We're no longer Releasing Equity to buy that new Passat

Rabidlamb

http://www.independent.ie/business/irish/mortgage-topups-are-history-following-97pc-fall-3195849.html

Once-popular loans are now almost defunct with downturn

TOP-UP mortgages are almost non-existent these days but were once a vital part of the boom, providing cash to home owners to buy cars or furniture, or extend or invest in other properties, the Central Bank said yesterday.

Homeowners were borrowing €5.5bn a year in top-up loans at the height of the boom in 2005 and 2006 but this has slumped 97pc to just €195m today, the bank said.

Top-up loans amounted to a third of all lending at one stage and were particularly popular with the under-40s and those working in financial services, the public sector and construction, according to new research by the Central Bank and the Central Statistics Office.

Around one in 13 homeowners took out a top-up loan in 2005 or 2006, and 90pc of this money went into some form of construction, which acted as a shot in the arm for the already turbo-charged sector.

Two-thirds of all the top-up loans borrowed in the last decade were used to renovate or upgrade the family home.

Others bought investment properties, holiday homes or used the cash to buy cars and furniture. All these sectors have seen drastic declines since the credit bubble popped in 2007.

"There is a strong correlation between trends in equity release and construction output in housing," says the Central Bank report.

"This appears to be the primary channel through which equity withdrawal affected the domestic economy in recent years."

The average top-up loan was between €50,000 and €60,000 throughout the last decade, the bank said. That rose as the boom reached its zenith.

"At the peak of the property boom, there was an increasing trend for very large equity withdrawal loans (ie, greater than €150,000)," the researchers said.

"The bulk of this borrowing appears to have been invested in other properties (holiday homes and buy-to-let properties)."

The younguns would never believe this but there was a time when the banks were throwing money at you cause your house had magically risen in value.
House prices never crash so it was a safe bet for you & your bank.
So if you wanted a €10k holiday to Las Vegas, just stick the loan on your puny mortgage.
The stupidity of paying back for a car or holiday over 20+ years & securing it on your home didn't register with people.

Ghandee

Rabidlamb wrote: »

http://www.independent.ie/business/irish/mortgage-topups-are-history-following-97pc-fall-3195849.html



The younguns would never believe this but there was a time when the banks were throwing money at you cause your house had magically risen in value.
House prices never crash so it was a safe bet for you & your bank.
So if you wanted a €10k holiday to Las Vegas, just stick the loan on your puny mortgage.
The stupidity of paying back for a car or holiday over 20+ years & securing it on your home didn't register with people.

Where as nowadays, the banks (with the bad credit history) mistakenly send off bad credit reports to The ICB, about people who've bailed them out.

Banks be crazy OP.

bnt

What's a "Passat"? Sounds like something used in Italian cooking ..?

eth0

A passat isn't exactly a rare car, don't see why someone would take out a loan to buy one. Just get one thats a bit older

anncoates

I'm trying to coax the last smug drop out of the Celtic Tiger stock hindsight archetype tank but the bugger is running on empty at this stage.

Lando Griffin

Berti, fingers, Cowen et al. Another oh I wish this was the boom time again thread. Get over it it won't happen for another 2 or 3 years.

Mr Benevolent

These threads are getting a bit repetitive. Blah blah banks, blah loans, blah the old days, blah corruption.