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

Barracuda1

StillWaters wrote: »

There is not going to be mass repossessions. That's just redtop headline stuff.
Banks will cherrypick properties and owners to take action on, and then dripfeed to Market.

Do not expect this to have any significant impact on the property Market.

I agree 100%. Banks will pick out properties that can be sold. The idea of mass repo is not in theirt intrest. The top guys on the 500k+ salaries will kiss good bye to them.

beeno67

khards wrote: »

Haahhhaaahahhah hahahahhahahha. You are joking right?

Over 20,000 hoplessely insolvent defaulters properties repossessed and dumped onto a market currently consisting of 48,977 properties for sale.

Yes, prices will go down again, but look on the bright side, once this stock has been cleared prices will stabilize to what ever the banks are willing to lend to the average punter.

It should take around 5 years to clear all of the new stock.

Although if the 20,000 properties are occupied then that is an extra 50,000 people entering the rental market, pushing up rents and thus pushing up house prices. So hard to see a massive reduction in property prices in the medium term as a result of repossessions.

cookie1977

It really does depend on what they're repossessing as to the impact on the market. I presume they'll go after more BTL's first and much of this market is apartments. Not exactly what a lot of people want nowadays.

StillWaters

khards wrote: »

Haahhhaaahahhah hahahahhahahha. You are joking right?

Over 20,000 hoplessely insolvent defaulters properties repossessed and dumped onto a market currently consisting of 48,977 properties for sale.

nope, not joking. You tell me how it is in the banks interest to dump 20,000 houses to market.
Then tell me how it is in the Government's interests politically.

Barracuda1

cookie1977 wrote: »

It really does depend on what they're repossessing as to the impact on the market. I presume they'll go after more BTL's first and much of this market is apartments. Not exactly what a lot of people want nowadays.

From reading past press releases the majority of loans in arrears are in midlands and border counties. For all we know they could be houses that are not lived in or have been abondoned. In my estate two houses were abondoned and the banks took their time taking them back into care and selling them

khards

beeno67 wrote: »

Although if the 20,000 properties are occupied then that is an extra 50,000 people entering the rental market, pushing up rents and thus pushing up house prices. So hard to see a massive reduction in property prices in the medium term as a result of repossessions.

Regarding prices, they are a function of the cost and availability of credit and NOT the number of properties on the market.

beeno67

khards wrote: »

Regarding prices, they are a function of the cost and availability of credit and NOT the number of properties on the market.

It is supply and demand. Repossessions will increase supply. Extra in rental market filters through to increase demand. Cost and availability of credit is another (but far from the only) factor that affects demand.

khards

Ok, lets put some facts to the whole argument that the banks will not repossess properties in any meaningful numbers.

There are 29,369 BTL not paying their mortgage and pocketing the cash.
There are 95,554 private households over 3 months in arrears.

In the last quarter an extra PDH 3,205 properties were in arrears.
In the last quarter an extra BTL 1,003 properties were in arrears.

At this rate of arrears there would need to be somewhere near 1000 extra repossessions every month, just to stop these figures rising, that is assuming that arrears do not get worse and some people manage to pull themselves out of arrears.

Now to get through the backlog of 29,369 BTL + 95,554 PDH that has built up over the years you are looking at an additional 2000 repossessions per month.

So to stop arrears building and clear through a backlog you must repossess near 3000 properties per month. Taking back any less than 1000 figure will result in the arrears situation building further.

khards

beeno67 wrote: »

It is supply and demand. Repossessions will increase supply. Extra in rental market filters through to increase demand. Cost and availability of credit is another (but far from the only) factor that affects demand.

No, you are clearly wrong.

If there were only 1000 properties on the market but banks were not willing to issue mortgages any more, how much would the houses be worth (I will give you a clue, they would all have to be bought with cash)

If banks let anyone take out million euro mortgages, how much would houses be selling for this time next month?

Any one who is made homeless will not be put into private rental accommodation, there is a new bill being passed the housing amendment bill that will be putting as many of these relocated people into council owned housing.

http://www.oireachtas.ie/viewdoc.asp?fn=/documents/bills28/bills/2013/4413/b4413d.pdf

beeno67

khards wrote: »

Ok, lets put some facts to the whole argument that the banks will not repossess properties in any meaningful numbers.

There are 29,369 BTL not paying their mortgage and pocketing the cash.
There are 95,554 private households over 3 months in arrears.

In the last quarter an extra PDH 3,205 properties were in arrears.
In the last quarter an extra BTL 1,003 properties were in arrears.

At this rate of arrears there would need to be somewhere near 1000 extra repossessions every month, just to stop these figures rising, that is assuming that arrears do not get worse and some people manage to pull themselves out of arrears.

Now to get through the backlog of 29,369 BTL + 95,554 PDH that has built up over the years you are looking at an additional 2000 repossessions per month.

So to stop arrears building and clear through a backlog you must repossess near 3000 properties per month. Taking back any less than 1000 figure will result in the arrears situation building further.

First of all not all these properties need to be repossessed. It depends how much in arrears each property is and how much owner can pay. So for example if a person missed one mortgage repayment in 2008 but has paid every mortgage payment in full since, they are still considered 5 years in arrears.

Also if mortgage is for say 300,000 and property is worth 200,000 it may be in the banks interest to write off the 100k and let the owner pay a new mortgage on the remaining 200k if they can afford this.

The vast majority of properties with under performing mortgages will not be repossessed.

beeno67

khards wrote: »

No, you are clearly wrong.

If there were only 1000 properties on the market but banks were not willing to issue mortgages any more, how much would the houses be worth (I will give you a clue, they would all have to be bought with cash)

If banks let anyone take out million euro mortgages, how much would houses be selling for this time next month?

Any one who is made homeless will not be put into private rental accommodation, there is a new bill being passed the housing amendment bill that will be putting as many of these relocated people into council owned housing.

http://www.oireachtas.ie/viewdoc.asp?fn=/documents/bills28/bills/2013/4413/b4413d.pdf

Of course availability of credit effects prices but it is far from the only issue. If in your scenario banks refused all lending but all but one property owner refused to sell, prices would rise.

Supply and demand. As I said various factors affect supply and demand.

khards

beeno67 wrote: »

First of all not all these properties need to be repossessed. It depends how much in arrears each property is and how much owner can pay. So for example if a person missed one mortgage repayment in 2008 but has paid every mortgage payment in full since, they are still considered 5 years in arrears.

Also if mortgage is for say 300,000 and property is worth 200,000 it may be in the banks interest to write off the 100k and let the owner pay a new mortgage on the remaining 200k if they can afford this.

The vast majority of properties with under performing mortgages will not be repossessed.

So how is that working out for those who have been attempting to restructure then?

The truth is that if a bank has a non-performing mortgage on its book, it doesn't matter if they have only been €10 in arrears for 10 years the value of the mortgage has to be written down on the banks books.

Most of the 20,000+ in serious arrears are unable to restructure their mortgages and are hopelessly insolvent.
In the long run repossessing non-performing assets makes the banks books stronger as they do not have to write down the non-performing loans.

Another things to add about the banks, apart from they don't care about anyone but themselves. International investors and funds will see that Ireland has tidied up its act and start investing in the banking sector again.
Currently Ireland banking sector is a no-go area because it has been impossible for the banks to foreclose on secured debt of those breaching their mortgage contracts.
The amended repossession law that will be brought in next month will ultimately breath some fresh air into the banking sector and make mortgage lending viable again.

beeno67

khards wrote: »

In the long run repossessing non-performing assets makes the banks books stronger as they do not have to write down the non-performing loans.
.

Of course they do. Mortgage 300k. Repossessed and sold for 200k means 100k loss for bank plus addition legal and other costs of repossession.

Mortgage written down to 200k means 100k loss for bank.

If the bank can write down the mortgage it saves the bank money. Obviously some would be unable to pay any mortgage so they will end up repossessed.

Snakeblood

beeno67 wrote: »

Of course they do. Mortgage 300k. Repossessed and sold for 200k means 100k loss for bank plus addition legal and other costs of repossession.

Mortgage written down to 200k means 100k loss for bank.

If the bank can write down the mortgage it saves the bank money. Obviously some would be unable to pay any mortgage so they will end up repossessed.

If they repossess and sell the house for 200 grand, that's 200 grand that they can use to start lending to someone else. If the mortgage is written down to 200 grand, then they get the trickle of repayment from someone with an appalling credit history. Or they could get that 200 grand and invest it in a country or economy that isn't boned with little prospect of recovery.

I mean, that's one angle to look at it from too. Not saying its right.

Villa05

StillWaters wrote: »

There is not going to be mass repossessions.
Do not expect this to have any significant impact on the property Market.

Your comment has been filed under delusion along with:
House prices only ever go up
You'll never go wrong with bricks and mortar.
Rent is dead money
Buy now or you'll be priced out of the market
The fundamentals are sound
We are heading for a soft landing

Ulster bank alone have stated they will repossess 1,000 properties per year once the new laws are in place, expect Danske to do the same.
The IMF are putting serious pressure on the Government to get this sorted so whether the Irish Banks/Gov want to repossess or not is immaterial. External bodies who we owe billions to are calling the tunes

Villa05

beeno67 wrote: »

First of all not all these properties need to be repossessed. It depends how much in arrears each property is and how much owner can pay. So for example if a person missed one mortgage repayment in 2008 but has paid every mortgage payment in full since, they are still considered 5 years in arrears.

Incorrect, a person who missed one payment 5 years ago is classified as 30 days in arrears. Do you think the IMF would accept data as obscure as you describe.
A person +720 days in arrears has missed greater than 2 years payments (not necessarily consecutive)

There were 95,554 (12.3 per cent) private residential mortgage accounts for principal dwelling houses (PDH) in arrears of over 90 days at end-March 2013, up from 92,349 accounts (11.9 per cent) at end-December 2012.

Villa05

cookie1977 wrote: »

It really does depend on what they're repossessing as to the impact on the market. I presume they'll go after more BTL's first and much of this market is apartments. Not exactly what a lot of people want nowadays.

They will go after houses where there is demand, (Dublin, Cork, Galway). By increasing supply in these areas, it is going to have an impact on price

Split mortgages and mortgage to rent will be for areas where there is little demand.

cookie1977

Are you sure about that Villa? I cannot find evidence of that definition and if someone has under paid their mortgage by 10 euro then they are technically in arrears. Do you have any links?

Take this example here:
http://www.askaboutmoney.com/showthread.php?t=142472

Someone who's over paid a fortune into their mortgage missed one payment and is classified in arrears yet technically they are ahead of schedule. It's another technicality.

Here's a quote from the Central bank stats:
http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/Data.aspx

The arrears figures denote the value of arrears (payments not received by the contractual
due date) expressed as equivalent days past due. Partial payments received from borrowers
will be credited to the oldest arrears amount which will have the effect of reducing the
balance of arrears. Arrears of over 90 days past due do not necessarily signify that
borrowers have not made mortgage repayments for the last three months. For example, a
borrower can be making partial repayments on a monthly basis but may still be in arrears of a value equivalent to over 90 days past due. In the same way, arrears of over 180 days past
due does not necessarily signify that borrowers have not made mortgage repayments for
the last six months.

Aside from that though I doubt many of those in long term arrears are only in it due to a single missed payment. Although it would be interesting to see the stats.

Villa05

cookie1977 wrote: »

Are you sure about that Villa? I cannot find evidence of that definition and if someone has under paid their mortgage by 10 euro then they are technically in arrears. Do you have any links?


Here's a quote from the Central bank stats:
http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/Data.aspx

The arrears figures denote the value of arrears (payments not received by the contractual
due date) expressed as equivalent days past due. Partial payments received from borrowers
will be credited to the oldest arrears amount which will have the effect of reducing the
balance of arrears. Arrears of over 90 days past due do not necessarily signify that
borrowers have not made mortgage repayments for the last three months. For example, a
borrower can be making partial repayments on a monthly basis but may still be in arrears of a value equivalent to over 90 days past due. In the same way, arrears of over 180 days past
due does not necessarily signify that borrowers have not made mortgage repayments for
the last six months.

Thanks for posting Cookie, I could not find it.

What the Central bank are saying in your bold text is that being in arrears for 3 months does not mean that the mortgage has not been paid for the last 3 months. It means that the cumulative arrears to date = 3 months. i.e. paying half your mortgage for 6 months = 3 months (or 90 days in arrears)

Take a scenario where a person lost there job in Jan 2010 and got a new job in Jan 2011. They may have stopped paying there mortgage for that year and resumed paying full monthly payment in 2011 to date. They would still be classed as 360 days in arrears. Hope you get what I'm trying to explain

The fact that the long term arrears have increased by 11.9% is very serious,

cookie1977

So it's the value of the debt that equals your arrears time.

Yes 11.9% is very worrying. I still feel that not enough is being done to both A) find a longterm solution to recoverable/resolvable debt and deal properly with those that are about/need to loose there homes. The government should be putting in place some sort of organisation to deal with those loosing their homes. I see nothing positive going on at all at present. A simple huge increase in repossessions will not get this country going again.

the groutch

hopefully this reduction to 2 months protection from reposession will give the banks the power to go after the "wont pays", so that they won't need to give massive write-offs to the "can't pays"

jay0109

cookie1977 wrote: »

So it's the value of the debt that equals your arrears time.

Yes 11.9% is very worrying. I still feel that not enough is being done to both A) find a longterm solution to recoverable/resolvable debt and deal properly with those that are about/need to loose there homes. The government should be putting in place some sort of organisation to deal with those loosing their homes. I see nothing positive going on at all at present. A simple huge increase in repossessions will not get this country going again.

another quango...just what we need:rolleyes:

more than enough 'help' out there for anyone who loses their home

cookie1977

jay0109 wrote: »

another quango...just what we need:rolleyes:

more than enough 'help' out there for anyone who loses their home

I don't agree there is. MABS and FLAC are crying out for extra support.

who_ru

Sunday Indo & FF already spinning against repos. read article, FF guy says families (how does he know there all families) 2 years behind in their mortgages are 'vulnerable' to repossessions. http://www.independent.ie/irish-news/truly-shocking-as-one-in-four-now-unable-to-pay-their-mortgage-29364027.html

Dr Nic

Just wondering is the arrears figure made up of 'cant pays' or 'wont pays'? Is this figure easy to come by? How does one decide one is a 'wont pay'?

cookie1977

Dr Nic wrote: »

Just wondering is the arrears figure made up of 'cant pays' or 'wont pays'? Is this figure easy to come by? How does one decide one is a 'wont pay'?

It's both types together.

gurramok

This thread(http://www.boards.ie/vbulletin/showthread.php?t=2056977313 ) would lead you to believe that there are quite a few family homes in the 400k range that should of been repo'd.

khards

Dr Nic wrote: »

Just wondering is the arrears figure made up of 'cant pays' or 'wont pays'? Is this figure easy to come by? How does one decide one is a 'wont pay'?

It doesn't matter in the eyes of the banks and the law they are all defaulters and can all be repossessed equally.

There is no differentiating between them and to be honest the bankers couldn't care about the personal circumstances of the defaulter. That is what MABS is for, if the issue can't be resolved via MABS then the property will simply be taken back to that performing loans can be written against the asset.

68Murph68

who_ru wrote: »

Sunday Indo & FF already spinning against repos. read article, FF guy says families (how does he know there all families) 2 years behind in their mortgages are 'vulnerable' to repossessions. http://www.independent.ie/irish-news/truly-shocking-as-one-in-four-now-unable-to-pay-their-mortgage-29364027.html

Well if Charlie Weston says so it must be true. He's a seriously creditable journalist with an impressive history of offering unbiased comment on the Irish property market.

Villa05

who_ru wrote: »

Sunday Indo & FF already spinning against repos. read article, FF guy says families (how does he know there all families) 2 years behind in their mortgages are 'vulnerable' to repossessions. http://www.independent.ie/irish-news/truly-shocking-as-one-in-four-now-unable-to-pay-their-mortgage-29364027.html

Worth posting this before its deleted from the Indo comments section

This very newspaper has been calling the bottom of the property for the last 5 years, and only 2 weeks ago had a pull out special on property, implying for some areas "Get in before you are priced out of the market". Remember that, where did you hear it before? How many feature in the above statistics that took the advise of this very establishment? Do you think this was careful advise or an establishment promoting their own agenda for financial gain

They publish the opinion of representative of Fianna Fail who are the single most culpable in creating this mess. They appointed the "loosers" and "do nothingers" to the Central Bank and Regulators. Don't think that this was an error by FF. This was planned, the Government and local authorities were the largest beneficiaries of the property bubble, so appointing incompetent people was part of the plan. The people who coment here are the very people who collectively voted for these idiots, so by blaming Gov you are blaming yourselves.

People coment here that this crowd are worse than the last crowd and that they broke promises. I'm not making excuses for them, but I clearly heard Enda saying that the adjustment process following the disaster of Fianna Fail would be painful. Anyone who thought otherwise is just plain delusional.

Anyone promoting debt forgiveness write downs etc must always remember, where money is concerned there is no such thing as forgiveness, it is just passed on to someone else. That someone else will be our children and theirs. I'm not saying debt forgiveness will not happen, but be very careful your taxes could be used to forgive the debts of your future landlord. Thats why blanket debt forgiveness is a no go area