Mortgage Arrears

Barracuda1

I heard on the radio tonight that the govenor of the central bank wants banks to step up their action against cases of mortgage arrears. Will this drive house prices down futher. I think that they want to push out owners who can't/won't pay as in some cases they may have waitlist of applicants ready to take the distressed mortgage of the banks hands.

Rasmus

If they had a waitlist, why would it drive prices down further?

gaius c

I get the impression that they'll have to start with BTL's first due to the PR problems with evicting people from their PPR's.

hfallada

I think he wants to stop people who can pay for a mortgage to stop not paying it for the hope of a write off. It's the banks interest to have a person in a house paying some form of mortgage than an empty house plus a ton of legal fees to get them out of the house etc.

But something like 15-20% of buy to let are in arrears and it has to dealt with as it a huge amount. I know from people that the banks are extremely unreasonable at times when dealing with BTL. Expect capital plus interest when they agreed interest only a few months ago. Certain banks are telling people to do things like sell that property but yet won't put it in writing.

Ideally there should be a form of mediation between banks and customers to resolve problems best as possible

Boom__Boom

Barracuda1 wrote: »

I heard on the radio tonight that the govenor of the central bank wants banks to step up their action against cases of mortgage arrears. Will this drive house prices down futher. I think that they want to push out owners who can't/won't pay as in some cases they may have waitlist of applicants ready to take the distressed mortgage of the banks hands.

If the banks do start to take action on those with mortgage arrears its hard to not see it having a negative effect on house prices.

The big question is how much of an negative effect it will have.

As others have said I'd be shocked if the buy-to-let market isnt targeted initially for PR reasons.

There is a feeling that there are quite a number of BTL landlords who are still collecting rent but are making little to no effort in terms of making mortgage repayments.

For the most part I can't see banks wanting to hold on to any of the repossessed housing stock for any serious period of time so I would imagine once the number of repossessions start prices will be affected pretty quickly.

Edit : I wouldnt be surprised with the BTL repossessions if any sitting tenants weren't approached immediately by the banks to see if they had any interest in purchasing the property. Even as a simple PR move its a no-brainer. It would also potentially save the banks a lot of hassle in terms of having the property unoccupied/saving on selling costs etc. Any case where the bank can say "we didnt kick the people living in the house out, rather we kept them in place and gave the landlord a kicking" would be a major PR win for them. As such I wouldnt be surprised to hear of some sitting tenants getting especially good deals.

There still seems to be a sizable minority of property owners who seem to be putting their hopes on widescale mortgage debt forgiveness and while there will be some small mortgage forgiveness, chances are it is only going to be in a tiny percentage of cases.

Personally I think the banks have been holding off taking action with regards to mortgage arrears as they know when these houses come on the market they will inevitably depress the market further. However because the number/percentage of houses in arrears has gotten so high now they will be forced to take action sooner rather than later.

I think that the negative effects are likely to be worse in those areas which have already seen the biggest decreases in house prices. Also there are certain housing estates which would have a high percentage of BTL landlords operating in them are going to be hit very hard.

The_Conductor

hfallada wrote: »

I think he wants to stop people who can pay for a mortgage to stop not paying it for the hope of a write off. It's the banks interest to have a person in a house paying some form of mortgage than an empty house plus a ton of legal fees to get them out of the house etc.

But something like 15-20% of buy to let are in arrears and it has to dealt with as it a huge amount. I know from people that the banks are extremely unreasonable at times when dealing with BTL. Expect capital plus interest when they agreed interest only a few months ago. Certain banks are telling people to do things like sell that property but yet won't put it in writing.

Ideally there should be a form of mediation between banks and customers to resolve problems best as possible

Its more the case that the Central Bank want the commercial banks to cleanse their balance sheets of non-performing/under-performing assets. When we recapitalised the banking system, we made allowance for a significant number of mortgages that would have to be written down- this has not happened however, as our now risk averse lenders, prefer to sit on the cash we pumped into them, than percipitate the inevitable losses that a full and complete trawl through their mortgage loan books will entail.

This is not geared at BTL mortgages, PPR mortgages or any particular class of lender or asset- its a balance sheet exercise to cleanse the banking system of the systemic rot associated with Irish property assets.

Will it percipitate further property falls? Most probably- in those areas where there is a surplus of property (aka everywhere outside of Dublin, Cork and Galway- with a few other clusters of scarcity- such as Clare). However- prices are continuing to fall, notwithstanding the wonderful articles you'll read in the Indo from time to time. There is stability in some areas- notably Dublin- but this is due to a lack of building that happened in these areas over the past 2 decades, moreso than any fundamental equilibrium having been reached in the market.

So- its all mortgages, and the aim is to try to 'normalise' the Irish banking system, and get a normal banking sector up and running in the country again.

El_Dangeroso

Where are the figures on housing scarcity in Clare? I googled but couldn't find anything..