So who played the housing market and Lost?

Zascar

As per the other thread about who won, lets see who lost. I'm sure most peoples stories are way way worse than mine - but I bought a very small apartment in 2004 for €130k - like everyone I was just trying to get a foot on the ladder. 12 years later and it's still only worth €60k. At the start I was making a decent profit on it, but since 2008 when the rents fell, it's been costing me several hundred a month to top up the mortgage, with all the fees, charges and taxes on top of it. What's annoying is that I know people who bought in 2007/2008, went massively negative equity but are back above water now - but I've got a long way to go as I bought in one of the worse hit places.

So who else lost?

Toots

I wouldn't quite say 'played the market' but my husband and I bought our apartment in 2006 - 1 bed, south dublin, €330k. We intended to live in it for 5 years or so (I was 20, he was 22) and then move into something bigger and start a family etc. At the time our mortgage repayment was about €200 less than we would have paid to rent a similar property, so it was a no-brainer, or so it seemed. Then the crash happened, so not only did we end up in negative equity to the tune of about half the property value, but my husband also lost his job, so we were on 'interest only' for about a year.

So now, 10 years later, the negative equity isn't quite as bad, but still nowhere near the point where we could afford to sell it. We've since had a child, and we all sleep in the one bedroom, which isn't ideal, but IKEA has helped us make it work (there's even enough room for the dog). I actually really love the apartment, the development is lovely and well maintained, and the area we are in is where we grew up - we're about 10 mins away from both our parents - so it could definitely be a lot worse. Especially considering the rental crisis, I'm very grateful to own my own place, albeit a small place. If we just had another bedroom or two, I'd be happy to stay here for good.

bigpink

Toots wrote: »

I wouldn't quite say 'played the market' but my husband and I bought our apartment in 2006 - 1 bed, south dublin, €330k. We intended to live in it for 5 years or so (I was 20, he was 22) and then move into something bigger and start a family etc. At the time our mortgage repayment was about €200 less than we would have paid to rent a similar property, so it was a no-brainer, or so it seemed. Then the crash happened, so not only did we end up in negative equity to the tune of about half the property value, but my husband also lost his job, so we were on 'interest only' for about a year.

So now, 10 years later, the negative equity isn't quite as bad, but still nowhere near the point where we could afford to sell it. We've since had a child, and we all sleep in the one bedroom, which isn't ideal, but IKEA has helped us make it work (there's even enough room for the dog). I actually really love the apartment, the development is lovely and well maintained, and the area we are in is where we grew up - we're about 10 mins away from both our parents - so it could definitely be a lot worse. Especially considering the rental crisis, I'm very grateful to own my own place, albeit a small place. If we just had another bedroom or two, I'd be happy to stay here for good.

Wow thats so young to buy a place.How did ye get the loan?

L1011

bigpink wrote: »

Wow thats so young to buy a place.How did ye get the loan?

2006.

There's your answer.

Toots

L1011 wrote: »

2006.

There's your answer.

Pretty much that in a nutshell. My hubby and I were on decent enough money, but we still were well short of what we needed, so my dad offered to go on the mortgage with us.

The real kicker was that we bought about 6 months before they brought in the stamp duty exemption for first-time-buyers. That's ten grand I'll never see again

draiochtanois

This post has been deleted.

riclad

IF you bought a house outside dublin , in a rural area , in the boom ,
you are probably 50-40 per cent in negative equity .There are people in dublin who are still in negative equity ,but at least house prices are
rising in dublin.
The tax system has no mercy on landlords,
ie you can be on negative equity,.
rent is less than the mortgage and you will still get a tax bill for
Some imagined profit on the rental home.
As you only get a tax allowance for 75 per cent of the interest on the loan.
And of course some people are stuck in 1 bed units ,
as negative equity stops them from moving to a larger home.

Toots

draiochtanois wrote: »

This post has been deleted.

I don't know do I blame anyone really. I mean, obviously all of us sharing a bedroom isn't ideal, but really it's the only thing I'd change about where I live. I don't 'regret' buying it. Obviously I wish we'd paid a lot less for it, but at the end of the day, at least I've got a roof over my head that's not subject to the whim of some vulture fund raising the rent to an unaffordable level, or deciding to sell the place out from under me.

I could 'blame' the bank (who I worked for at the time) for lending me such a huge amount of money, but I was the one who applied for the mortgage. I don't think anyone back then would have thought for a moment that things would go the way they did. It never entered my head that we'd be stuck in a situation where we wouldn't be able to sell the apartment.

As I said, the rents at the time were astronomical. The apartment next door to mine is smaller and has a tiny balcony, and at the time it was renting out for €1350 per month. My mortgage was €1100ish. Property prices were skyrocketing and I suppose there was an element of fear that if we didn't buy something then, we'd never have been able to afford anything. Less than a year after we moved in, the price of a 1 bed in our development had gone up to €390k.

My one regret really is that my dad's name is on our mortgage. We were told at the time we took the mortgage, that we'd have to put Dad's name on it to get the multiple, and then after a year we could have his name removed. Well 12 months later, when I got on to the mortgage department to sort it out, they denied flat out that I'd been told this, and told us that we couldn't remove his name until we were earning enough to qualify for the amount outstanding on our own. It does worry me that if something was to happen to myself and my husband, which left us with no income (if we pop our clogs the life insurance will cover the mortgage) that the bank would come after my dad for the money.

The sad thing is that the whole property bubble thing looks to be happening again - shortage of places to rent and prices of places for sale getting higher and higher. I assume that at some point in the future there'll be another crash, so hopefully by the time we get through the next recession I'll be in better shape financially, so we can take advantage of the post-crash house prices and maybe get my son into his own bedroom before his 21st birthday :pac:

newacc2015

I think the biggest losers are BTL investors who had a bad period in recent years ie a few late payments on their mortgage and therefore have a bad credit rating. I know tons of landlords with low LTV on their BTL properties but cant switch banks due to their bad credit rating. Some are completely screwed over by their banks ie I know a few investors with a mortgage rate of 5.8% on their properties, which is variable rate. The same bank is offering loans to residential customers at 3.2% with the same LTV. You can guess who is paying for the banks tracker mortgages

BTL investors are being screwed over by their banks. If you default on a BTL mortgage, your bank can put your property into "receivership" and sell it for whatever they like. You have to pay the shortfall despite them possible selling your property for below value. This is not hypothetical situation and this has happened

Banks can repo a BTL house with little resistance from the courts compared to a normal residential mortgage. Despite this BTL investors are being charged an arm and a leg for mortgages

4ensic15

newacc2015 wrote: »

I think the biggest losers are BTL investors who had a bad period in recent years ie a few late payments on their mortgage and therefore have a bad credit rating.

The biggest losers are developers who bought sites at massive prices and then couldn't develop them. They had borrowings on sites and no income at all coming in. Many ended up bankrupt with no earnings, a destroyed credit record and no way back.

intheclouds

I lost twice really.

1. Bought an apartment in 2005, mortgage was same as rent, seemed like a no brainer. I clearly remember the bank trying to encourage me to borrow more, get a house, rent a room out. Mad times. Thought I'd be in it 5 years. 11 years later I'm still here and it's worth about 75% of what I paid for it. Am at about the break even state in that if I sold it it'd just cover the outstanding mortgage on it.

2. Inherited the family home with a sibling in 2007. Absolute height of the boom. An uncle was executor and he deliberately dragged his feet and wouldn't deal with the estate. Took 3 years of solicitors letters to get him to move on it. Finally put it on the market when the prices had crashed low and ended up reducing price again to sell. What could have cleared my mortgage ended up being a pittance. Thems the breaks.

I don't blame anyone but I resent those who claim that anyone who bought in those days was trying to turn a quick buck. I was simply crippled by rent and wanted my own place. No plans of making a quick buck or "fooling the bank" into lending me really crazy money.

It's all just a matter of timing. Had I bought 2 years earlier I wouldn't have been stung so much, had I bought 2 years later I'd have been stung worse.

Personally I have recovered financially, there's many who haven't.

bigpink

L1011 wrote: »

2006.

There's your answer.

Yes but 20 and 22

riclad

Prices have Been going up in dublin for years due to lack of supply,
Dublin needs at least 10,000 houses built every year ,
theres much less than that being built.
The cost of the crash is being passed onto the taxpayer ,
we are still paying back money borrowed from the eu to stabilise the banks.We will be paying the cost of the crash for 20 years from now.

Toots

bigpink wrote: »

Yes but 20 and 22

We'd both been working full time for over 2 years at that point. Obviously we were far younger than the average buyer, but in terms of being able to apply for a mortgage, we met all the criteria and were able to repay etc. I think our repayments were something like 35% of our take home pay every month.

dori_dormer

Bought an apartment in 2005 in a decent commuter town outside Dublin for 255000. Lived in it for 5yrs before OHs job had us travelling abroad for most of the next 3. was crippled by crap rental income and non residents tax, crap management company. When we came home we decided we needed to sell. We had minimal savings due to throwing all spare cash at the mortgage to get it out of negative equity. Mortgage was at 140 and we were literally hoping to break even and run away.. eA was hoping for 150. We had a baby and that delayed us putting it on the market by 6 months. In that time prices had a small bounce back and we put it on the market for 180. Sold for 188 thanks to a small bidding war. I couldn't believe we walked away with a lump sum. Nothing close to what we'd put into it but still it helped towards buying our house. Apartments in the area are still only selling for the 200 mark so I think we did alright in the end! Only lost out on about 100k......

Smoked Tuna

It's crazy how people have lost or gained so much money (whether in equity or cash) on the property roller coaster.

Its not a good thing either way.

Zascar

newacc2015 wrote: »

I think the biggest losers are BTL investors who had a bad period in recent years ie a few late payments on their mortgage and therefore have a bad credit rating. I know tons of landlords with low LTV on their BTL properties but cant switch banks due to their bad credit rating. Some are completely screwed over by their banks ie I know a few investors with a mortgage rate of 5.8% on their properties, which is variable rate. The same bank is offering loans to residential customers at 3.2% with the same LTV. You can guess who is paying for the banks tracker mortgages

This is a good point. I'm a BTL investor but I have never missed a mortgage payment, however i have never shopped around for a better rate either. I actually have no idea how much interest I'm paying but I'm, sure it's on a variable. Is there decent savings to be had, what should I do? I thought I can't swap if I'm negative equity?

L1011

bigpink wrote: »

Yes but 20 and 22

I was offered a significant mortgage at 19 in 2006. Nearly everyone had gone insane, banks included.

ongarboy

Zascar wrote: »

This is a good point. I'm a BTL investor but I have never missed a mortgage payment, however i have never shopped around for a better rate either. I actually have no idea how much interest I'm paying but I'm, sure it's on a variable. Is there decent savings to be had, what should I do? I thought I can't swap if I'm negative equity?

I'm not sure there's much shopping around opportunities these days. I bought in 2005 on a tracker ECB + 2% rate from my bank. In 2007, NIB (remember them!) had ads asking mortgage holders to switch to their trackers offering just ECB + 0.5%. I called my bank's bluff and said NIB would take my mortgage if they didn't match their rate even though I hadn't even applied to NIB at that stage or gotten any gauranteed they would take it! My bank came back with an ECB + 0.75% compromise offer which I happily accepted as I didn't want to go through the whole transfer process and I've been on that tracker rate ever since. I also still have mortgage interest relief for buying between 2004 and 08.

While it's great that my interest rate has been 0.75% for ages now as ECB is at 0%, I only came out of negative equity this year and if I was to sell in the morning, I'd still take a 60k loss on what I originally paid for. I would be mad to sell right now as I could rent my place for 2.5 times what my mortgage is which is reassuring but more importantly, I like my place, location and am happy to be here for foreseeable future.

So while I certainly didn't play the market, I feel I haven't won or lost as such and while I'd make a sizeable loss on selling today, other factors such as the fantastic tracker rate I'm on take the sting out of my circumstances!

Godge

newacc2015 wrote: »

I think the biggest losers are BTL investors who had a bad period in recent years ie a few late payments on their mortgage and therefore have a bad credit rating. I know tons of landlords with low LTV on their BTL properties but cant switch banks due to their bad credit rating. Some are completely screwed over by their banks ie I know a few investors with a mortgage rate of 5.8% on their properties, which is variable rate. The same bank is offering loans to residential customers at 3.2% with the same LTV. You can guess who is paying for the banks tracker mortgages

BTL investors are being screwed over by their banks. If you default on a BTL mortgage, your bank can put your property into "receivership" and sell it for whatever they like. You have to pay the shortfall despite them possible selling your property for below value. This is not hypothetical situation and this has happened

Banks can repo a BTL house with little resistance from the courts compared to a normal residential mortgage. Despite this BTL investors are being charged an arm and a leg for mortgages

If you BTL, you are in business. Some businesses succeed, some fail. That is capitalism, I have no sympathy.

Similarly, I have no sympathy for those who bought outside a city or large town as it was already clear a decade ago that city living was the future.

Negative_G

I've heard many different people say over the years that they could 'never see it coming' and I've always found it hard to believe.

Can people honestly believe that the lead up to the boom was sustainable. To be fair, I don't think many could have forecast just how bad it was but to say that you could never see it coming is a bit naive in my opinion.

I considered purchasing at the time but thankfully avoided it with some consideration.

One of the biggest warning signs to me was seeing people I went to school with who barely passed their leaving cert driving almost new high end cars and buying houses for 350k+.

TheDoc

Negative_G wrote: »

I've heard many different people say over the years that they could 'never see it coming' and I've always found it hard to believe.

Can people honestly believe that the lead up to the boom was sustainable. To be fair, I don't think many could have forecast just how bad it was but to say that you could never see it coming is a bit naive in my opinion.

I considered purchasing at the time but thankfully avoided it with some consideration.

One of the biggest warning signs to me was seeing people I went to school with who barely passed their leaving cert driving almost new high end cars and buying houses for 350k+.

Yeah I've never bought it either.

I took what I felt was a prudent decision not buying and going into the rental market. Was with my GF longterm but we had never lived together, so we decided to make sure that would work and then we could keep saving.

I had no issues with mortgage approval. Crash came, rental market then went out of control and my savings got obliterated and now the Central bank regs have me struck out of home ownership for the time being. Not bothering with savings until I see some changes there.

Have to say thought find it hard to generate sympathy for many cases I hear or know. Similar to you, I know people who just lost the run of themselves, and just because a bank said yes they never even quesitoned if it was a good idea.

Too many people had the expectations that the banks would advise you on your own personal finances.

intheclouds

Negative_G wrote: »

I've heard many different people say over the years that they could 'never see it coming' and I've always found it hard to believe.

Can people honestly believe that the lead up to the boom was sustainable. To be fair, I don't think many could have forecast just how bad it was but to say that you could never see it coming is a bit naive in my opinion.

I considered purchasing at the time but thankfully avoided it with some consideration.

One of the biggest warning signs to me was seeing people I went to school with who barely passed their leaving cert driving almost new high end cars and buying houses for 350k+.

Naive? Every bank in the country was telling people that they should borrow more and more. I remember my brother in law telling me that it was ok for him to borrow the amount he did because the bank said it was ok - as though the bank was some kind of impartial financial advisor. The thing is, plenty of people would have viewed the banks in that light.

Sure, house prices were not going to keep rising. But people were afraid that if they didnt buy somewhere along the line, if a crash happened theyd never be lent money to buy and theyd end up renting forever - and maybe unable to start a family because of it.

I know people who bought purely because they wanted to start their families and didnt want the uncertainty of the rental market and having to change kids schools etc... With female fertility limited they couldnt wait for the bubble to burst or anything like that.

Not surprisingly, many people are not economists, do not study property markets, are not well versed in boom/bust signs etc...they just want to buy a home when the time is right for them to buy a home.

meeeeh

A lot of people actually got lucky because they got trackers. Ours is either 0.8 or 0.6 so while nobody wants to be in negative equity but if you don't want to move and can service a mortgage you are actually onto a winner. What does it matter if you 100 grand more on the same house if you will pay 50 less over the lifetime of the mortgage because the rate is so much lower.

karenalot

ongarboy wrote: »

I bought in 2005.

I only came out of negative equity this year and if I was to sell in the morning, I'd still take a 60k loss on what I originally paid for.

So while I certainly didn't play the market, I feel I haven't won or lost as such and while I'd make a sizeable loss on selling today, other factors such as the fantastic tracker rate I'm on take the sting out of my circumstances!

You also would have had to pay rent elsewhere for the last 11 years. I'd imagine that would add up to be more than the 60k loss.

Negative_G

intheclouds wrote: »

Naive? Every bank in the country was telling people that they should borrow more and more.

Take some personal responsibility. The banks lost the run of themselves, no doubt, but they never put a gun to anyone's head.

It doesn't take a genius or an economist to work out that taking out a 350k mortgage between a self employed tradesman and a hairdresser is a bad idea. Im using a very generic example but it applies to many scenarios. It could apply to any job in reality.

It would seem the simple question of "If I/we lose employment for whatever reason , how do I pay my mortgage" didn't occur to many people. It doesn't take an expert or economist to figure it out.

There were alot of variables in the crash. The government, the media, the regulator, developers and the banks to name but a few. However, I've yet to hear of anyone being forced to buy a house by any of the above.

I've come across many who are quick to point the finger at anyone but themselves but refuse to acknowledge their own mistakes.

intheclouds

Negative_G wrote: »

Take some personal responsibility. The banks lost the run of themselves, no doubt, but they never put a gun to anyone's head.

It doesn't take a genius or an economist to work out that taking out a 350k mortgage between a self employed tradesman and a hairdresser is a bad idea. Im using a very generic example but it applies to many scenarios. It could apply to any job in reality.

It would seem the simple question of "If I/we lose employment for whatever reason , how do I pay my mortgage" didn't occur to many people. It doesn't take an expert or economist to figure it out.

There were alot of variables in the crash. The government, the media, the regulator, developers and the banks to name but a few. However, I've yet to hear of anyone being forced to buy a house by any of the above.

I've come across many who are quick to point the finger at anyone but themselves but refuse to acknowledge their own mistakes.

Im not really sure what personal responsibility you mean?

I actually know a self employed plumber and shop assistant who got a mortgage of 500k on a property thats now worth probably 250k.

They went to the bank and showed their earnings and savings and the bank stress tested them and said they passed the criteria. Where would you have expected them to do something differently?

When does anyone force anyone to buy a house? I dont see how thats relevant. They wanted to buy a house, they had a child, and the bank told them the numbers were ok. I really dont see how you can claim that they should take personal responsibility for that.

Dardania

intheclouds wrote: »

Negative_G wrote: »

Take some personal responsibility. The banks lost the run of themselves, no doubt, but they never put a gun to anyone's head.

It doesn't take a genius or an economist to work out that taking out a 350k mortgage between a self employed tradesman and a hairdresser is a bad idea. Im using a very generic example but it applies to many scenarios. It could apply to any job in reality.

It would seem the simple question of "If I/we lose employment for whatever reason , how do I pay my mortgage" didn't occur to many people. It doesn't take an expert or economist to figure it out.

There were alot of variables in the crash. The government, the media, the regulator, developers and the banks to name but a few. However, I've yet to hear of anyone being forced to buy a house by any of the above.

I've come across many who are quick to point the finger at anyone but themselves but refuse to acknowledge their own mistakes.

Im not really sure what personal responsibility you mean?

I actually know a self employed plumber and shop assistant who got a mortgage of 500k on a property thats now worth probably 250k.

They went to the bank and showed their earnings and savings and the bank stress tested them and said they passed the criteria. Where would you have expected them to do something differently?

When does anyone force anyone to buy a house? I dont see how thats relevant. They wanted to buy a house, they had a child, and the bank told them the numbers were ok. I really dont see how you can claim that they should take personal responsibility for that.

Doesn't sound like they've tried to pass off responsbility on anyone else?

Negative_G

intheclouds wrote: »

Im not really sure what personal responsibility you mean?

I actually know a self employed plumber and shop assistant who got a mortgage of 500k on a property thats now worth probably 250k.

They went to the bank and showed their earnings and savings and the bank stress tested them and said they passed the criteria. Where would you have expected them to do something differently?

When does anyone force anyone to buy a house? I dont see how thats relevant. They wanted to buy a house, they had a child, and the bank told them the numbers were ok. I really dont see how you can claim that they should take personal responsibility for that.

What you are saying here is essentially 'the bank said it was okay so we only did what the banks said'. When you're dealing with hundreds of thousands of euro, that attitude simply isn't good enough.

I would have expected them to take a short amount of time and figured out how they would be able to keep a roof over their head if for whatever reason one of them lost their job. Its called contingency planning.

I fear this is going to go around in circles.

I argued whether people could actually, hand on heart, say that they never saw it coming. People had blinkers on.

You seem to think the burden lies on the banks because they said it was okay. I don't agree.

I could see the madness as a teenager. I understood that economies were cyclical and I could clearly see everywhere I went that the economy was heavily reliant on the construction industry and as a result, the housing industry. There was plenty of people at the time who were waving their arms about how delicate the situation was becoming but too many people just wanted to keep the good times rolling.

meeeeh

Negative_G wrote: »

I could see the madness as a teenager. I understood that economies were cyclical and I could clearly see everywhere I went that the economy was heavily reliant on the construction industry and as a result, the housing industry. There was plenty of people at the time who were waving their arms about how delicate the situation was becoming but too many people just wanted to keep the good times rolling.

Abd luckily as a teenager you didn't need to make any decisions about anything so it was easy to see things clearly.

Yes personal responsibility comes into play and yes people were going over the top every where. But once you have the mass madness it's easy to get swept in and I know very few in people of a certain generation that didn't get into it. So it's a lot more likely you were the wrong generation and managed to stay out than due to any other reason.

intheclouds

Negative_G wrote: »

What you are saying here is essentially 'the bank said it was okay so we only did what the banks said'. When you're dealing with hundreds of thousands of euro, that attitude simply isn't good enough.

Why not? Why do banks bother having stress testing if it doesnt, you know, stress test?

Negative_G wrote: »

I would have expected them to take a short amount of time and figured out how they would be able to keep a roof over their head if for whatever reason one of them lost their job. Its called contingency planning.

They did contingency plan, they kept a few bob saved to cover lack of work. Same as anyone taking out a mortgage at any time - Im not sure what point you are trying to make here? Neither of them lost their jobs?

Negative_G wrote: »

I fear this is going to go around in circles.

I argued whether people could actually, hand on heart, say that they never saw it coming. People had blinkers on.

You seem to think the burden lies on the banks because they said it was okay. I don't agree.

They didnt see it coming. Most people didnt.

Of course the burden of lending lies with the lender - are you trying to tell me that the ordinary punter who applies for a bank loan is expected to be a financial analyst?

Negative_G wrote: »

I could see the madness as a teenager. I understood that economies were cyclical and I could clearly see everywhere I went that the economy was heavily reliant on the construction industry and as a result, the housing industry. There was plenty of people at the time who were waving their arms about how delicate the situation was becoming but too many people just wanted to keep the good times rolling.

Arent you great? You were only a teenager, you probably didnt have decisions to make about fertility, raising children near good schools, rental uncertainty, you had time to be a junior economist because you werent working 60 hour weeks to feed the kids.

It really was not about keeping "the good times rolling" for most ordinary people - and if thats how you remember it you clearly did not see the bigger picture. The "good times rolling" attitude was coming from the government, developers, banks and plenty of "speculators" but for most ordinary people who were just trying to put a roof over themselves or their kids heads there was nothing about keeping good times rolling.

Your analysis of it seems naive to me, possibly because you were a teenager then so you really didnt understand the many reasons why people want to own their own property and why it seemed grand if the bank said it was ok. Banks were literally pushing people into higher loans and when a man in a suit stood in front of you saying the higher loan made MORE sense - why would you expect most people to argue that it didnt?