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100% Mortgages

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    #62
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    JuliusCaesar wrote: »
    Jeez! Can you not do your own research?

    Jeezus, that says nothing!

    It says EBS and BOI do them for the Affordable Housing Scheme only. It does not answer the question at all.;)


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    #63
    London Irish
    Registered Users Posts: 36 ✭London Irish


    JuliusCaesar wrote: »
    Jeez! Can you not do your own research?

    And finally someone quotes an AAM thread...a site that is next to worthless since house price discussion is banned there, driving away a huge segment of posters....

    The OP is seeking a 100% mortgage. In the current climate, and in a general sense, that means the OP will drop into NE as soon as the ink dries.

    But of course, the specific location of the house, and the house itself, matters. The OP could be buying in an area that holds value. IMHO how any area can hold, or will continue to hold, value in the current financial disaster that faces Ireland is another matter. Whats happening to us is off the scale in comparison with the 80s or 50s, though it might be hard for us to see or feel the scale of it at the present moment.

    I'm sure one example is out there that will show that "value is holding". Many examples even.

    But prices are dropping and the OP needs to take into account....

    I like gdael's answer where she/he has compared the interest on cash versus interest on credit - and can see themselves coming out ahead in the (short?) term. Anyone who is serious about investing in property needs to get their hands on excel and start working out the various interest rate scenarios, now (and, I hope in gdael's case, in the future).

    I like this indication of a numbers based approach. Above all, we need to take the emotion out of these discussions.

    House prices will stop falling eventually. We all know this.

    What will stop prices falling? Sellers refusing to sell below a certain price? Why does an individual seller think he/she has a choice is setting the sale price if they are undercut by others who need to sell due to debt/unemployment? I can't dictate the sale price of my bank shares. If you won't sell to me at a certain price i want, I'll move on.

    Right now it's a race to the bottom and those who don't sell soon will be screwed eventually.

    And if you think that you're selling for below what's it worth, spare a though for the poor bastard who is taking the property off your hands. That individual is shafted in comparison. It's the inverted house of cards.

    Why am I so sure of this? Because we don't have a EU patent on the 10% corporation tax, with sweeteners added. And we are not stopping job losses yet. And that multinationals will always seek the lower cost bases.

    So house prices will continue to fall! Hurrah!!

    But on the other hand how far can house prices fall before the economy is crippled in the medium to long term? As much as high prices were good for individuals in the short term but disastrous for overall society in the medium term, picking up bargains in the next few months hardly matters if you suddenly don't have a job or you then suffer a significant salary cut. A Pyrrhic victory - you have the house of your dreams for next to nothing, but you have to emigrate to give you or your family some opportunity.

    Like it or not, house prices are a certain store of wealth, and even though I rent, I can see the danger that faces many property-owners (and would-be owners) in Ireland. Surely we can't let this situation get out of control? Even I could go home and buy a nice home, for cash, but quite frankly I'm too scared to bring my family to Ireland...

    Ireland is now in a very dangerous situation whereby we become a smart economy or become just like (and have to compete with) an eastern European country (never mind India, China....).

    Either way, we do need to recognise how we really got here and start building again.

    What I find truly amazing in these back-and-forth conversations is the sense that house prices are some kind of wealth multiplier that appears to be independent of outside factors. The key word here is competitiveness. High house prices have led to high wages. With a little forethought from the government, my friends at home could still have had (not quite as much) wealth in their homes while making this country (and their jobs) more water tight to recession....


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    #64
    ParkRunner
    Registered Users Posts: 3,026 ✭✭✭ParkRunner


    blueeyedboy wrote: »
    Wow I am impressed, what bank was this is your dont mind me asking?

    Ebs/Haven. I wont take the full 100% though, probably 92. Hope to have the keys in the next few weeks. I wouldnt be surprised if prices go down a bit more, in fact it is a near certainty should interest rates rise and the property tax be introduced but as bad as the economy is, there are still a lot of people who have been hanging on waiting to buy and many will be now able to buy.

    There is an oversupply of apartments which will probably face the biggest drop but there are only so many solid houses in or around Dublin in decent areas which are affordable and are likely to hold their value more. In my opinion fixing now for the long term is worthwhile as paying off a smaller mortgage at a high interest rate or a larger mortgage at a lower interest rate wont be all that different.


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    #65
    JupiterKid
    Moderators, Social & Fun Moderators Posts: 12,748 Mod ✭✭✭✭JupiterKid


    EF wrote: »
    Ebs/Haven. I wont take the full 100% though, probably 92. Hope to have the keys in the next few weeks. I wouldnt be surprised if prices go down a bit more, in fact it is a near certainty should interest rates rise and the property tax be introduced but as bad as the economy is, there are still a lot of people who have been hanging on waiting to buy and many will be now able to buy.

    There is an oversupply of apartments which will probably face the biggest drop but there are only so many solid houses in or around Dublin in decent areas which are affordable and are likely to hold their value more. In my opinion fixing now for the long term is worthwhile as paying off a smaller mortgage at a high interest rate or a larger mortgage at a lower interest rate wont be all that different.

    Do you seriously believe, the the current economic climate, that houses anywhere are actually going to hold their value? And how do you define "affordable"? If a 4 bedroom detached house is valued at, say €235,000, and no one is in a position to buy because they are losing their jobs, emigrating (which has returned this year with a vengeance) or taking a savage pay cut to hold on to their job, the house is hardly "affordable" now, is it?

    Obscene house prices in the bubble years helped destroy this country's competitiveness - lower house prices will eventually help to restore some competetiveness but we are far from the bottom of the house price crash yet.

    Ireland's property bubble 1996-2006 will go down in history with Japan's in economic text books as a lesson and a warning to others.


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    #66
    Amhran Nua
    Closed Accounts Posts: 4,124 ✭✭✭Amhran Nua


    London Irish wrote: »
    High house prices have led to high wages.
    No, house price rises and falls have almost no relationship to wages. What happened was the banks started lending higher and higher multiples of first one then two salaries, and I know of one family of immigrants who got a mortgage based on the three of them working in McDonalds. Lack of regulation really.

    In the overall economic sense its to the benefit of the economy that house prices drop and stay low, relative to wages, since money spent on accommodation is not productive in any way. If we got the same amount of investment into domestic industry as construction, we'd be in a far stronger position now.


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    #67
    ParkRunner
    Registered Users Posts: 3,026 ✭✭✭ParkRunner


    JupiterKid wrote: »
    Do you seriously believe, the the current economic climate, that houses anywhere are actually going to hold their value? And how do you define "affordable"? If a 4 bedroom detached house is valued at, say €235,000, and no one is in a position to buy because they are losing their jobs, emigrating (which has returned this year with a vengeance) or taking a savage pay cut to hold on to their job, the house is hardly "affordable" now, is it?

    Obscene house prices in the bubble years helped destroy this country's competitiveness - lower house prices will eventually help to restore some competetiveness but we are far from the bottom of the house price crash yet.

    Ireland's property bubble 1996-2006 will go down in history with Japan's in economic text books as a lesson and a warning to others.

    The current economic climate isnt going to last forever. Affordable for me is a solid 3 bed house for 4 times my salary


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    #68
    London Irish
    Registered Users Posts: 36 ✭London Irish


    Amhran Nua wrote: »
    No, house price rises and falls have almost no relationship to wages. What happened was the banks started lending higher and higher multiples of first one then two salaries, and I know of one family of immigrants who got a mortgage based on the three of them working in McDonalds. Lack of regulation really.

    Yes and no. Yes I know that easy credit got us into this mess. Perhaps I should have said that "Lax lending rules and easy credit led to high house prices, driving up the overall cost of living, leading to a demand for wage increases and thus driving down overall competitiveness."
    Amhran Nua wrote: »
    In the overall economic sense its to the benefit of the economy that house prices drop and stay low, relative to wages, since money spent on accommodation is not productive in any way. If we got the same amount of investment into domestic industry as construction, we'd be in a far stronger position now.

    Agree. I was in Lisbon at the weekend. Totally surprised. Everyday living costs are low and the infrastructure would put put us to shame. My partner was there supervising the outsourcing of a major firm's financial division from London, to cut costs while maintaining the same business hours and timezone.


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    #69
    Senna
    Registered Users Posts: 8,800 ✭✭✭Senna


    EF wrote: »
    should interest rates rise and the property tax be introduced

    Interest rates or possible taxes play a very small part in market activity. The market has to/will settle at a price level, i predict -70% peak, not even NAMA will stop that from happening.
    EF wrote: »
    In my opinion fixing now for the long term is worthwhile as paying off a smaller mortgage at a high interest rate or a larger mortgage at a lower interest rate wont be all that different.

    Irish banks offer a maximum of 10 year fixed rate, so unless you mortgage term is 10 years or less, people who buy now might save/break even in the short term, they will be paying more in the long term.
    The principle amount is whats important, rates can vary but if your principle is low it wont have as big an affect.


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