low paid Hotel, Catering, Pub or Retail work.

How many new jobs outside of construction and public service with a salary of 35,000 plus have been created. That is the kind of salary needed to be comfortable with the Irish cost of living.

Also in rural areas there has been a big scale down in owner operated pubs, shops and retail. These jobs have been replaced by low paid labour in multinationals in larger towns. The jobs crisis will work its way from Mayo to Meath this summer. Just wait till first phase of construction lay offs start at the end of next month. Blocklayers, plasterers, roofers will soon find it tight.

you got it right

nesf

Longfield wrote:

TCollins I think you're in the "denial" phase, look at this graph and tell me how it hasn't mirrored the Irish market so far?

We could be in that initial "bear trap" of the first sell off...


Housing markets are weird though, I'd be extrememly surprised if the final actual graph looked much like that other than in "general form".

Do-more

Glenbhoy wrote:

One other thing, is anyone noticing any signs of the dead cat bounce, following on from the election??
I can't say for certain, but I am starting to see some more sale agreed signs going up on my morning commute - I don't know if it's a sign that vendors have possibly become a bit more realistic re selling prices, or if it's a little upsurge in demand caused by the economic stability we're assured of under our 'really, really stable govt'. Anyone else notice this? Will we see better numbers come Aug (presumably it takes a few months for events on the ground to filter through to the stats).

Certainly signs of some sort of bounce around me, with a number of properties sale agreed or sold. Of the few I know, prices are holding up at around December levels which is about 10% off the top of the market.

Still lots more properties waiting to be sold so I really can't see prices rising again as in Longfield's graph, I think interest rates will put paid to that. But we might see a plateau for a few months as whatever demand in the system is released and then a decline as further interest rate rises bite.

(Spoke to a guy last weekend with connections in a major lender who said that there are an increasing number of people deferring mortgage repayments for 6 and 12 months.....)

Gurgle

SimpleSam06 wrote:

Yup, that's exactly what I said. Its not a "reward" of some sort, as I picked up Patrick was saying, its just negotiation from strength. I see no reason why the inverse would not also apply, however.

Your loan contract is for the full length of the mortgage term.
The margin can't be changed unless you sign a new contract.

If you're on a variable rate loan, you have the option to repay the loan in full without penalty. Your bank doesn't have the option to demand you do this though.

You're only really stuck if you have fixed your interest rate. In this case you are liable for all the interest due up to the end of the fixed rate period. Thats why banks are always pushing for you to take a fixed rate loan.

When you have equity in the property, you can re-negotiate your loan. More accurately you can repay your loan in full and take out a new one, either with your current lender or a different one. As you are negotiating from a strong position, you can get a better rate.

If the reverse occurred and you had negative equity the bank can't change their margin. They can't just tear up the contract and demand that you sign a new one, they're stuck with the agreed margin until the loan is paid off.

indiewindy

indiewindy wrote:

As you say that he is contributing to the mortgage, he therefore would appear to have a financial interest in the house. That is nothing to do with rent a room. This also doesnt have much to do with the original topic

My last post on this, because it is off topic but you are misinformed.

He has no financial interest in my house. Technically he rents a room from me. Check out the rent-a-room scheme if you can be bothered learning how it works regarding tenancy and tax.

If what you are claiming was true, every single person renting in a house with an owner-occupier would "have a financial interest" in the house and therefore lose FTB status.

It's really not that difficult to understand.

Afuera

Deleted User wrote:

He has no financial interest in my house. .

But does he have a "beneficial interest" in the house? This is the term that Revenue use to see if somebody is elegible for FTB status.

Deleted User wrote:

Technically he rents a room from me. Check out the rent-a-room scheme if you can be bothered learning how it works regarding tenancy and tax.

If he is technically renting a room from you under the rent-a-room scheme then you will have to make a tax return dictating this to Reveune. Also, if he is paying more than 7,620 EUR a year in "rent" you will have to pay tax on all of the money he pays you.