Does anyone still offer 100% mortgages?

gurramok

shamblertine wrote: »

Why does loan percentage matter to a bank? Surely its simply a matter of assessing if you can make the monthly repayments.

If you default, then in the current climate both parties are screwed either way. If the bank repossesses they will be left with a house in negative equity which they won't be able to sell because of policies they have introduced to make it harder to get mortgages. So giving 92% mortgages or 100% mortgages doesn't make a damn bit of difference to them.

Climate has changed. Banks need to make money and the only secure way of doing that from mortgages is getting deposits without having a house they cannot sell at a profit when repossessed.
They know instant negative equity is on the cards hence they do not want a greater risk of default.

The shoe was on the other foot when prices rose constantly, equity was produced on paper and 100% mortgages looked good to them as a small risk.

The above points answer what ntlbell was stating, those 100% mortagges played a part in where we are now.

shamblertine wrote:

thats just not true

Tell that to the tens of thousands of mostly young people in negative equity right now, alot of them took out 100% mortgages on apts at the peak which have crashed in value and they are stuck where they are for many years.

oeb

shamblertine wrote: »

but negative equity isn't going to affect your ability to make repayments, so it doesn't make any difference to banks if you have a 100% mortgage or a 92% mortgage

When you take out a loan you need to secure something against it that is equal or greater than the value of the loan. If you have Negative equity (Liabilities (Mortgage) are greater than assets (House Value)) you put the bank in the position where should they need to reposess your house (And there are many reasons you might not be able to keep up payments, more than simply losing your job) they will lose money. Because the house prices are still falling, they are very unlikely to offer 100% mortgages as it is nearly certain that the collateral offered up against loan will soon be worth less than the loan (ignoring intrest for now).

In a rising market banks have the freedom to offer 100% loans because it does not really matter to them if people can pay them back or not. Either the house owner pays back the loan plus intrest (profit for the bank), or the bank can quickly sell on the house at a profit. Either way they are covered.

In todays market the bank will more than likely make a loss on the value of the house, and it will take longer to shift. At the moment there are lots of people defaulting on their loans, which means losses for the banks (in a lot of cases, particularly if the house was bought in the last three or four years). Banks are unlikely to give 95% plus to anyone they do not see as safe. People who are very unlikely to lose their jobs (For example, doctors or dentists, possibly army personell, possible members of AGS etc) (They would also need to be in an income bracket that would enable them to make the payments of course).

That is my understanding of how it works anyway.

Edit : It is also worth noting, that people who hold negitive equity are much more likely to default. Many people see a major issue with paying back a loan for 10% or 15% more than the value of their home. There are few downsides to defaulting (other than reposetion)

Salome

EBS are offering up to 100% mortgages on affordable housing schemes based on a LTV of 80%.

confuzed

Salome wrote: »

EBS are offering up to 100% mortgages on affordable housing schemes based on a LTV of 80%.

would anyone please explain what does that mean?
100% mortgage of 80% LTV.

Xiney

Why would people want 100% mortgages available (ever again)?

If banks only give out 90% or, better, 80% mortgages, and people have to have a 10-20% deposit to buy, it ensures house prices won't go f*cking nuts because it limits the prices based on what people can afford to save in the first place.

Also, if buyers can't manage to save up a down payment, it doesn't bode well for their financial planning skills and ability to repay a mortgage.



There are about a million and one other reasons not to give out 100% mortgages.

oceanclub

Salome wrote: »

EBS are offering up to 100% mortgages on affordable housing schemes based on a LTV of 80%.

I think that's ****ing outrageous. The government have already had to cover EBS under the guarantee scheme and they have _already_ written off 20% of their property loans (http://www.irishtimes.com/newspaper/finance/2009/0313/1224242800049.html). Now, here they are giving 100% of the cost of a property to people who are the least able to deal with any property drop, and which they know _for a fact_ will be worth less than that. The government should nail their bollocks to a ****ing tree over this.

P.

leeroybrown

confuzed wrote: »

would anyone please explain what does that mean?
100% mortgage of 80% LTV.

LTV means loan-to-valuation ratio. A €160k loan for a property valued at €200k gives you a LTV of 80%.

oceanclub wrote: »

I think that's ****ing outrageous.

It's not quite a classic 100% mortgage. The buyer is only getting a loan for a maximum of 80% of the value of the home even if they are getting that section as a 100% mortgage.

EDIT: I'll also add that as far as I know the mechanisms involved in the Affordable Housing scheme will impose additional limitations on the maximum borrowings and repayments based on income.

confuzed

leeroybrown wrote: »

It's not quite a classic 100% mortgage. The buyer is only getting a loan for a maximum of 80% of the value of the home even if they are getting that section as a 100% mortgage.

That's right it is effectively 80% mortgage. Why on this earth they give confusing statements.
SO NONE OF THE BANKS GIVE 100% MORTGAGE. Although AIB website says 100% mortgage for young professionals but i think practically days are over.

trevorku

Aib offering 100%? You must be mistaken, ive scoured every bank in the country and all wont give more than 92% which is rubbish because it means you need a deposit of between 15k and 25k or something before they even give you the loan, oh how I wish I had taken a 100% mortgage before the economy collapsed, surely it cant stay like that forever?

leeroybrown

confuzed wrote: »

That's right it is effectively 80% mortgage. Why on this earth they give confusing statements.

Technically it is a 100% mortgage as the buyer is borrowing the entire reduced 'affordable' price and supplying no deposit themselves. The fact that it's an affordable housing scheme means that they are subject to additional limitations and commitment that make it a viable offer for the bank.

Another point to note is that for Affordable Housing the availability of near-100% mortgages are the rule not the exception. Ulster Bank also offer 100% of the reduced 'affordable' price. I'm sure there are others out there who will do it to.

trevorku wrote: »

Aib offering 100%?

As 'confuzed' says it's specific to their 'Young Professionals' mortgage packages. They're targeting young recently qualified doctors, dentists, etc. who have a large disposable income, no kids, a secure medium term income with secure salary future increases. Right now the number of 'professionals' who qualify for this is very restrictive. I think that BoI still offer a similar mortgage.

shamblertine

Xiney wrote: »

Also, if buyers can't manage to save up a down payment, it doesn't bode well for their financial planning skills and ability to repay a mortgage.

Its not that they can't manage to save it up, its just that it will take them many years to save up. The majority of first time buyers will be on lowish income, therefore saving up 25k or so for a deposit for a one bed apartment will take a long time, perhaps until they are 30 or over. In that time, they may have started a family and so need somewhere bigger than a 1 bed, which means they will have to save for an even bigger deposit which will take more years. So young people these days will only likely be able to buy property when they are about 35 or older.

trevorku

EBS First Mortgage features

* Choice of variable or fixed interest rates - or a split loan, where some of your repayments are at a fixed rate and some are at a variable rate
* Up to 92% loan to property value (LTV) available
* EasyStep(1) option available - reduced mortgage repayments for the first 3 years
* Option to repay interest only(2) for the first three years, depending on what you earn and the amount you want to borrow
* 35 year term available

leeroybrown

The poster above who brought EBS up was referring specifically to their affordable housing mortgage not to their normal first time buyer mortgage. They probably shouldn't have mentioned in the first place as it's not really a standard 100% mortgage and the confusion it's caused is derailing this thread.

Sqaull20

Xiney wrote: »

Why would people want 100% mortgages available (ever again)?

If banks only give out 90% or, better, 80% mortgages, and people have to have a 10-20% deposit to buy, it ensures house prices won't go f*cking nuts because it limits the prices based on what people can afford to save in the first place.

Also, if buyers can't manage to save up a down payment, it doesn't bode well for their financial planning skills and ability to repay a mortgage.



There are about a million and one other reasons not to give out 100% mortgages.

Yeah it should be 20% or more for everyone.100% meant anyone that had an income could get a mortgage and alot of them didnt think long term, they wanted now and hoped for the best.If it was 40k of their own money which would take the average person years to spare, they wouldn't be so fast in signing the papers.

Xiney

shamblertine wrote: »

Its not that they can't manage to save it up, its just that it will take them many years to save up. The majority of first time buyers will be on lowish income, therefore saving up 25k or so for a deposit for a one bed apartment will take a long time, perhaps until they are 30 or over. In that time, they may have started a family and so need somewhere bigger than a 1 bed, which means they will have to save for an even bigger deposit which will take more years. So young people these days will only likely be able to buy property when they are about 35 or older.

You are still operating under the assumption of current property prices.

25k for a deposit for a one bed? No one bed should be more than 100 000 euro, and it would have to be a very well appointed, well positioned one.

This is what I'm saying: if people NEED to have a deposit of at least 10% (20% being better) then the amount people can save based on their income will determine the prices that people can sell at: if nobody is able to pay 300 000 for a one bed shoe box, then the prices will be set at more reasonable levels.

Also, in a two income couple earning, we'll say, 45k combined, (which until recently was not unheard of nor the combination of excessive wages) they should be able to save up 10 grand with perfect ease very year. That means in 3 years, they'd have 30k, which would be enough for a 20% deposit on a 3 bed 150 000 semi detatched home. That's where the market should be, frankly.

And people who spent 30k on a wedding and then got a 100% mortgage... well. I'm not personally loving this recession, seeing as I'm unemployed, but it really is a much needed wake up call.

oceanclub

trevorku wrote: »

Aib offering 100%? You must be mistaken, ive scoured every bank in the country and all wont give more than 92% which is rubbish because it means you need a deposit of between 15k and 25k or something before they even give you the loan

Yes, god forbid that someone show that are reasonably financially responsble before banks give them a 6-figure loan for a depreciating asset.

P.

shamblertine

Xiney wrote: »

You are still operating under the assumption of current property prices.

25k for a deposit for a one bed? No one bed should be more than 100 000 euro, and it would have to be a very well appointed, well positioned one.

No one bed should be more than 100,000 considering how small they are, but the reality is its extremely rare to find a 1 bed apartment in Dublin for less than 230,000, the majority of 1 bed apartments are 300,000 and over. Which is crazy. The apartments don't seem to be falling in price much at all, they still have a long long way to go.

Fighting Irish

CamperMan wrote: »

sounds unfair to me, why should someone earning big bucks get a 100% mortgage when they can clearly afford the deposit.

sure we'll just reward the people who don't put in as much effort

SkepticOne

shamblertine wrote: »

No one bed should be more than 100,000 considering how small they are, but the reality is its extremely rare to find a 1 bed apartment in Dublin for less than 230,000, the majority of 1 bed apartments are 300,000 and over. Which is crazy. The apartments don't seem to be falling in price much at all, they still have a long long way to go.

The only thing propping up the price at the moment is the "affordable" schemes. I doubt if many ordinary buyers are willing to pay this sort of money.

Xiney

shamblertine wrote: »

No one bed should be more than 100,000 considering how small they are, but the reality is its extremely rare to find a 1 bed apartment in Dublin for less than 230,000, the majority of 1 bed apartments are 300,000 and over. Which is crazy. The apartments don't seem to be falling in price much at all, they still have a long long way to go.

It's extremely rare NOW, because of 100% mortgages being handed out willy nilly and people thinking that it's ok to spend a third of a million euro on a 1 bedroom apartment! They have far to fall, but without some serious government intervention the market will ensure they do.

Here is the concept in short: if there is less money to spend, prices will fall. If people have more money to spend, prices will go up.

Being tied to a limited deposit limits the money people have to spend, therefore limiting the prices at which the majority of houses will be sold.


I've basically repeated the same thing three times now, and you seem to be having trouble grasping it. Oh well.

CamperMan

is any bank even giving a mortgage??

I have tried a few and some are not giving mortgages and tell you up front, I read in the papers that AIB and the BOI are not giving mortgages to a wide range of people, nurses, prison officers, anyone in the retail industry!!

The AIB strung me along for over 5 weeks, made me jump through fu¢king hoops, I had a decent guarantor and offered to put my land up as security, all I wanted was a €90,000 mortgage, the AIB refused me on several reasons, first was they thought I could not afford the mortgage and second, I didn't give enough information.


I gave the bank 3 years accounts, letters from the accountant, 12 months bank statements from 3 bank accounts + many more bits of information that they wanted.

leeroybrown

CamperMan wrote: »

The AIB strung me along for over 5 weeks, made me jump through fu¢king hoops, I had a decent guarantor and offered to put my land up as security, all I wanted was a €90,000 mortgage, the AIB refused me on several reasons, first was they thought I could not afford the mortgage and second, I didn't give enough information.

If I had to guess, I'd say that the *real* reason is that you weren't borrowing enough. As the banks are aggressively de-leveraging at the moment they're probably shying away from smaller shorter term mortgages as it ties up what little money they have to lend for a much smaller profit over time.

jmayo

shamblertine wrote: »

but negative equity isn't going to affect your ability to make repayments, so it doesn't make any difference to banks if you have a 100% mortgage or a 92% mortgage

I guess you are not going to be qualifiying in anything resembling a business or economics degree :rolleyes:
The way lending usually works and used to work in sane times, was that you had to have something to secure the loan, you know something that was worth more than the loan in the event you default.
Now if they give 100% for a 300,000 property today it probably will only be worth 250,000 this time next year, so what happens if you defualt ?

Assuming you are young student, the world you have grown up in over the last 10 odd years was a place called la la land and now you are in reality where property prices don't increase by 5-10% year on year, actually they may decrease by 5-15% year on year, thus 100% mortgages are not going to happen.
Also sorry to tell you graduates may not sail into a job and get ever increasing wages as the years go by. They may actaully be going on to the dole.

Xiney

jmayo wrote: »

I guess you are not going to be qualifiying in anything resembling a business or economics degree :rolleyes:

You never know.

I mean, we got into this mess somehow.

Lushed1

I got approved for 100% mortgage last week from EBS. 110,000 euro for a brand new 4 bedroom house in donegal. I got it under an affordable housing scheme.

biko

Sub prime mortgages caused the collapse in the states so I hope they won't start using those again.

shamblertine

Xiney wrote: »

It's extremely rare NOW, because of 100% mortgages being handed out willy nilly and people thinking that it's ok to spend a third of a million euro on a 1 bedroom apartment! They have far to fall, but without some serious government intervention the market will ensure they do.

Here is the concept in short: if there is less money to spend, prices will fall. If people have more money to spend, prices will go up.

Being tied to a limited deposit limits the money people have to spend, therefore limiting the prices at which the majority of houses will be sold.


I've basically repeated the same thing three times now, and you seem to be having trouble grasping it. Oh well.

I've agreed what you said to a certain extent, I just don't think giving a 100% mortgage instead of a 92% mortgage has had as big as an effect on prices as you're suggesting.

Also you make it seem like 100% mortgages allowed anyone to get a loan for any amount, like someone who was on 30k could get a mortgage for 400,000. This was never the case, you've always only been able to get mortgages for 5 or 6 times your salary.

shamblertine

jmayo wrote: »

I guess you are not going to be qualifiying in anything resembling a business or economics degree :rolleyes:
The way lending usually works and used to work in sane times, was that you had to have something to secure the loan, you know something that was worth more than the loan in the event you default.
Now if they give 100% for a 300,000 property today it probably will only be worth 250,000 this time next year, so what happens if you defualt ?

Assuming you are young student, the world you have grown up in over the last 10 odd years was a place called la la land and now you are in reality where property prices don't increase by 5-10% year on year, actually they may decrease by 5-15% year on year, thus 100% mortgages are not going to happen.
Also sorry to tell you graduates may not sail into a job and get ever increasing wages as the years go by. They may actaully be going on to the dole.

Thanks for the condescending, patronising rant. Its quite funny to be lectured about the economy by you, a 42 year old taxi driver (see I can make assumptions too, how bout that). Please tell me more about what happened in the last 10 years and before that? I hear in the olden days most families had to make do with having 1 car only?!?!? That can't be true can it?

jmayo

shamblertine wrote: »

Thanks for the condescending, patronising rant. Its quite funny to be lectured about the economy by you, a 42 year old taxi driver (see I can make assumptions too, how bout that). Please tell me more about what happened in the last 10 years and before that? I hear in the olden days most families had to make do with having 1 car only?!?!? That can't be true can it?

Well if you aren't a young student who is under the misconception that banks should be dishing out 100% mortgages against property that is descreasing in value just because you will have a qualification, then you are even more deluded than I thought.

Were you the poster complaining that it will take x amount of years to save a deposit ?
Perish the thought that people have to save for things :rolleyes:
Cut back on the foreign weekends away, the nights out, the designer clothes, the BMW 3 series and before long one has saved a few quid.

BTW I am not taxi driver but suffice to say I did go through college completing high calibre degree and watched most of my classmates emigrate because there weren't jobs in this country.
And yes the most a family had was one car, and even then it wasn't fancy new one but an old Toyota, Ford, VW or a Lada.
Hell come to think of it, you know a lot of families didn't even have a car :eek:

The_Conductor

shamblertine wrote: »

They do for professionals whose salary is likely to increase to 60k or so in the next 3-5years, which hopefully includes me although I'm not qualified yet.

Public sector employees in cast iron jobs, can in some cases access 92% loans. That is the maximum. There are new rules being drawn up by the financial regulator at the moment which are very likely to cast lending multiples and LTV ratios in stone for the lending institutions.