The Long "night of the living dead"

Niall Keane

So today finally topped it….

I’ve been trying to get an architecture business off the ground for a while now, once having been employed as a project -architect and manager involved in high tech, innovative medical projects, even designing hybrid theatres of which only 5 exist in the world, combining non-invasive and surgical procedures in heart operations to enhance success rate by 60% until Anglo withdrew funding from that project. Not boasting here, just differentiating from the boom architects who master planned the ghost estates. I actually worked at something worthwhile, something that actually saved lives!

The last 3 clients I’ve had, have been refused at a late stage, finance from banks who initially over-encouraged them, bad for me and all those who stood to do some business, but must be a kick in the balls for those clients.

Anyway….
Recently I had a friend from the boom days, an ex-QS, who has since gotten a €25k / year job in a foreign and very secure company in the internet sector, come and tell me she needed an architect as she was going to buy a house close to work (in Finglas) and houses were going for €80k. This made sense as her rental house was costing €900/month and an €80k mortgage even at 6% over 30 years would amount to €479.64 a month.

She asked me if I would mind helping out and viewing with her, with mind to employing my services later after a purchase, and she also wisely employed for just under €200 an established mortgage broker to apply to the banks for her.

She had savings, a gift from her folks, which meant she probably needed only €70k (less than the car loans my bosses got during the boom) and the broker first decided to apply to AIB, her own bank, to see if all was good with application, then to proceed to apply to other banks.

Well…..
AIB refused!!!

She met all their criteria, I have to wonder if there’s a case for either discrimination or false advertising?

She had savings, a permanent job in a good company, but why did they refuse?

The broker said, that they didn’t “believe” that she could pay €900 a month in rent on her salary, despite the FACT that they had her bank records to prove that she did.

Now I know this girl, she also trains martial arts with me; some of you probably recognise me from the martial arts forum. Anyway she doesn’t drink, smoke etc. and impressively lives a very healthy life including no processed food, so I guess she leads a frugal life ( you know what our betters keep trying to persuade us to do to keep costs down and make us more competitive) and it seems although we live in a democracy, where one is innocent until proven guilty, and although the state / we own (a democracy) this bank, THEIR policy seems to be guilty until proven innocent, and further more considering the evidence already submitted!, guilty even if proven innocent!

SO people, I ask you, what hope have we with these zombie banks?
I’m not going to get paid, and neither will the taxi men I would have used, nor will the electricians, plumbers, handymen, DIY stores etc. etc.
Hearing myself, I seem to be using the “catch-phrases of the clown” but if anyone reading wants to investigate my experience I will be more than happy to disclose and prove this account.

My client is now appealing to the bank, appealing to the same body that refused! What hope can be entertained? Another democratic failure, appeals to a nationally owned institution having to be made to that same institution? I wonder if it’s to the same people who decided in the first place to refuse. No transparency would seem to speak for itself!

Somehow I think of Iceland. Once the pariah, now the Avant guard of growth! And I have to recall some posts I made 5 years ago on this forum, when persons in opposition believed that this would be a short sharp shock, that NAMA would work, and that we needed to save the banks, and that they wouldn’t be zombies, but instead see and seize good business opportunities’.
When will we wake from this nightmare? How long must we wait for those who hope for salvation to realise that a death by 1000 cuts only ends in death, not damage limitation?

Does my client or indeed Ireland have any hope?

Anyone else got some real, verifiable horrors to depict the reality of this zombie economy? Or comments on this situation?

AlmightyCushion

Niall Keane wrote: »

So today finally topped it….

I’ve been trying to get an architecture business off the ground for a while now, once having been employed as a project -architect and manager involved in high tech, innovative medical projects, even designing hybrid theatres of which only 5 exist in the world, combining non-invasive and surgical procedures in heart operations to enhance success rate by 60% until Anglo withdrew funding from that project. Not boasting here, just differentiating from the boom architects who master planned the ghost estates. I actually worked at something worthwhile, something that actually saved lives!

The last 3 clients I’ve had, have been refused at a late stage, finance from banks who initially over-encouraged them, bad for me and all those who stood to do some business, but must be a kick in the balls for those clients.

Anyway….
Recently I had a friend from the boom days, an ex-QS, who has since gotten a €25k / year job in a foreign and very secure company in the internet sector, come and tell me she needed an architect as she was going to buy a house close to work (in Finglas) and houses were going for €80k. This made sense as her rental house was costing €900/month and an €80k mortgage even at 6% over 30 years would amount to €479.64 a month.

She asked me if I would mind helping out and viewing with her, with mind to employing my services later after a purchase, and she also wisely employed for just under €200 an established mortgage broker to apply to the banks for her.

She had savings, a gift from her folks, which meant she probably needed only €70k (less than the car loans my bosses got during the boom) and the broker first decided to apply to AIB, her own bank, to see if all was good with application, then to proceed to apply to other banks.

Well…..
AIB refused!!!

She met all their criteria, I have to wonder if there’s a case for either discrimination or false advertising?

She had savings, a permanent job in a good company, but why did they refuse?

The broker said, that they didn’t “believe” that she could pay €900 a month in rent on her salary, despite the FACT that they had her bank records to prove that she did.

Now I know this girl, she also trains martial arts with me; some of you probably recognise me from the martial arts forum. Anyway she doesn’t drink, smoke etc. and impressively lives a very healthy life including no processed food, so I guess she leads a frugal life ( you know what our betters keep trying to persuade us to do to keep costs down and make us more competitive) and it seems although we live in a democracy, where one is innocent until proven guilty, and although the state / we own (a democracy) this bank, THEIR policy seems to be guilty until proven innocent, and further more considering the evidence already submitted!, guilty even if proven innocent!

SO people, I ask you, what hope have we with these zombie banks?
I’m not going to get paid, and neither will the taxi men I would have used, nor will the electricians, plumbers, handymen, DIY stores etc. etc.
Hearing myself, I seem to be using the “catch-phrases of the clown” but if anyone reading wants to investigate my experience I will be more than happy to disclose and prove this account.

My client is now appealing to the bank, appealing to the same body that refused! What hope can be entertained? Another democratic failure, appeals to a nationally owned institution having to be made to that same institution? I wonder if it’s to the same people who decided in the first place to refuse. No transparency would seem to speak for itself!

Somehow I think of Iceland. Once the pariah, now the Avant guard of growth! And I have to recall some posts I made 5 years ago on this forum, when persons in opposition believed that this would be a short sharp shock, that NAMA would work, and that we needed to save the banks, and that they wouldn’t be zombies, but instead see and seize good business opportunities’.
When will we wake from this nightmare? How long must we wait for those who hope for salvation to realise that a death by 1000 cuts only ends in death, not damage limitation?

Does my client or indeed Ireland have any hope?

Anyone else got some real, verifiable horrors to depict the reality of this zombie economy? Or comments on this situation?

How long has she been in her current job? Also, when it comes to savings banks aren't looking for a lump sum that was gifted to the person they are looking for a history of regular saving (xxx per month, every month). €12,000 in savings that were saved at a rate of €500 per month for 2 years is better than your parents/family/friends giving you €15,000. The reason for this is that having regular savings means that if your circumstances change (interest rates go up, wage cuts, tax increases etc) then you'll have a buffer that will help prevent you from going into arrears. Whereas if you save nothing or very little every month and your circumstances change the chances of you going into arrears are a lot higher.

Niall Keane

AlmightyCushion wrote: »

How long has she been in her current job? Also, when it comes to savings banks aren't looking for a lump sum that was gifted to the person they are looking for a history of regular saving (xxx per month, every month). €12,000 in savings that were saved at a rate of €500 per month for 2 years is better than your parents/family/friends giving you €15,000. The reason for this is that having regular savings means that if your circumstances change (interest rates go up, wage cuts, tax increases etc) then you'll have a buffer that will help prevent you from going into arrears. Whereas if you save nothing or very little every month and your circumstances change the chances of you going into arrears are a lot higher.

Current job 8 months, never unemployed! Plus a permanent job, with a "celebrated" company Criteria from bank was 6 months or is that simply illegal "false advertising"?

Savings 100-200 a month, but also rent is twice what mortgage would be.

How is a €400 a month mortgage (€80k) a risk? Even a bedsit costs €450 minimum

It makes absolutely no investment sense, unless......

Banks dont want first time buyers, as that means the houses they rent will be vacant and given they probably have boom mortgages on them that then have a high risk of default well .... Maybe im cynical or maybe i call a spade a spade?

The_Honeybadger

I have had two friends approved and drawn down mortgages in the past year, both have moved into their new homes and had no major issues apart from the usual jumping through hoops that they make you do.
One is a teacher (non permanent), and the other works in the hospitality sector but had a good deposit from an inheritance. While this is anecdotal I think if you are perceived as a good bet and the bank feel that the house is reasonably priced then you have a good chance of being approved. Long established companies are downsizing or closing every day, house prices in most areas are still falling and the economy is still very rocky so it's no surprise that banks are being ultra cautious. Sounds like your friend is not meeting the banks current criteria for some reason and that is frustrating for her, but hardly surprising on a 25k salary in Dublin, which is the most expensive part of the country to live in. That is a very small salary to expect to pay a full mortgage on IMO. It sounds like your friend is prudent but that obviously isn't enough on its own.

Niall Keane

mickeyk wrote: »

I have had two friends approved and drawn down mortgages in the past year, both have moved into their new homes and had no major issues apart from the usual jumping through hoops that they make you do.
One is a teacher (non permanent), and the other works in the hospitality sector but had a good deposit from an inheritance. While this is anecdotal I think if you are perceived as a good bet and the bank feel that the house is reasonably priced then you have a good chance of being approved. Long established companies are downsizing or closing every day, house prices in most areas are still falling and the economy is still very rocky so it's no surprise that banks are being ultra cautious. Sounds like your friend is not meeting the banks current criteria for some reason and that is frustrating for her, but hardly surprising on a 25k salary in Dublin, which is the most expensive part of the country to live in. That is a very small salary to expect to pay a full mortgage on IMO. It sounds like your friend is prudent but that obviously isn't enough on its own.

I understand the risk-aversion paranoia, but she HAS met their criteria (at least their OFFICIAL list) and was initially encourage by her local branch to pursue a mortgage.

The reason her broker was given for the refusal was "they didnt believe that she could pay €900 a month rent" yet she does and they have access to her whole banking history which confirms this.

As for €25k being low, well lads thats pretty good for the multi nationals our "knowledge economy" encourages. Welcome to Irelands future! And besides the calc was done by the bank as to how much that would allow her to borrow.

You shouldnt have calculations in place that get overridden by a "feeling"! That is discriminatory!

If i had a planning department refusal over some junior planners "feeling" and had met all the criteria it would be off to "an bord pleanalla", you know an independent body!

wheres the transparency? The consistency? Hows a country supposed to operate with "emotional" banks with "kinda guideline" criteria? Surely risk analysis is based on calculations not some clerks use of the "force"? Since when is it ok to dismiss established facts in favour of a belief? Theres a word for that carry on - childishness! If thats how internal banking decisions are made, with infantile un-professionalism, what hope have we, the lager society for economic recovery at all?

The_Honeybadger

My guess is that they felt that she wouldn't have enough disposable income left after paying mortgage and utilities. It's hard to tell without all the details. My broad point was that if you speak in general terms away from this specific case I am not surprised somebody on 25k can't get a mortgage.

shedweller

Niall Keane wrote: »

It makes absolutely no investment sense, unless......

Banks dont want first time buyers, as that means the houses they rent will be vacant and given they probably have boom mortgages on them that then have a high risk of default well .... Maybe im cynical or maybe i call a spade a spade?

This. +100

Also the fact that houses are at near enough rock bottom so if loads of people bought now, they would make a nice profit in 20 or so years. So while there are examples of people being let buy houses now, i'd say the majority of buyers at the moment are investors. Who will be selling these on in 20 or so years at a handsome profit.

Niall Keane

mickeyk wrote: »

My guess is that they felt that she wouldn't have enough disposable income left after paying mortgage and utilities. It's hard to tell without all the details. My broad point was that if you speak in general terms away from this specific case I am not surprised somebody on 25k can't get a mortgage.

"They felt" eh? Thats the problem in Ireland, she pays twice as much rent as a mortgage repayment would be, but perhaps "they" associate their own mortgage payments with her case, unduly influencing their "feelings" on the matter? I believe this illness its called "projecting the shadow" in psychoanalysis.

This forum has plenty of calls for reducing minimum wages, getting more competitive, basically learning to live with less, but how can we if doing so excludes us from normal economic activity because of old guard "feelings"?

Take her position to its logical end....

So she must rent indefinitely paying twice as much servicing someone else's debt. That extra €400 a month she would save by buying does not stimulate the economy but goes straight to her landlords mortgage.

Maybe she must downsize her rental property according to these "feelings"? But even one beds are approx €650 a month, artificially inflated by these zombie bank policies! in that case what is the real "minimum wage" in Ireland? You know, one people can live on? Not student summer job rates?

Multiply her case by the growing number in her position, and imagine the effect it i having on growth and wage inflation?

All based on "feelings" based on personal experiences of whats needed to repay a mortgage, personal experiences rooted in an unrealistic boom, forming a mind that cannot or will not move with the times to the extent of ignoring data from their own criteria and calculations!

Thats where we are and why we are sinking!

Niall Keane

Niall Keane wrote: »

Thats where we are and why we are sinking!

Silly me, I thought "reckless lending" and going mad etc was why we were "sinking" (as blamed by most of the country, anyway). And now everyone wants to go right back to square one and force the banks to give out mortgages left right and centre again?
Really?
If she doesn't like her rent, then let her move. Nobody has some innate entitlement to a mortgage. She can go apply somewhere else if she's still that upset.

But even one beds are approx €650 a month, artificially inflated by these zombie bank policies

Nothing to do with the govt setting a minimum bar with rent allowance, no?

I should probably repeat myself: she doesn't have some innate entitlement to a mortgage and neither does anyone else.

K-9

Her local branch pushing her for a mortgage doesn't really mean much, I wouldn't read anything into it, never mind conspiracy theory stuff.

There's enough there to not grant it I'd say. Only 8 months in a new job though permanent, in the "old days" you'd have needed a couple of years.

The thing that stands out for me is it's a foreign employment, where would she live while she works abroad? Paying rent and a mortgage on €500 per week Gross is a big commitment.

Edit: See you meant multinational. For me she isn't long enough in her new job but that's going on the old prudent banking criteria for getting a mortgage.

ednwireland

banks dont have any money to lend (from all the stories appearing in various places) is the only conclusion i can come to ( i think theres a bit of a credit squeeze going on which doesnt look like ending anytime soon)

Niall Keane

bluewolf wrote: »

Silly me, I thought "reckless lending" and going mad etc was why we were "sinking" (as blamed by most of the country, anyway). And now everyone wants to go right back to square one and force the banks to give out mortgages left right and centre again?
Really?
If she doesn't like her rent, then let her move. Nobody has some innate entitlement to a mortgage. She can go apply somewhere else if she's still that upset.


Nothing to do with the govt setting a minimum bar with rent allowance, no?

I should probably repeat myself: she doesn't have some innate entitlement to a mortgage and neither does anyone else.

Reckless lending created the problem, polar opposite zombie banks a sustaining it!
Happy medium folks! I know that requires a bit more than black and white awareness!

As for rent costs - supply and demand! Do you think the restricted access to credit for first time buyers has no effect on this?

Nothing to do with entitlement to a loan! how emotive?

She is entitled to be treated impartially surely, an not be discriminated against?
i would have thought meeting THEIR set out criteria would mean at least qualifying for the same services another citizen can avail of?
Didnt realise AIB relied on calculations (to see how much could be borrowed) SHE MET, criteria on risk reduction SHE MET but ALSO on divination or something? Where they can override their own transparent procedures and a body of evidence with gut feelings?

Come on, time Irish banks made decisions based on structured procedures not hand shakes and assessing for trusting looks? How can any of us trust procedures that are not transparent or open to independent appeal? More so in this case i was staggered!
Here a bank that has the clients accounts is also saying that it doesn't believe the data from those accounts! "Doesn't believe she can pay €900 a month rent"!
Thats not even a good lie to cover up why they wont lend! They don't believe their own data? Come on?

martomcg

Honestly I think its pot luck getting a mortgage and also they must be using "hidden" criteria to judge applicants.

I've a mate who bought a house (in Dublin) 6 months ago for 105k, all in the mortgage was 120k to cover everything.

He's 23, earning 25k a year and only in the job 13 months. He too had a small amount of savings.

The icing on the cake is that his mortgage payment is €480 odd a month. He's renting the house for €1000/month while living at home. So he's covering his mortgage and clearing an extra €500/month on top of his wages.

He's working as an accountant, so maybe that's considered a more stable employment than working in IT?

Niall Keane

Niall Keane wrote: »

Nothing to do with entitlement to a loan! how emotive?

She is entitled to be treated impartially surely, an not be discriminated against?

^ This is emotive.
Your idea of "being treated impartially" seems to mean automatically giving loans out recklessly to people who have failed their lending criteria.

i would have thought meeting THEIR set out criteria would mean at least qualifying for the same services another citizen can avail of?
Didnt realise AIB relied on calculations (to see how much could be borrowed) SHE MET, criteria on risk reduction SHE MET but ALSO on divination or something? Where they can override their own transparent procedures and a body of evidence with gut feelings?

You're basing a lot of accusations on, well, nothing.
You're not involved in the process, one assumes. You have no idea of the fine details of why she was rejected. All you have is an unhappy client complaining they didn't get a mortgage - understandable - and summarising that they didn't think she could pay it back. You don't hear the "...because she's not in a job for x amount of time", and so you far from have the full info. Third hand. Nothing to be ranting about divination in an emotive fashion.

latenia

The problem is probably the opposite of what you think in that the amount she wants to borrow is actually too small for it to be worth the bank's trouble. I may have read somewhere recently that €150k is the minimum they'll give on a mortgage.

Niall Keane

bluewolf wrote: »

^ This is emotive.
Your idea of "being treated impartially" seems to mean automatically giving loans out recklessly to people who have failed their lending criteria.

You're basing a lot of accusations on, well, nothing.
You're not involved in the process, one assumes. You have no idea of the fine details of why she was rejected. All you have is an unhappy client complaining they didn't get a mortgage - understandable - and summarising that they didn't think she could pay it back. You don't hear the "...because she's not in a job for x amount of time", and so you far from have the full info. Third hand. Nothing to be ranting about divination in an emotive fashion.

Then i guess they shouldn't falsely advertise!

SHE MET THE CRITERIA! For the umpteenth time! Pheew!!!

Even the broker was surprised. You know professionals tend not to submit incomplete applications!

Ie so an independent third party has already checked that she met criteria to avoid refusal! And even this didn't work!

As a professional architect i can make sure a planning application has all the ingredients to be validated!

Here with the banks we have "fluid" validation procedures! And that is flat out wrong, and hurtful to growth, and i would imagine open to corruption, ah, now I understand how we got where we are. And we still have the same gombeans with the same mentality running the show, this time in the opposite direction. On / off binary fools!

Niall Keane

Niall Keane wrote: »

Then i guess they shouldn't falsely advertise!
...

Even the broker was surprised. You know professionals tend not to submit incomplete applications!

Falsely advertise what? Can you point me to any of their ads which say that absolutely anyone will always be approved for a mortgage regardless of their circumstances?

I have no idea what "incomplete applications" has to do with anything; you're just ranting at this stage.

Niall Keane

bluewolf wrote: »

Falsely advertise what? Can you point me to any of their ads which say that absolutely anyone will always be approved for a mortgage regardless of their circumstances?

I have no idea what "incomplete applications" has to do with anything; you're just ranting at this stage.

Christ? The qualifying criteria THEY advertise!

K-9

It seems odd they'd turn her down for paying €900 a month rent.

Is her income €25,000 net or gross?

Does she have a car loan or even own a car and pay insurance and tax?

It could be that her expenses didn't match her income.

Permabear

This post has been deleted.

Dannyboy83

The "helicoptered funds" wouldn't matter if she has a track record of paying 900€ rent herself, when the mortgage repayment is half that.

With AIB, you have to be prepared to 'shop around'.
Different branches of AIB have very different methods of assessment.

Lastly, AIB are very strict on stress testing because they are planning to jack up interest rates significantly.

Dannyboy83

martomcg wrote: »

He's working as an accountant, so maybe that's considered a more stable employment than working in IT?

The advice for the last 12 months is that IT professionals have a better chance of securing a mortgage than any other sector in Irish industry, including the public sector.

Salaries in IT have been depressed since 2001 and are expected to rise, while most of the rest of the industries in Ireland have been overpaid and are expected to stagnate, if not fall.

Niall Keane

K-9 wrote: »

It seems odd they'd turn her down for paying €900 a month rent.

Is her income €25,000 net or gross?

Does she have a car loan or even own a car and pay insurance and tax?

It could be that her expenses didn't match her income.

Gross

No loans

Niall Keane

Permabear wrote: »

This post had been deleted.

Shes looking for 70-80k not 200k, everything is relative!!!

Wouldnt excluding people from borrowing flat out based on your idea of a minimum salary for anything just be plainly descriminatory? Is credit to be the luxury of the rich and not based on stress tests etc.?

She had passed the initial stress test!

Your post seems quite popular / populist though, i guess alot of people just dont understand maths, and how risk is calculated?

Permabear

This post has been deleted.

Niall Keane

Permabear wrote: »

This post had been deleted.

So you're saying as a professional working in a related field that a salary of 25k basically excludes one from credit? (Regardless of amount applied for, even of standard stress tests applied to everyone else recommend acceptable risks up to 87k)

At what salary level does credit become available?

And why are people below your figure paying any increased taxes or USC (bank bailouts) if they are a sector of society automatically excluded from banking services? Well at least the main one in most peoples lives.

See i cant reconcile universal standards, transparency, fairness and anti-corruption measures with such bad-practice that allows a personal opinion on what constitutes a good salary to override the impartial mathematical mechanisms already in place- the stress tests and other criteria.

"Trust" is a fairly important word being paraded about in economic discussions both micro and macro. How can one be expected to trust such veiled banking institutions?

How can a society move forward with any degree of certainty?

How can any business plan ahead in such a climate?

If there was open transparency, assessments could be made by others invested in bank decisions, on the viability of a party accessing credit, and so financing projects.

Ask any architect, the few of us remaining about sudden u-turns by banks killing projects where other service suppliers have already invested time and money.

Look at the larger firms use of internship programmes, why? Because cheap / slave labour allows for the wastage in seeking but failing to secure work! If viable projects didn't end up in the bin so frequently, interns wouldn't be needed, they could pay a real wage to "employees" and that too would filter into the larger economy.

This is more ongoing economic wastage caused by banks that I'm sure hasn't been calculated, but i wouldn't be surprised if its a significant figure.

As I've said, if credit is refused with transparent reasoning, fair enough, if criteria is met, criteria designed by the institutions themselves and still credit is refused well? WTF?

Niall Keane

Maybe i see things through a solid science that deals with real stuff like gravity?

See if i abandon "economic engineering" and think of real engineering...

Well say i have a load to carry, (your mortgage) i run the calcs, and i figure out the depth of the beam required ( calculations based on scientific certainties and proved through "stress testing")

Now maybe Im used to building skyscrapers and this is just a domestic house, so maybe that beam looks a little slim to me!

But i have the good sense to know to trust the calcs an not to make up new personal opinions on how gravity acts!

See i understand the load carrying capability of steel beams, i even have tables to refer to. (Im sure theres some similarity in banking calculations?)
Also i know that gravity (risk) is a constant and doesn't change in value just because i use a smaller beam on a smaller project!

That way i don't confuse the f**k out of clients wondering if I'm going to insist on using a beam that fills their living room from floor to ceiling just because I'm happier dealing with large scale projects and I've abandoned the tables in favour of my unfounded contrary opinion!

Sponge Bob

Was talking to an international project manager who is crying out for qualified QS's but one must travel. Maybe then the banks will cough.

Farmer Pudsey

I have to agree with Niall Keane here. If an old style bank manager was in place he would lend her the money if the story checks out. he would do a little homework (be nosy). Find out where she was renting and who she was renting from, getting a letter from them maybe. Ignore the wages she is on she is obivously a hard worker if it is relativly new multinational she may have a secure job for the next 10 years even on a twenty year mortgage which would cost 400/week is affordable to her. She has utility bills etc at present from her rented house the real extra she will have is property tax water rates etc which landords will include in rent over time.

The reality is that banks are no longer banks I see this right accross companies. Take the co-op stores I deal with in one the manager is a manager in the other a lad is inside the counter who cannot discount. So even though I have an account there because it is nearer I end up buying most large purchasses elsewhere.

The reality is the lady above is a grafter she can live frugally if she has to and will manage the mortgage however as banks are still ran by accountants based in the headoffice then in ten years++ time or when ever we have the next boom we will again have the same overlending as the are not looking at figures in detail and not looking at the ability of the invidual to handle debt.

This is the problem with actuaries and analysts they are looking at an average cost accross a group when in reality in dealing with debt to have to look at the invidual.

maninasia

Permabear wrote: »

This post had been deleted.

Yes, but do you understand the real risk?

They are not giving the loan because she does not fall WELL within their criteria. The banks simply do not want to loan money out except maybe credit cards, their no.1 priority is rebuilding their balance sheets. It's very easy to turn her down as she did not earn the deposit herself. End of story.

K-9

She's only 8 months in a new job after changing career, I don't understand why the bank didn't say "come back in a years time" but it is a second hand account, seems an odd thing for a bank to say.

Stheno

K-9 wrote: »

She's only 8 months in a new job after changing career, I don't understand why the bank didn't say "come back in a years time" but it is a second hand account, seems an odd thing for a bank to say.

I'd see this as a possible issue, anyone in a job less than a year has no job security.

Niall Keane

Stheno wrote: »

I'd see this as a possible issue, anyone in a job less than a year has no job security.

Before "going out on my own" I was in a job 4 years and it took 4weeks notice to be made redundant! At least they were relatively decent employers, many of my peers worked longer in one firm 7-10 years only to be let go with 2 weeks notice.

She has passed her probation period and was made permanent, one of the basic bank criteria for mortgage.

Tell me, do you really believe in "a job for life"? where have you been for the last 5-6 years? There is no such thing in the private sector as a "permanent" job!

K-9

Niall Keane wrote: »

Before "going out on my own" I was in a job 4 years and it took 4weeks notice to be made redundant! At least they were relatively decent employers, many of my peers worked longer in one firm 7-10 years only to be let go with 2 weeks notice.

She has passed her probation period and was made permanent, one of the basic bank criteria for mortgage.

Tell me, do you really believe in "a job for life"? where have you been for the last 5-6 years? There is no such thing in the private sector as a "permanent" job!

That isn't the point, banks are aware of that. She's only 8 months into a brand new career.

Niall Keane

K-9 wrote: »

That isn't the point, banks are aware of that. She's only 8 months into a brand new career.

Well lets call on this practice, how much more secure will her job be in 12 months?
Has some law been passed preventing the possibility of being let go after one works a year or two?

(Just persuing this thought, as it has nothing to do with my client, she already had passed the stress test and as ive said the issue / reason given was their belief system - not believing she should be able to pay what THEIR records show she actually does - and not her failing to meet qualifying criteria)

AlexisM

The bank has to consider risks which could occur over the life of the mortgage - not just whether she can pay the mortgage in the next year or so. Duration of employment is one thing they look at - the longer you are in a job, the less likely you are to leave/lose the job (and yes, anyone can lose a job but it gets less likely over time). As a female young enough to want a 30 year mortgage, there must be at least a 50/50 chance that she will have a baby in the next 5 to 10 years. A salary of 25K gross gives 1,800 per month net. I'm sure she personally can live very frugally but how would she pay for childcare out of that plus a mortgage plus house expenses plus baby expenses? And it would be very difficult for the bank to repossess a house in those circumstances so they probably just don't want to take the risk - as someone said above, this is a small, probably low margin mortgage so why run the risk... Yes, there are always risks that people's circumstances will change, they'll have triplets, lose a job etc. - but for a woman in her 20s or 30s, the chances of a baby in the next 5-10 years is quite high.

Niall Keane

AlexisM wrote: »

The bank has to consider risks which could occur over the life of the mortgage - not just whether she can pay the mortgage in the next year or so. Duration of employment is one thing they look at - the longer you are in a job, the less likely you are to leave/lose the job (and yes, anyone can lose a job but it gets less likely over time). As a female young enough to want a 30 year mortgage, there must be at least a 50/50 chance that she will have a baby in the next 5 to 10 years. A salary of 25K gross gives 1,800 per month net. I'm sure she personally can live very frugally but how would she pay for childcare out of that plus a mortgage plus house expenses plus baby expenses? And it would be very difficult for the bank to repossess a house in those circumstances so they probably just don't want to take the risk - as someone said above, this is a small, probably low margin mortgage so why run the risk... Yes, there are always risks that people's circumstances will change, they'll have triplets, lose a job etc. - but for a woman in her 20s or 30s, the chances of a baby in the next 5-10 years is quite high.

Doesnt it take two to tango? Ie chances are in that case there would be another income or maintainance payment contributing!

What your saying is that women (shes mid 30's btw) are excluded from getting a mortgage? Hope women groups are becoming aware of this and bring a class action to reclaim all additional taxation paid by their group to bail out banks as they clearly dont need institutions that exclude them? After all inequality and discrimination are covered by European and Irish law, such a practice you propose the banks to be using would be illegal!

Of course credit refusals and other practices marred by such illegality would be a good reason for banking to be as clandestine as it is!

K-9

Niall Keane wrote: »

Doesnt it take two to tango? Ie chances are in that case there would be another income or maintainance payment contributing!

What your saying is that women (shes mid 30's btw) are excluded from getting a mortgage? Hope women groups are becoming aware of this and bring a class action to reclaim all additional taxation paid by their group to bail out banks as they clearly dont need institutions that exclude them? After all inequality and discrimination are covered by European and Irish law, such a practice you propose the banks to be using would be illegal!

Of course credit refusals and other practices marred by such illegality would be a good reason for banking to be as clandestine as it is!

That's a pretty outlandish interpretation of a reasonable point, you seem to be convinced there is some conspiracy here. 25k is not a great wage for a mid 30's female, but she is starting on a new career.

It's €21,500 net, she pays €10,800 Rent leaving €10,700 to run a car, pay bills, live on and put away savings. It isn't that great a case at all. Your reasoning is, sure she paid her rent all along and the mortgage will be half her rent, but that's all she really has going for her in this case.

Paying a €70,000 mortgage over 30 years doesn't make much sense to me either, should be 20 years at that amount. The €400 or so a month she's saving would be cut with life assurance and house insurance as well, plus she'll have to maintain the house.

When you look at it like that, this isn't the no brainer you think it is.

Stheno

Niall Keane wrote: »

Before "going out on my own" I was in a job 4 years and it took 4weeks notice to be made redundant! At least they were relatively decent employers, many of my peers worked longer in one firm 7-10 years only to be let go with 2 weeks notice.

She has passed her probation period and was made permanent, one of the basic bank criteria for mortgage.

Tell me, do you really believe in "a job for life"? where have you been for the last 5-6 years? There is no such thing in the private sector as a "permanent" job!

Employee rights for the first twelve months of any job are very poor compared to an employee there more than a year

I don't believe in a job for life, I've done a lot of contracting over the years, but do see how a new job for eight months in a new career would be classed as risky

Farmer Pudsey

K-9 wrote: »

That's a pretty outlandish interpretation of a reasonable point, you seem to be convinced there is some conspiracy here. 25k is not a great wage for a mid 30's female, but she is starting on a new career.

It's €21,500 net, she pays €10,800 Rent leaving €10,700 to run a car, pay bills, live on and put away savings. It isn't that great a case at all. Your reasoning is, sure she paid her rent all along and the mortgage will be half her rent, but that's all she really has going for her in this case.

Paying a €70,000 mortgage over 30 years doesn't make much sense to me either, should be 20 years at that amount. The €400 or so a month she's saving would be cut with life assurance and house insurance as well, plus she'll have to maintain the house.

When you look at it like that, this isn't the no brainer you think it is.

It is not an outlandish interpretation another poster raised the issue of her sex. The reality is that people that manage like this will always survive. Take a male accountant on 10K more take home with a little bit of a gambling adiction that will not show up on the banks radar. Who is more likly to default this lady or the accountant. She passed the stress test her ability to pay is not an issue if the rent details are true the bank could ahve looked for a letter from the landlord.

On one hand there is a chance that she may have a child on the other hand she may marry a millionaire or even a Joe/Jane Soap earning 20-30K. Every body is forgetting that if she is qualified in some form in 2-5 years time she may be earning 10-15K more. Happy days for the bank if one of these senario happen which are as likly or even more than this lady will have a child without some sort of support.

100k 25 year/term life assurance will cost her 15 euro/ month. House insurance about 16-20/ month so she is still left with 365 euro/month. If she passed the stress test she should have been lend the money. Did they offer her a 60K mortgage to see if her family might put up more equity.

murphaph

Niall Keane wrote: »

Banks dont want first time buyers, as that means the houses they rent will be vacant and given they probably have boom mortgages on them that then have a high risk of default well .... Maybe im cynical or maybe i call a spade a spade?

Interesting idea. I wouldn't put it past them tbh. Certainly a 400 pm mortgage is a lot more affordable than 900 pm rent and would likely always be the case.

Niall Keane

murphaph wrote: »

Interesting idea. I wouldn't put it past them tbh. Certainly a 400 pm mortgage is a lot more affordable than 900 pm rent and would likely always be the case.

Yea, thats what baffles me.. The reality of this situation.

You would think the banks might like to pretend they are in business. They've been rightly caught out regarding credit to small and medium businesses, overdrafts to loans etc.

Here they have an opportunity to grant a mortgage to a first time buyer for just 80k, and be able to say - see its business a usual, you would think they should adopt such a policy if they wanted to be real sneaky bastards, surely giving two such mortgages is less risky than a single 160k mortgage. I would imagine even the dole could keep an 80k mortgage repayment going if the worst happened, for the period between jobs. And theres more jobs that can allow a borrower to afford to service it. Not so with larger mortgages!

It is not possible to shelter oneself for any less than €400 a month, even bedsits are 500-600 the only risk in this case would have to be of the person fell so far as to become homeless, what percentage of our population with thord level educatoon does this happen to? The risk is beyond tiny!

So whats the rub? What I surmised earlier about wanting to protect rents flowing in to boom time property mortgages by locking people in rentals through credit denial sounds even a little paranoid to me, but why else would a bank turn down this modest but sure bit of business? They're either really dumb or really clever! Or i guess a few really clever people managing a load of really dumb ones. Like in all areas of life?

krd

mickeyk wrote: »

My broad point was that if you speak in general terms away from this specific case I am not surprised somebody on 25k can't get a mortgage.

I knew people who in the bubble were earning under 25k. And they were give mortgages, not only for a primary dwelling, but speculative mortgages to buy property with. They were also given "home improvement" loans - which they lived the high life on.

Jesus, they were giving pensioners mortgages to speculate with.

Someone on 25k, could comfortably pay an 80k, or 70k mortgage.

I could see a scenario where the banks start really taking the piss. I knew people, who in the 90s, before the madness really got going, were turned down for mortgages that were less than their annual income. (There was a time when banks didn't like giving unmarried couples mortgages - The bank manager, Mr. Bollocky O'Fatbelly, didn't like anyone who was living in sin "Come back to us when you get married, and we'll talk to ya den")

krd

Niall Keane wrote: »

It is not possible to shelter oneself for any less than €400 a month, even bedsits are 500-600 the only risk in this case would have to be of the person fell so far as to become homeless, what percentage of our population with thord level educatoon does this happen to?

The risk is beyond tiny!

The risk is not beyond tiny. People from all social classes, and levels of education can become homeless. Especially now. Dublin's once swanky streets, now days look like camping jamborees.

With houses going for 80k, it might be well worth the while, of groups of say three or four people getting together and buying houses together, a real house share. What the subsidized fat farmers used to do, as they were sending the kids who weren't getting the farm off to Dublin to train as solicitors, would be to buy a house.

4 students, doing a degree for four years, would all be reasonably well able to pay off an 80k mortgage between them.

shedweller

krd wrote: »

The risk is not beyond tiny. People from all social classes, and levels of education can become homeless. Especially now. Dublin's once swanky streets, now days look like camping jamborees.

links?

K-9

Farmer Pudsey wrote: »

It is not an outlandish interpretation another poster raised the issue of her sex. The reality is that people that manage like this will always survive. Take a male accountant on 10K more take home with a little bit of a gambling adiction that will not show up on the banks radar. Who is more likly to default this lady or the accountant. She passed the stress test her ability to pay is not an issue if the rent details are true the bank could ahve looked for a letter from the landlord.

On one hand there is a chance that she may have a child on the other hand she may marry a millionaire or even a Joe/Jane Soap earning 20-30K. Every body is forgetting that if she is qualified in some form in 2-5 years time she may be earning 10-15K more. Happy days for the bank if one of these senario happen which are as likly or even more than this lady will have a child without some sort of support.

100k 25 year/term life assurance will cost her 15 euro/ month. House insurance about 16-20/ month so she is still left with 365 euro/month. If she passed the stress test she should have been lend the money. Did they offer her a 60K mortgage to see if her family might put up more equity.

Well if the accountant is gambling away money he will not have much savings, that will be factored in.

Banks shouldn't factor in projected additional income, have people learned anything from the crash? Might as well put in she'll be renting a room out, will help the ould application.

Farmer Pudsey

K-9 wrote: »

Well if the accountant is gambling away money he will not have much savings, that will be factored in.

Banks shouldn't factor in projected additional income, have people learned anything from the crash? Might as well put in she'll be renting a room out, will help the ould application.

You should read the post and think about it before replying I was showing other probilities that would have a positive effect on the finiancial risk associated with this lady's application. Bank should not take in projected additional income however neither should they take in projected loss of income in thta case. Ever application should be looked at in its merits.

As Niall stated in another post this type of mortgage is more than likly sustainable in the short to medium term during unemployment which one for over 150K may not be. On a thirty year mortgage the repayments at present are a little over 300/month.

I have highlighted area's for you to think about. However it was early sunday morning you may have came after a few scoop's and even I do not always think clearly.

K-9

Farmer Pudsey wrote: »

You should read the post and think about it before replying I was showing other probilities that would have a positive effect on the finiancial risk associated with this lady's application. Bank should not take in projected additional income however neither should they take in projected loss of income in thta case. Ever application should be looked at in its merits.

As Niall stated in another post this type of mortgage is more than likly sustainable in the short to medium term during unemployment which one for over 150K may not be. On a thirty year mortgage the repayments at present are a little over 300/month.

I have highlighted area's for you to think about. However it was early sunday morning you may have came after a few scoop's and even I do not always think clearly.

I did think about it, I outlined in detail how the bank would look at her financial details previously, you went on about gamblers and hypotheticals. It isn't a no brainer as the OP seems to think it is, it's borderline because she's mid 30's and just changed career and she isn't on that great an income. There are merits to her application but the bank turned her down because of concerns, despite what the OP thinks.

Personally I think anybody taking a 30 year mortgage on 70k is a poor decision, yes she might be able to pay more, but it's far too long a term for a relatively small amount. I'd call it poor advice myself. You'd be paying a crazy amount of interest on such an amount. Don't take it too personally.

maninasia

Niall Keane wrote: »

Yea, thats what baffles me.. The reality of this situation.

You would think the banks might like to pretend they are in business. They've been rightly caught out regarding credit to small and medium businesses, overdrafts to loans etc.

Here they have an opportunity to grant a mortgage to a first time buyer for just 80k, and be able to say - see its business a usual, you would think they should adopt such a policy if they wanted to be real sneaky bastards, surely giving two such mortgages is less risky than a single 160k mortgage. I would imagine even the dole could keep an 80k mortgage repayment going if the worst happened, for the period between jobs. And theres more jobs that can allow a borrower to afford to service it. Not so with larger mortgages!

It is not possible to shelter oneself for any less than €400 a month, even bedsits are 500-600 the only risk in this case would have to be of the person fell so far as to become homeless, what percentage of our population with thord level educatoon does this happen to? The risk is beyond tiny!

So whats the rub? What I surmised earlier about wanting to protect rents flowing in to boom time property mortgages by locking people in rentals through credit denial sounds even a little paranoid to me, but why else would a bank turn down this modest but sure bit of business? They're either really dumb or really clever! Or i guess a few really clever people managing a load of really dumb ones. Like in all areas of life?

There might be something to what you say, in terms of income stream from rentals. But I would say the main reason is that they desperately need to increase their depost:loan ration. Every loan made out goes in the wrong direction. They simply do not want to give out any loans at present!

Niall Keane

[Quote=K-9;

Personally I think anybody taking a 30 year mortgage on 70k is a poor decision, yes she might be able to pay more, but it's far too long a term for a relatively small amount. I'd call it poor advice myself. You'd be paying a crazy amount of interest on such an amount. Don't take it too personally.[/Quote]

I didnt realise that interest rates or mortgages varied according to principal borrowed? My own experience was that banks offered a similar interest rate for all mortgages taken at a particular time?

Ie she would be paying the same % amount as someone borrowing 300k over 30 years! Dont see anything wrong with being prudent and living with in your means, she obviously is hyper-cautious, maybe more so than the banks, cant fault that after her an this countries experience? Nothing stops her paying down early either if she feels like it, penalties only exist for fixed rates i believe?

Or is it that you feel that 70-80k is easy enough to come by without a mortgage? If so there are many who work 40+ hours a week and find it otherwise!

Keeps sounding like you see mortgage and house ownership as entitlements for only a privileged class? Right now house prices allow for many normally financially excluded to break free from tenurey, if they get the chance to enjoy the same fair treatment as everyone else!

Farmer Pudsey

K-9 wrote: »

I did think about it, I outlined in detail how the bank would look at her financial details previously, you went on about gamblers and hypotheticals. It isn't a no brainer as the OP seems to think it is, it's borderline because she's mid 30's and just changed career and she isn't on that great an income. There are merits to her application but the bank turned her down because of concerns, despite what the OP thinks.

Personally I think anybody taking a 30 year mortgage on 70k is a poor decision, yes she might be able to pay more, but it's far too long a term for a relatively small amount. I'd call it poor advice myself. You'd be paying a crazy amount of interest on such an amount. Don't take it too personally.

Mortgage money in intrest terms is the cheapest money that you can borrow. If the only loan that you ever borrow is a mortgage then you are laughing. It is car loan, credit union loans (nowaday as they are no longer cheap) or finance house loans for holidays, house improvments or excess credit card spending ( not pay off at end of month) are generally more of an issue. A lot of people that had debt issue's after the boom was not all associated with proper house loans. It was the 30-40% of the loan that they got ( by not have to have a deposit and 110-120% loans)which they used to furnish the house and put down lawns and tarmac as well as 40'' TV that crippled them and started the downward spiral.

To someone earning over 100K taking 70K longterm seems not to make sence. However it is slightly under 3 times her income. It is a borderline mortgage, however it is not like a 150k mortgage to a 50K income. For the cost of the loan she will find very no place to rent. You begin to wonder have the banks still not reached reality from the days of the 250K mortgage or are they still harking back to them. Also have they a preference to let all these houses in the sub 100K market to investors.

There is no reason why she may not pay down the loan early as lots of people do mind you mortgage debt is the last debt I would pay down. Also talking to a fellow with a tracker that is in a position to pay some of it down he felt that with the medium term outlook he would not pay off tracker loan at present rather he is looking at buying one of the sub 100k properties that are for sale at present. He feels that the tracker money is too good value to pay down and he will never again be able to borrow at this rate.