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

GetWithIt

OMD wrote: »

But the person who didn't buy in 2005 (as per the example) has been paying rent for the last 8 years. That rent is now more than the mortgage. How would they have amassed a deposit any more than the home owner would have amassed significant savings to say pay off part of mortgage early

In Ireland people tend to buy houses but rent rooms. There is a significant difference in cost between the 2.

The renter would have also have had far greater flexibility with regards employment during a time when the economy fell through the floor. The buyer may have had to forego employment opportunities or both rent and buy in order to stay in the jobs market.

The_Conductor

Villa05 wrote: »

Has anyone got a copy of this report, or a county by county breakdown. It would answer alot of questions on this thread

It was published 19th of September last year- so for all intents and purposes, it is out of date.
Further- when they say 'published' they don't mean made freely available- you need an Account with Moody's to access the report, and even then- depending on your account type- you may have to pay to access individual reports.

If anyone does have access to the report- feel free to discuss it and its contents- but do not quote lengthy passages from it- and certainly do not make the report itself available (as you'll get us all in trouble)..........

S.

Ps- if you do have an account with Moodys- its the 'Key Drivers of Default in Irish RMBS Pools Will Persist in 2013' special commentary

murphaph

cookie1977 wrote: »

Ah, yes of course over 20-30 years they will go up. But what you say is why I think people (and the banks) should be looking at long term fixed rates. Yes the monthly cost will be higher but it offers stability over the longer period. No highs to lows to highs that the current system offers. I presume long term the CB and the banks are looking at how they can completely reorganise how mortgages work for greater stability for everyone (I hope anyway). Link fixed.

These long term reasonable fixed rates are only available in Germany etc because the risk to the bank on mortgages here is low. The risks to the banks in Ireland is arguably much higher at present, so these rates will not be available.

wexie

cookie1977 wrote: »

Ah, yes of course over 20-30 years they will go up. But what you say is why I think people (and the banks) should be looking at long term fixed rates. Yes the monthly cost will be higher but it offers stability over the longer period. No highs to lows to highs that the current system offers. I presume long term the CB and the banks are looking at how they can completely reorganise how mortgages work for greater stability for everyone (I hope anyway). Link fixed.

It's perfectly normal in Holland to have your mortgage fixed for the duration. The interest is much higher but the mortgage relief (on PPR) is over all the interest so after tax it's not too bad and it's a nice bit of stability /security.

Snakeblood

I'd be totally in favour of introducing a fixed rate mortgage over 30 years. A friend of mine has it in the states, and swears by it. He can also overpay though. I wouldn't trust banks not to stick the interest rate way too high.

uberalles

Villa05 wrote: »

Has anyone got a copy of this report, or a county by county breakdown. It would answer alot of questions on this thread


[/URL]

Cavan is top of the list there........

http://businessetc.thejournal.ie/mortgage-defaults-rising-ireland-602021-Sep2012/

Villa05

Some important news slipped through the Bank Holiday weekend, hoping people would not notice


Our "strongest" Bank tightening Lending criteria for mortgages

For example, a first-time buyer on €30,000 will now only be able to borrow 3.5 times their salary. Previously the norm was up to four times salary.

http://www.irishtimes.com/business/sectors/administrators-sue-former-quinn-actuary-1.1484598

2/3 of sales in the first quarter of 2013 were cash sales not exactly a sustainable situation. Apparently many were farmers, I thought they were in need of massive subsides from PAYE workers because they were poor
http://www.independent.ie/business/personal-finance/property-mortgages/twothirds-of-property-deals-made-for-cash-in-first-quarter-29472357.html

Meanwhile the cost of servicing the Countries National Debt balloons by 13.5% to 5.178 Billion
http://www.rte.ie/news/business/2013/0802/466133-exchequer-figures/

For those small number of areas experiencing house price growth Is this Classic Dead Cat Bounce Data?


Thanks to The Conducter and uberellas for your links

OMD

Villa05 wrote: »

Some important news slipped through the Bank Holiday weekend, hoping people would not notice


Our "strongest" Bank tightening Lending criteria for mortgages

http://www.irishtimes.com/business/sectors/administrators-sue-former-quinn-actuary-1.1484598

Surely a bigger headline is "Banks still prepared to lend over €100K to someone who only earns 30k a year". 30K is a tiny income to even consider buying a house.

Frank Lee Midere

OMD wrote: »

Surely a bigger headline is "Banks still prepared to lend over €100K to someone who only earns 30k a year". 30K is a tiny income to even consider buying a house.

If that works up the scale it will massively reduce prices. After all take home on 30 is more than half take home on 80. The marginal tax of 52% really bites.

Anyway the guy on 30k could finance a 100k mortgage. He just couldn't buy a house in most parts of the country.

OMD

Frank Lee Midere wrote: »

If that works up the scale it will massively reduce prices. After all take home on 30 is more than half take home on 80. The marginal tax of 52% really bites.

Anyway the guy on 30k could finance a 100k mortgage. He just couldn't buy a house in most parts of the country.

Taking on a €105,000 mortgage when you are only earning €30,000 is madness. By the way at the moment, on Daft, there are 16,414 properties for sale in Ireland for less than €125,000 out of a total of 51,125.

gaius c

OMD wrote: »

Taking on a €105,000 mortgage when you are only earning €30,000 is madness. By the way at the moment, on Daft, there are 16,414 properties for sale in Ireland for less than €125,000 out of a total of 51,125.

You reckon? It's only € 486.57 a month on a 35 year SVR. You'd pay that for a double room in Dublin.

Villa05

OMD wrote: »

Surely a bigger headline is "Banks still prepared to lend over €100K to someone who only earns 30k a year". 30K is a tiny income to even consider buying a house.

thats why house prices are still too high. In and analysis last year the average wage was 36k and their were 1.2 million workers earning below this figure.

This would means that the state would have to subsidise far too many peoples accomodation costs. The state is in no position to absorb this added expense.

OMD

gaius c wrote: »

You reckon? It's only € 486.57 a month on a 35 year SVR. You'd pay that for a double room in Dublin.

35 year mortgages? Really? I thought we had gone away from the idea of these. Anyway it is not just the mirtgage repayments it is the unexpected costs. If you are renting and the roof needs replacing then tough luck to the landlord. If you own and are earning 30k where do you get the 10k to fix the roof, or the central heating or whatever. Yes you may be lucky and nothing happens but when the household has one income and it is 30k or less then you should not be thinking of getting a 120k mortgage or even a 105K mortgage.

Frank Lee Midere

OMD wrote: »

35 year mortgages? Really? I thought we had gone away from the idea of these. Anyway it is not just the mirtgage repayments it is the unexpected costs. If you are renting and the roof needs replacing then tough luck to the landlord. If you own and are earning 30k where do you get the 10k to fix the roof, or the central heating or whatever. Yes you may be lucky and nothing happens but when the household has one income and it is 30k or less then you should not be thinking of getting a 120k mortgage or even a 105K mortgage.

But I asked why then would someone on double that wage take on a 200k mortgage? And to double the take home pay you would need 80k. If that were the case prices would collapse even more.

You are right about the 35 years. They aren't offering that anymore.

OMD

Frank Lee Midere wrote: »

But I asked why then would someone on double that wage take on a 200k mortgage? And to double the take home pay you would need 80k. If that were the case prices would collapse even more.

You are confusing take home pay with disposable income. Someone earning 60k a year does not take home 2 times what someone on 30k does but they have a higher disposable income. They can choose to spend this on foreign holidays, private education for their children, new cars or on a bigger more expensive house.

Galego

Frank Lee Midere wrote: »

You are right about the 35 years. They aren't offering that anymore.

Yes, they are for FTB under 35 years old. And I see nothing wrong about spreading the life of a loan to the maximum possible.

Villa05

OMD wrote: »

they have a higher disposable income. They can choose to spend this on foreign holidays, private education for their children, new cars or on a bigger more expensive house.

Or a market can be controlled and manipulated by powerful vested interests to extract the maximum from buyers, leaving very little income for other pursuits, hence the collapse of irelands domestic economy

Villa05

gaius c wrote: »

€ 486.57 a month on a 35 year SVR. You'd pay that for a double room in Dublin.

Madness also

Frank Lee Midere

OMD wrote: »

You are confusing take home pay with disposable income. Someone earning 60k a year does not take home 2 times what someone on 30k does but they have a higher disposable income. They can choose to spend this on foreign holidays, private education for their children, new cars or on a bigger more expensive house.

I am specifically not confusing take home pay with disposable income. Disposable income is take home after rent or mortgage. Discretionary income is after obligatory payments. The rest of your argument is illogical. If higher income earners intend to continue to spend on private schools they will get lower mortgages.

Frank Lee Midere

Galego wrote: »

Yes, they are for FTB under 35 years old. And I see nothing wrong about spreading the life of a loan to the maximum possible.

I haven't seen that offered anywhere. A 34 year old would be paying until he was 69, nearly 70.

Galego

Frank Lee Midere wrote: »

I haven't seen that offered anywhere. A 34 year old would be paying until he was 69, nearly 70.

Both AIB and BOI offer 35 year mortgages to FTB under 35. Is there any clause in a 35 year old mortgage which states that it must be paid in 35 years?
A 35 year old mortgage can be set up to be repaid at any time, 20, 25, 30 or whatever years you want. The beauty of it is that it offers the flexibility that shorter terms do not.

cdeb

Galego wrote: »

Yes, they are for FTB under 35 years old. And I see nothing wrong about spreading the life of a loan to the maximum possible.

A longer loan term means you borrow more, which means you pay more for the same house.

If you can afford a grand a month, a 35-year mortgage means repaying E420k, while a 25-year mortgage means repaying E300k.

35-year-mortgages should be banned. If you could borrow for a maximum of 25 years, house prices would drop, which - despite the bleating of various media outlets - would be hugely beneficial for the country. This notion of tying FTBs down to mortgage debt till they retire is scandalous. Have we nothing else to live for than paying off debt?

Villa05

@cdeb + 1000 terms like beauty and flexibility to describe a 35 year mortgage could only come from a banker, no flexibility for lifes hiccups.

gurramok

OMD wrote: »

35 year mortgages? Really? I thought we had gone away from the idea of these. Anyway it is not just the mirtgage repayments it is the unexpected costs. If you are renting and the roof needs replacing then tough luck to the landlord. If you own and are earning 30k where do you get the 10k to fix the roof, or the central heating or whatever. Yes you may be lucky and nothing happens but when the household has one income and it is 30k or less then you should not be thinking of getting a 120k mortgage or even a 105K mortgage.

House insurance. Yes, the banks still offer 35 yr mortgages. As long as its stress tested by 2% and the repayments are no more than 35% of your net income, that's the rules so far. I agree it should be more stringent but we're not that far yet in regulation.

StillWaters

Villa05 wrote: »

@cdeb + 1000 terms like beauty and flexibility to describe a 35 year mortgage could only come from a banker, no flexibility for lifes hiccups.

I'm not a Banker and I have always gone for the longest term possible. It depends on your attitude to risk I suppose. I can get a better return on my money elsewhere than the standard SVR.

The_Conductor

Frank Lee Midere wrote: »

I haven't seen that offered anywhere. A 34 year old would be paying until he was 69, nearly 70.

Well- pension age has been increased to 68- and is due to be increased to 70 for both men and women, according to plans. So- they'd still be working- only in retirement would the mortgage no longer feature- which seems fair enough. Working until you're 70 doesn't seem very fair to me though (but it is what we've signed up to).

cdeb

StillWaters wrote: »

I'm not a Banker and I have always gone for the longest term possible. It depends on your attitude to risk I suppose. I can get a better return on my money elsewhere than the standard SVR.

The point wasn't about return though, it was about driving house prices up.

35-year mortgages drive house prices up. Therefore they're a bad thing.

When it comes to getting something for cheaper, then that outweighs any consideration of return.

StillWaters wrote:

So- they'd still be working- only in retirement would the mortgage no longer feature- which seems fair enough.

How is that possibly "fair enough"?

StillWaters

cdeb wrote: »

The point wasn't about return though, it was about driving house prices up.

35-year mortgages drive house prices up. Therefore they're a bad thing.

Lots of things drive prices up and are good things, economic growth, rising population, people living longer etc. I know we have been scarred by the bubble, but to say rising house prices and contributing factors = bad is nonsensical.

Geuze

After a massive financial crisis, we still haven't learned.

Mortgage duration must be limited, by law. Experience has shown that borrowers are over-optimistic about the future, and borrow too much, over too long.

The max mortgage duration should be 25y, in my opinion.

35y and 40y mortgages, with low monthly repayments, only lured borrowers into a false sense of security.

30y - 40y mortgages contributed to rising house prices, which was the worst thing to happen to Ireland.

If limiting duration, means smaller loans, and less credit available, so be it.

Geuze

Similarly, the LTV should be limited, by law.

Max 80-85% LTV.

This means larger deposits, less debt.

If limiting LTVs means smaller loans, and less credit available, so be it.