Glut of repossessed houses could depress prices ‘by up to 25%’

cookie1977

More power to you smccarrick for explaining on that but I fear it'll fall on deaf ears.

gurramok

cookie1977 wrote: »

Are you saying if they're (for example) an owner of a BTL in donegal and a PPR/PDH in Dublin, the dublin property will be affected in any repossession of the BTL?

Yes its possible as part of the restructuring. If the numbers add up and are too great for a sustainable mortgage(counting bad personal circumstances), repo in both cases is possible. Obviously it can go the other way with no repo at all and just leave the person with the PPR(sustainable mortgage cases).

Galego

cookie1977 wrote: »

Are you saying if they're (for example) an owner of a BTL in donegal and a PPR/PDH in Dublin, the dublin property will be affected in any repossession of the BTL?

No, that is not what I refer to. A fictitious example: if 1000 Donegal BTLs are repossessed and sold by banks at 20% discount this will have an effect in the prices in the area and in Ireland. How? People who are in the border counties will be attracted to buy in Donegal. Then houses in those counties will have to lower prices to fight back this effect. This domino effect will certainly impact Co.Dublin to certain extent. Of course not 20%, maybe just 2-5%.

We can see this economic domino effect in prices in EU. I still remember when Dublin stores had to fight back the low prices in Northern Ireland few years ago. Thousand of Dubliners were driving to the North to do their weekly shopping. This drove down the prices in the Republic as a consequence.

cookie1977

gurramok wrote: »

Yes its possible as part of the restructuring. If the numbers add up and are too great for a sustainable mortgage(counting bad personal circumstances), repo in both cases is possible. Obviously it can go the other way with no repo at all and just leave the person with the PPR(sustainable mortgage cases).

While it's possible as you say there's been no evidence of this to date. It will be interesting to see if the banks look for double repo going forward with the new legislation.

cookie1977

Galego wrote: »

No, that is not what I refer to. A fictitious example: if 1000 Donegal BTLs are repossessed and sold by banks at 20% discount this will have an effect in the prices in the area and in Ireland. How? People who are in the border counties will be attracted to buy in Donegal. Then houses in those counties will have to lower prices to fight back this effect. This domino effect will certainly impact Co.Dublin to certain extent. Of course not 20%, maybe just 2-5%.

We can see this economic domino effect in prices in EU. I still remember when Dublin stores had to fight back the low prices in Northern Ireland few years ago. Thousand of Dubliners were driving to the North to do their weekly shopping. This drove down the prices in the Republic as a consequence.

I was replying to gurramock sorry. But in reply to you, yes I'd agree in some way but I think you're over simplifying the process. You're not taking into account a lot of variables including location of btl's which might put people off.

Galego

In a different note Cyprus bail out: Cyprus Depositor Haircut "Bailout" Turns Into Saver "Panic", Frozen Assets, Bank Runs, Broken ATMs.

Cyprus will impose a levy of 6.75% on deposits of less than €100,000 - the ceiling for European Union account insurance, which is now effectively gone following this case study - and 9.9% above that.

Wow!

Source: http://www.bloomberg.com/news/2013-03-16/euro-area-takes-aim-at-depositors-in-cyprus-bailout.html

Galego

cookie1977 wrote: »

I was replying to gurramock sorry. But in reply to you, yes I'd agree in some way but I think you're over simplifying the process. You're not taking into account a lot of variables including location of btl's which might put people off.

Sorry! Yes I simplified things and did not take loads of factors into account. :cool:

Villa05

@ smccarrick
my point is that Dublin has characteristics that do not make it immune from price falls as a result of repossessions. I know it won't be to the same effect as will happen in the rest of the country. I think the outlying commuter belt of Dublin will be hammered. Dublin prices came down more because there were more transactions there. Repossessions will encourage increased transactions at whatever price in the rest of the country and drive prices down further.

My main point as a whole is that I can't find any other country that has situation where a person can remain in a home, where they have 2 years or more missed payments. Maybe "Ireland is different" but the last time that theory was used we ended up bankrupt depending on the kindness of strangers.

My 2nd point is that residential should be tackled first and put rent receivers in for BTL's where there is no payment forthcoming. My fear being that:
The bank Guarantee bailed out the banks
NAMA bailed out the developers
and this recent development will bail out the BTL's
thus completing the Golden Circle and leaving nothing for the ordinary householder except the bill of course.

Thirdly, This is a mess of epic proportions and will lead to increased interest rates pulling more into the arrears crisis. An out of control downward spiral

Time will tell what will happen, but I have grave concerns

The_Conductor

I think we all have grave concerns- that much we are all in agreement on.

Dublin has only had more sales than the rest of the country as a consequent of a higher density on housing units, nothing more, nothing less. Ronan Lyons (DAFT.ie's resident economist) is on the record lamenting the lack of sales other than executor sales in the Dublin area- akin to the rest of the country, people are continuing to refuse to acknowledge the extent of the falls in their property value.

Interest rates- are unlikely to go anywhere anytime soon (that is of course excluding variable rates- which are slowly returning to 'normal' levels). The ECB is still expected to reduce its overnight rate (currently @ 0.75%) further- in light of the unexpected industrial contraction in Germany- and their shrill demands (given their general election coming up in the autumn). Any Irish mortgage borrowers on tracker mortgages, have a small fall on the immediate horizon, and an unknown length of time before rates start to rise again (given the perilous state of the global economy).

Personally I don't see why private mortgagees deserve to be treated ahead of any other borrower. Certainly, appoint rent receivers to BTL properties, however especially in the case of strategic defaulters- regardless of whether they are PPR or BTL properties- they deserve to be chased to the ends of the earth.

Why should anyone stay in a property they cannot afford to pay for- esp. when wiser people didn't borrow ridiculous amounts of money they couldn't afford- and despite their relative astuteness, are now living in unsuitable accommodation and unable to move. Quite simply- no-one should have any expectation to stay in any property they cannot afford to pay for. No-one. Everyone should be guaranteed accommodation- however, not in a location of their choice, and certainly not of salubrious nature.

Its all well and good to ring our bells- the bankers got their bailout, the developers got their bailout, now its time for individual home owners. I'd argue that it damn well isn't their turn. You say at the end of the day homeowners will be left on the hook if there isn't enough to go around- nope, they won't- the tax payer, and our children, and our children's children, will be......... The sense of entitlement here is palpable- why should homeowners expect a handout? Why are we special? We're not- as we've proven, and we need to stay the course.

Dublin is not immune to price falls. It has something than many parts of the country don't have though- and that is a fundamental level of demand which is in practice putting a floor on residential property prices. Will that floor be 2000 prices or 1990 prices- who knows- in parts of Dubln we're already at 1995 prices- especially for apartments and less desirable property types.

Yes- its a mess, yes, we're all gravely concerned- and yes, if you look, we agree on far more than we disagree on.

cookie1977

Careful now. You're making sense.

cookie1977

Interesting conversation on RTE radio1 now. Example given of unrealistic expectations (as there are) amongst borrowers was where a family with a million euro mortgage with no income in to house were gievn an offer by the bank of staying in the property for another year and then voluntary surrender with the bank wiping out any outstanding debt after the sale of the property. According to the commentator (who thought is was a good deal) they were refusing the offer hoping for something better.

This to me seems like a very good deal which they should have accepted immediately. As I and others have said, were the debt is un restructurable deals involving repossession are an important part of the solution.

Galego

cookie1977 wrote: »

Interesting conversation on RTE radio1 now. Example given of unrealistic expectations (as there are) amongst borrowers was where a family with a million euro mortgage with no income in to house were gievn an offer by the bank of staying in the property for another year and then voluntary surrender with the bank wiping out any outstanding debt after the sale of the property. According to the commentator (who thought is was a good deal) they were refusing the offer hoping for something better.

This to me seems like a very good deal which they should have accepted immediately. As I and others have said, were the debt is un restructurable deals involving repossession are an important part of the solution.

A friend of a friend is in this same situation which means these examples are not as rare as people may think. Apparently, this person also refused a deal offered by her bank.

How in the earth anyone would refuse that sort of deals is beyond me! But I guess Ireland has not reached 90,000 in arrears by coincidence.

cookie1977

Galego wrote: »

A friend of a friend is in this same situation which means these examples are not as rare as people may think. Apparently, this person also refused a deal offered by her bank.

How in the earth anyone would refuse that sort of deals is beyond me! But I guess Ireland has not reached 90,000 in arrears by coincidence.

It is bizarre to me too. They didn't say if they accepeted the offer in the end or not but what would puzzle me is with that offer, what where they holding out for?

Villa05

@ smccarrick Agree with almost everything you have said
Normal Variable interest Rates would be the base rate + 2% = 2.75% The fact that they are at 4.5% and rising is reflective of the mess that has been made of the situation. Even if you have a 50% deposit you can’t get a rate under 4%.

I’m not saying anyone should get a free lunch, be they PPR or BTL. What I’m saying is scarce resources should be targeted towards those who are in genuine unsustainable situations. From the arrears figures there are far more in the PPR side. while the Gov are bleating about BTL

The big question is just how many are in the re-possession category? I feel the situation has been left to fester for so long that a flood of repossessions is inevitable

Ulster Bank have said they will repossess 1,000 per year, estimates show the have 12,500 mortgage holders in trouble of some sort. This is an 8% repossession rate of those in arrears per year

Ulster Bank won't say how many Irish customers are behind on their home loans but parent RBS has said that 13pc of its €19bn of Irish mortgage debt is in arrears.

The average Irish home loan is currently around €200,000 - suggesting a staggering 12,500 Ulster Bank home loan customers could be in trouble.

http://www.independent.ie/irish-news/bank-to-hire-150-scots-to-chase-loan-arrears-here-28816799.html

Ulster Bank has announced it plans to repossess more than 1,000 homes per year once a loophole is closed in a new law which currently prevents banks from recovering money owed to them.

http://www.breakingnews.ie/ireland/ulster-bank-plans-1000-home-repossessions-per-year-once-loophole-is-closed-586743.html

Galego

cookie1977 wrote: »

It is bizarre to me too. They didn't say if they accepeted the offer in the end or not but what would puzzle me is with that offer, what where they holding out for?

In the case which I know, an almost "free" house to live.

cookie1977

Galego wrote: »

In the case which I know, an almost "free" house to live.

Well I hope to god no one gets that.

jay0109

cookie1977 wrote: »

Well I hope to god no one gets that.

well they're getting a 'free' house as things stand....not paying the mortgage at all and 'negotiating' with the bank. It suits a lot of people to drag out these matters.

That piece on the radio earlier was with Ross Maguire of New Beginnings...1 of many groups in place to get a piece of the pie when it comes to debt write down negotiation time.
Why the bank don't just chuck the family in question out on the side of the road, as was the case with the Killiney couple or with McFeely, is beyond me. They have mortgage debt of 1m, no income and have refused a deal of another yr of rent free living and then 100% debt write off for giving up their home. Out

cookie1977

jay0109 wrote: »

well they're getting a 'free' house as things stand....not paying the mortgage at all and 'negotiating' with the bank. It suits a lot of people to drag out these matters.

That piece on the radio earlier was with Ross Maguire of New Beginnings...1 of many groups in place to get a piece of the pie when it comes to debt write down negotiation time.
Why the bank don't just chuck the family in question out on the side of the road, as was the case with the Killiney couple or with McFeely, is beyond me. They have mortgage debt of 1m, no income and have refused a deal of another yr of rent free living and then 100% debt write off for giving up their home. Out

They're not getting a free house. They were allowed to stay in the property for another year before they'd have to move out and any remaining debt would be wiped. Which is a fair deal on what's being described. There was also no mention of whether the family could live rent free in that property so I dont know how you've come to that conclusion. It would also not be 100% of their debt written off. They loose their house and the rest of the mortgage outstanding after the sale would be wiped but they could have substantial personal debt too.

The couple in killiney owned multiple properties and had been warned for a long time before they were evicted. McFeely is a cowboy it seems. Both are not examples of the people I and others would be concerned about.

handlemaster

jay0109 wrote: »

well they're getting a 'free' house as things stand....not paying the mortgage at all and 'negotiating' with the bank. It suits a lot of people to drag out these matters.

That piece on the radio earlier was with Ross Maguire of New Beginnings...1 of many groups in place to get a piece of the pie when it comes to debt write down negotiation time.
Why the bank don't just chuck the family in question out on the side of the road, as was the case with the Killiney couple or with McFeely, is beyond me. They have mortgage debt of 1m, no income and have refused a deal of another yr of rent free living and then 100% debt write off for giving up their home. Out

i aggree. just a note the killiney couple had a large number of properties .

Gosub

It wouldn't surprise me if the owners were so deluded as to be thinking to themselves "a sure, in a year the house will be worth a million again and we'll be fine"

A lot of people are still living in la-la land where house values are concerned. House prices are still too high now. It's stalling any small recovery that might take place.

Galego

Is there anywhere else in the world in which unemployed people could spend (at least) a year living in a 1M eur house for "free"?

How much would it cost to rent a 1M eur house for a year? 25-50k? Jesus I'd think that they are already getting a good deal if they are staying there for another year for "free".

gaius c

Lose health cover and second car to get bank debt deal

And a family of 4 in an urban area gets a healthy post-tax "living allowance" of €896. That sounds like a pretty handy deal to me. There are plenty getting by on that money in gross pay.

cookie1977

gaius c wrote: »

Lose health cover and second car to get bank debt deal

And a family of 4 in an urban area gets a healthy post-tax "living allowance" of €896. That sounds like a pretty handy deal to me. There are plenty getting by on that money in gross pay.

I dont think any reasonable person would object to these guidelines/recommendations.

Zamboni

gaius c wrote: »

Lose health cover and second car to get bank debt deal

And a family of 4 in an urban area gets a healthy post-tax "living allowance" of €896. That sounds like a pretty handy deal to me. There are plenty getting by on that money in gross pay.

Cut your cloth...
Perfectly reasonable guidelines.

Galego

gaius c wrote: »

Lose health cover and second car to get bank debt deal

And a family of 4 in an urban area gets a healthy post-tax "living allowance" of €896. That sounds like a pretty handy deal to me. There are plenty getting by on that money in gross pay.

Ok, let me understand this!
Someone is in arrears, not paying a mortgage BUT enjoys the below luxuries:

* children private school.
* foreign holidays.
* Sky Sports.

Jesus!!! I also want a deal!

EricPraline

cookie1977 wrote: »

I dont think any reasonable person would object to these guidelines/recommendations.

True. Unfortunately I expect plenty of objections.

There are plenty of working people who diligently pay their rent or mortgages, and consequently are unable to afford health insurance, a second car, or private school fees. The idea that someone would receive a debt-write down, while maintaining a standard of living that is beyond many working people, is deeply unpalatable and would incentivise strategic defaulters.

gaius c

cookie1977 wrote: »

I dont think any reasonable person would object to these guidelines/recommendations.

It's over €45k post-tax money. Did Sean Quinn draft these guidelines? I'm reasonable and I'm objecting.

Villa05

gaius c wrote: »

It's over €45k post-tax money. Did Sean Quinn draft these guidelines? I'm reasonable and I'm objecting.

Too right

The guidelines set out how much different family units will be allowed to live on each month.

According to the new guidelines, a family in an urban area with two adults, but one income, would be allowed €896 a week.

This family has a €1,500 monthly mortgage repayment, one teenager and one pre-teen.

I bet there are many families (comprising of 2 adults and 2 children) out their wishing they had that level of income. The irony being that they may well be paying rent to the the family being bailed out using their taxes. Were the houses repossessed and sold off their rent would most likely fall significantly

Sick Country

The_Conductor

gaius c wrote: »

It's over €45k post-tax money. Did Sean Quinn draft these guidelines? I'm reasonable and I'm objecting.

I'm reasonable and I'm objecting too.......
Both myself and my wife work fulltime.
After tax, mortgage and childcare- we have nothing like 896 a month, never mind a week, from which to pay for everything else.
Give up foreign holidays and Sky Sports...... Really? I'm crying crocodile tears for the poor souls. I've never had subscription TV, and last had a holiday 6 years ago- and didn't over-borrow during the boom, and now have to pay for those reckless people who are being allowed 896 a week?
My mind boggles.......

Did Sean Quinn draft these guidelines indeed........

cookie1977

I was primarily referring to the cuts on health, holidays second cars etc. I did not see the 896 per week (which sounds a bit large to be honest) BUT lets not jump the gun here. The guidelines have not been published as of yet and perhaps the indo is looking to sell papers. Remember this is the same paper people normally bash about house price recovery yet when they report this people take it as fact.

Quote:

According to the new guidelines, a family in an urban area with two adults, but one income, would be allowed €896 a week.

This family has a €1,500 monthly mortgage repayment, one teenager and one pre-teen.

Maybe we should keep the powder dry until an official announcement. In saying that, if they are true, I'll be just as aghast as you all are.

http://www.isi.gov.ie/