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

lima

Daith wrote: »

Yeah agreed. Take people from the family home? Madness and political suicide

Completely fair and normal political decisions should not have to be political suicide. The people who remained frugal should not have to be punished for the collective greediness of a nation.

Only in oiiahhherrland.

jay0109

Daith wrote: »

Yeah agreed. Take people from the family home? Madness and political suicide

I would'nt call it madness, more like realism in a lot of cases. And fairness for the greater society.

But just can't see it happening

cookie1977

Fitch seem to be hedging their bets in every direction:
http://www.rte.ie/news/business/2013/1217/493337-irish-banks/

On the property market, Fitch also said it believes repossessions will be used as a last resort, as banks are showing "willingness" to work with borrowers to achieve the best outcome for both sides.
It said it expects loan impairment charges to stabilise and then fall gradually and non-performing loans to peak next year.
"A reducing unemployment rate and changes in legislation, including the credible threat of home repossession, could help improve asset quality," it said.

Villa05

cookie1977 wrote: »

Fitch seem to be hedging their bets in every direction:
http://www.rte.ie/news/business/2013/1217/493337-irish-banks/

Even as a last resort, there still would need to 20000+ repossesions or voluntary sales. Thats the impact of doing nothing for so long.

cookie1977

Villa05 wrote: »

Even as a last resort, there still would need to 20000+ repossesions or voluntary sales. Thats the impact of doing nothing for so long.

Only time will tell. Needs and wants are very different things.

Villa05

There are 40k and growing in arrears over 2 years....!

cookie1977

Villa05 wrote: »

There are 40k and growing in arrears over 2 years....!

And as I've said before. We're unwilling to deal with low hanging fruit like BTL's while the troika were supervising. What really makes people believe we'll suddenly start dealing with pdh arrears now the Troika have gone? Honest question that.

leinsterdude

Anyone here in arrears ? I am.......3.5k

cookie1977

leinsterdude wrote: »

Anyone here in arrears ? I am.......3.5k

No thankfully. Sorry to hear that. Want to share with us your experiences with the banks on this?

lima

cookie1977 wrote: »

No thankfully. Sorry to hear that. Want to share with us your experiences with the banks on this?

I'm surprised, since you are so pro-helpthepeoplewhowontpaytheirdebts

lima

cookie1977 wrote: »

And as I've said before. We're unwilling to deal with low hanging fruit like BTL's while the troika were supervising. What really makes people believe we'll suddenly start dealing with pdh arrears now the Troika have gone? Honest question that.

Which is why we shouldn't trust the govt.. honestly the trioka shouldn't have left. Come back!

murphaph

lima wrote: »

Which is why we shouldn't trust the govt.. honestly the trioka shouldn't have left. Come back!

Maybe you'll get your cheap house next time we have to call them in lima :pac: Until then I'm afraid the normal course of action will not take place and fewer and fewer banks will go near the Irish mortgage market, driving up interest rates in the process.

Glad I live in Germany tbh. 3.5% fixed for 20 years readily available right now. Low risk for the banks: don't pay your mortgage and you won't keep your house. Exact opposite in Ireland so expect interest rates to skyrocket.

I wonder do many of the existing mortgage holders realise that they will be paying over the odds rates (in a Eurozone context) because banks can't repossess their neighbour's house that's massively in arrears?

Daith

murphaph wrote: »

I wonder do many of the existing mortgage holders realise that they will be paying over the odds rates (in a Eurozone context) because banks can't repossess their neighbour's house that's massively in arrears?

Well as long as house prices go up up up right?

gaius c

cookie1977 wrote: »

And as I've said before. We're unwilling to deal with low hanging fruit like BTL's while the troika were supervising. What really makes people believe we'll suddenly start dealing with pdh arrears now the Troika have gone? Honest question that.

I refer you to an earlier post of mine:

gaius c wrote: »

Herbert Stein's Law: "If something cannot go on forever, it will stop,"

The fact that the state has diverted so much effort into defying the inevitable just means that it's going to be so much more painful when it does stop.

gaius c

murphaph wrote: »

Maybe you'll get your cheap house next time we have to call them in lima :pac: Until then I'm afraid the normal course of action will not take place and fewer and fewer banks will go near the Irish mortgage market, driving up interest rates in the process.

Glad I live in Germany tbh. 3.5% fixed for 20 years readily available right now. Low risk for the banks: don't pay your mortgage and you won't keep your house. Exact opposite in Ireland so expect interest rates to skyrocket.

I wonder do many of the existing mortgage holders realise that they will be paying over the odds rates (in a Eurozone context) because banks can't repossess their neighbour's house that's massively in arrears?

Excellent point. If mortgages are going to become unsecured debt then people should expect to pay credit card-level interest rates on that debt.

cookie1977

gaius c wrote: »

I refer you to an earlier post of mine:

So quotes aside do you still think there will be a glut of repossessions resulting in another drop in property prices?

cookie1977

gaius c wrote: »

Excellent point. If mortgages are going to become unsecured debt then people should expect to pay credit card-level interest rates on that debt.

Except you forget in "normal" economies like Germany they have proper bank governance so that a bank only gives out what it and the person can afford and nothing more. There's proper governmental oversight to stop the banks taking crazy risks on credit. So in the end you dont cause a crash in the economy.

I too would love to see that in Ireland from now on. But first we've got to deal with the mess that is now, caused, not solely by people taking more money then they probably should have but rather a complete failure in the system which has resulted in the tax payer picking up the tab. But that's probably for another discussion.

gaius c

cookie1977 wrote: »

So quotes aside do you still think there will be a glut of repossessions resulting in another drop in property prices?

They will increase but political pressure may see them drawn out over a longer period of time, which would give rise to another set of unforeseen consequences like all their previous efforts at market interference.

cookie1977

gaius c wrote: »

They will increase but political pressure may see them drawn out over a longer period of time, which would give rise to another set of unforeseen consequences like all their previous efforts at market interference.

Probably correct but I suspect the courts themselves will also not be very quick processing them. Just looking at the CB stats it seems to me that there's a bottle neck in the courts at present even with the numbers that are going through now.

gaius c

cookie1977 wrote: »

Probably correct but I suspect the courts themselves will also not be very quick processing them. Just looking at the CB stats it seems to me that there's a bottle neck in the courts at present even with the numbers that are going through now.

And while this delay might prevent a "collapse" in prices, it would make the process longer.

In business, when there's a bill to be paid, putting it off till another day never makes that bill go away. Best case scenario is that you just pay what you put off but often, there are extra costs associated with can kicking.

The current strategy might enable the banks to trade their way out of trouble but it's passing the cost onto everybody else by making accommodation artifically expensive and this will impact our cost base & general competitiveness.

gaius c

One unintended consequence we might see would be if a "no PPR left behind" policy is followed, while BTL's get liquidated out of hand, would that that BTL interest rates would end up being lower than the "riskier" PPR loans and thus make it even harder for FTB's to compete with BTL.

cookie1977

gaius c wrote: »

One unintended consequence we might see would be if a "no PPR left behind" policy is followed, while BTL's get liquidated out of hand, would that that BTL interest rates would end up being lower than the "riskier" PPR loans and thus make it even harder for FTB's to compete with BTL.

I might not be following you correctly but again, considering we haven't gone after BTL's at all, despite the fact that they have to be the easier arrears to deal with, I dont see how this would happen.

Another thing is that we have to consider in a "properly run" mortgage/banking market the banks wouldn't be lending crazy amounts to people which could turn out in the future to be impaired loans and if we take this as what will happen from now on (I live in hope) I dont see how we could end up in your situation. Yes we will still have all the bad mortgages to slowly work through now, but hopefully we wont repeat the bad lending practices again on new mortgages being given out at present and into the future.

Victor

lima wrote: »

I'm surprised, since you are so pro-helpthepeoplewhowontpaytheirdebts

Constructive posts only please.

Moderator

gaius c

cookie1977 wrote: »

I might not be following you correctly but again, considering we haven't gone after BTL's at all, despite the fact that they have to be the easier arrears to deal with, I dont see how this would happen.

Another thing is that we have to consider in a "properly run" mortgage/banking market the banks wouldn't be lending crazy amounts to people which could turn out in the future to be impaired loans and if we take this as what will happen from now on (I live in hope) I dont see how we could end up in your situation. Yes we will still have all the bad mortgages to slowly work through now, but hopefully we wont repeat the bad lending practices again on new mortgages being given out at present and into the future.

Then our banks will remain crippled and dependent on Draghi's life support and it would be dangerous to assume that can continue indefinitely.

lima

Villa05 wrote: »

Even as a last resort, there still would need to 20000+ repossesions or voluntary sales. Thats the impact of doing nothing for so long.

Yeah so even with vested interests lobbying for people to not pay their mortgage and live in their homes for free, we can expect 20,000 repossessions to happen this coming year, which will be great news for a lot of people struggling with trying to buy a family home.

cookie1977

Villa05 wrote: »

Even as a last resort, there still would need to 20000+ repossesions or voluntary sales. Thats the impact of doing nothing for so long.

Re PDH: According to the central bank stats, last quarter there was 76 repossessions on foot of a court order and and 132 voluntarily surrendered/abandoned during the quarter and already in banks hands was 1002 since the start of this year. After the end of the quarter there was 1050 in banks hands following disposal of 158. And again that's when the Troika where in charge.

http://www.centralbank.ie/polstats/stats/mortgagearrears/Pages/releases.aspx

You now think that we will will get to 20,000 repossessions or voluntary surrendered/abandoned over what period? And all this is possible after the Troika have left?

Re BTL's the figures are worse: According to the central bank stats, last quarter there was 31 repossessions on foot of a court order and and 31 voluntarily surrendered/abandoned during the quarter and already in banks hands was 502 since the start of this year. After the end of the quarter there was 516 in banks hands following disposal of 47.

Villa05

@cookie

I think its irrelevant at this point,
Option 1
If repossessions happen it will increase supply and prices will drop, however the banks will be cleansed and allowed to start afresh allowing sustainable low growth with tighter regulation from EU to prevent future credit bubbles.

Option 2
If repossessions are not allowed to happen, losses will increase, mortgage rates on paying customers will increase pulling more into the arrears crisis, Strategic defaulters get away with it, Mortgage lending becomes high risk -> deterring new entrants -> reducing mortgage lending -> increased pressure on interest rates

Option 1 is negative for house prices in the short term, however as the issue is repaired. House prices will stabilise and probably rise with inflation/economic recovery.

Option 2 is negative for house prices full stop, in addition banks remain in their zombie state. Lending to viable business drys up. Genuine distressed borrowers are in limbo unable to adequately plan for the future. Strategic defaulters win.
Construction of new houses will not happen as banks will not lend for this purpose, purchasers will not buy off plan. Construction workers remain on the dole.

To me it feels like Ireland is in a live experiment in reverse evolution so house prices will become less relevant and the burning issue will be the abundance of trees because the road we are travelling, thats where we will be eventually living.

cookie1977

But what about the fact that the rates of new arrears are slowing down (see CB report linked to before). I agree strategic defaulters (I've no idea how many there are) are going to benefit but this all suits banks. No need to crystallise debts, property prices rising, no need to do deals on manageable debts, no need to spend vast money on repossessions. It is crazy but I don't see it changing until possibly euro rates rise.

But to comment on you points, do you really see repossessions rise to 20K+ and if so over what period because that is possibly a 10 fold increase over current rates. On option 2 there's now "talk" of something coming back to people from the government which may offset some of what you think might happen.

I'm not totally disagreeing with your points but as it currently stands it's difficult to see how what you think might happen could infact happen.

Villa05

Im not saying it will happen, rather it has to happen at a minimum, otherwise option 2 is our future.
Ref new arrears, no trend occurs in a straight line.
Ref goodies, there will be no tax cuts while we have a dysfunctional health system and paying 9 billion in interest payments on our debt at CURRENT LOW % RATES. What happens when they increase

lima

I think popular opinion is that people are getting sick of seeing people living in their houses for free and not paying mortgages that they walked into banks and asked for themselves. More and more people are getting sick of it and these vested-interest lobby groups are getting quieter and quieter. I expect that we will see more and more repossessions and (fingers crossed) this will happily have an impact on house prices, lowering them to their true worth.