Property Market 2018

Cyrus

Samuel T. Cogley wrote: »

Considering KBC were (and are for a few more days only) offering 10 years at 2.99% I think you're wrong

should i be boasting about my 2.5% over 5 years with UB :cool:

draiochtanois

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Cyrus

draiochtanois wrote: »

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really? i changed from a fixed BOI mortgage that i took out late last year to UB to avail of the better rate and there was no break cost :pac:

seamus

draiochtanois wrote: »

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That's not really correct to say.

Yes they lock in funding, but they also illustrate the bank's confidence in where they expect interbank rates to go.

The bank itself is paying interest on the money that you've borrowed. So if they're willing to lock in rates for you, then they believe that the locked-in rate is going to generate profit for the bank over that fixed life - i.e. that your interest rate is higher than the bank's.

This is why they've been so desperate to get rid of trackers; because the customers were paying less interest on their mortgage than the bank was.

So offering a low fixed rate over a long-term is an indication that the bank does not expect rates in general to rise by an appreciable amount over that period.

draiochtanois

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Samuel T. Cogley

Samuel T. Cogley wrote: »

Considering KBC were (and are for a few more days only) offering 10 years at 2.99% I think you're wrong

time will tell

seamus wrote: »

..........

So offering a low fixed rate over a long-term is an indication that the bank does not expect rates in general to rise by an appreciable amount over that period.

Indeed, a fairly simple concept.

Cyrus

draiochtanois wrote: »

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no but it was the case in that situation, you arent necessarily locked into a fixed rate mortgage, people think you are

Rew

Cyrus wrote: »

no but it was the case in that situation, you arent necessarily locked into a fixed rate mortgage, people think you are

I tried to exit my fixed rate in 09/10, the break out fees were 25-30k

Cyrus

Rew wrote: »

I tried to exit my fixed rate in 09/10, the break out fees were 25-30k

the way they calc those fees has changed now as well, before it was a free for all :rolleyes:

Like has been mention here before the Central bank is now warning about PCPs being a threat to the banking system.

Many examples of sub-prime lending around PCPs added to the downwards pressure on used car prices thanks to the drop in sterling and rise in imports from the UK.

The Central Bank said the past three years have seen “significant growth” in the stock of car-related debt on Irish banks’ balance sheets, with an increase of 136 per cent to stand at €2.8 billion at the end of 2017.


PCP related finance was the main driver of this growth, accounting for 53 per cent of the increase. The outstanding amount of bank-funded PCP debt has increased 254 per cent over the past three years.



Of note in the data is that PCPs accounted for almost 40 per cent of car finance drawdowns by value during 2017. However, they represented just under a quarter of new car finance contracts.

https://www.irishtimes.com/business/financial-services/central-bank-warns-of-pcp-threat-to-banking-system-as-debts-rise-1.3443108

Graham

seamus wrote: »

offering a low fixed rate over a long-term is an indication that the bank does not expect rates in general to rise by an appreciable amount over that period.

I don't think it's quite as simple as that. It's quite feasible that the bank have secured the funding for a block of mortgages at a fixed rate for a fixed period.

Offering fixed rate mortgages guarantees the promised returns are covered along with the banks margin regardless of the underlying movement of interest rates.

Fixing isn't always about chasing the highest profits, it's often about fixing costs/revenue/margins/profits.

draiochtanois

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theboringfox

Cyrus wrote: »

the way they calc those fees has changed now as well, before it was a free for all :rolleyes:

I left a fix and there was no cost with UB. You are right about the change. They can now as I understand it only charge break costs if they can show it has cost them.

Rew

Cyrus wrote: »

the way they calc those fees has changed now as well, before it was a free for all :rolleyes:

It was AIB and I got the €1,600 cheque in the post the other day. More magic calculations same mortgage...

handlemaster

The_Conductor wrote: »

Bob24 wrote: »

It is a bad scheme in general becsause it is increasing demand whereas the problem is the lack of supply.

But on top of that it is unfair because not everyone can avail of it. If someone who is borderline but can’t avail of it gets priced out of the market by people who can avail of it, I certainly understand that person being pissed-off about it.

Wholly aside from borderline cases- Ireland is unique in the Eurozone in having a private sector with so much debt at floating interest rates. There is *no* other country in the Eurozone in this position- none.
As interest rates rise- the private sector- and in particular home-owners on floating interest rates- are going to get slaughtered- there is going to be carnage in the market.

The prudent thing to do- to try and shelter the great unwashed Joe and Mary public out there- is a scheme to allow them to migrate existing mortgages over to products which are fixed for the entire length of the mortgage- backed by either exchequer borrowing (as in the current scheme) or long term corporate borrowing (some of our bluechip companies have 20 year paper out there- though it may be too late to try and issue more in any great volume).

Deliberately stoking demand among FTBs- when there is not a commensurate increase in stock for them to chase- is a one way recipe for bubble pricing- as we so patently already have.............

Finance obviously signed off on Housing's scheme- despite their misgivings- they shouldn't have- however, the current shower will presumably be somewhere else when the manure hits the fan.

Why does it have to be back by anybody to fix for the life of the mortgage. France you can fix for 25/30years. The bank all give that

Cyrus

handlemaster wrote: »

Why does it have to be back by anybody to fix for the life of the mortgage. France you can fix for 25/30years. The bank all give that

You don’t think those banks have unhedged exposure to interest over 25 years do you ?

dar100

theboringfox wrote: »

I left a fix and there was no cost with UB. You are right about the change. They can now as I understand it only charge break costs if they can show it has cost them.

How is this calculated? aib still charge to break fixed rate?

theboringfox

dar100 wrote: »

How is this calculated? aib still charge to break fixed rate?

My letter just said no cost and then I got a letter saying what of the rates on offer would I like to go for. I presume if there had been a cost they would have shown calculation. Would think it is same for all banks though. My guess is they stopped banks calculating in any foregone income into cost and they had to show what was actually a cost. Good example is banks lowering fixed rates without any big change in outlook for rates. Effectively means lower rate is them taking less margin. So someone should be free to switch to that lower fixed rate if underlying funding cost of hedge has not changed and it is only the margin going down. Idea being a fixed rate is to protect against rate rises...It is not a tool to lock in profit for banks.

draiochtanois

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The_Conductor

draiochtanois wrote: »

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Honestly- I think this reflects an insecurity in the minds of Irish consumers- alongside saving for house deposits etc- that should be occurring anyway.

The bigger issue- as acknowledged by ISME/IBEC and indeed the Central Bank itself- is small business and enterprises are being starved of capital.

The stats from the Central Bank do not show a notable change in household savings (ok- its trending upwards- but its in keeping with historic trends)- the bigger issue is lending, particularly to businesses- has been hammered.

Henbabani

I must share something, lately i move in to Dublin and start the hunting race to get an apartment, i have to tell you that the rpz are working, i saw few apartments in really good locations like ifsc, donnybrook, 1BDR aparment that goes for 1,150-1,250 only because of the rpz, so a lot of critisicm wrote on the rpz, it's probably not the best solution but, it's better than nothing, there's no other chance that one bedroom apartment in the IFSC goes for only 1,250€.

Bob24

Henbabani wrote: »

I must share something, lately i move in to Dublin and start the hunting race to get an apartment, i have to tell you that the rpz are working, i saw few apartments in really good locations like ifsc, donnybrook, 1BDR aparment that goes for 1,150-1,250 only because of the rpz, so a lot of critisicm wrote on the rpz, it's probably not the best solution but, it's better than nothing, there's no other chance that one bedroom apartment in the IFSC goes for only 1,250€.

The thing is unless you are the perfect potential tenant to stand out from the hundreds of people desperate get each one of those places, it is be completely useless to you.

Also once you are in situ, it will encourage your landlord to evict you every couple of years in order to (really or not) carry-out renovation work which will let them push their rent up back to market rate.

So RPZ are benefiting a small amount of people over a short period of time (and can end-up being a curse if their landlord wants to increase rent and has no option but to evict you even if both parties agree on the increase). But if you go pass the few specific individual situations whereby they are beneficial, I very much doubt they are helpful to renters as a group.

I'll risk sounding like a broken record and say the only real solution is to match supply and demand. Anything else PR talk.

Henbabani

Bob24 wrote: »

The thing is unless you the perfect potential tenant to stand out from the hundreds of people desperate get one of those places, it is be completely useless to you.

Also once you are in situ, it will encourage your landlord to evict you every couple of years in order to (really or not) carry-out renovation work which will let them push their rent market rate.

So RPZ are benefiting a small amount of people over a short period of time (and can end-up being a curse if their landlord wants to increase rent and has no option but has no option but to exit you even if both parties agree on the increase). But if you go pass the few specific individual situations whereby they are of benefit, I very much doubt they are helpful to renters as a group.

the stories about hundreds of people outside apartments are no longer true, i've been this week in more than 6 viewings in Rathgar, Rathmines, ballsbridge, and IFSC - maximum people were there - 15.

Bob24

Henbabani wrote: »

the stories about hundreds of people outside apartments are no longer true, i've been this week in more than 6 viewings in Rathgar, Rathmines, ballsbridge, and IFSC - maximum people were there - 15.

See for example this recent thread which describes the situation from a landlord's perspective: https://www.boards.ie/vbulletin/showthread.php?t=2057851508

Because you go to one viewing with 15 people doesn't mean there hasn't been 200 people showing interest in the property.

Have you actually found a place yet and did you get a good price for it? If yes that's great but if not be ready to face weeks of search before realising the lower priced properties are actually almost impossible to get.

Henbabani

Bob24 wrote: »

See for example this recent thread which describes the situation from a landlord's perspective: https://www.boards.ie/vbulletin/showthread.php?t=2057851508

Because you go to one viewing with 15 people doesn't mean there hasn't been 200 people showing interest in the property.

Have you actually found a place yet and did you get a good price for it? If yes that's great but if not be ready to face weeks of search before realising the lower priced properties are actually almost impossible to get.

you're taking one example but not willing to listening to others from the surface.

Bob24

Henbabani wrote: »

you're taking one example but not willing to listening to others from the surface.

I was quoting a thread to show experience on the ground from landlords perspective compared to yours as a prospective tenant.

But for what they are worth aggregate figures from Daft are also showing continued rent increases which supports what these landlords are reporting on the ground: https://www.daft.ie/report/2017-Q4-rental-price-daft-report.pdf

Quarter to quarter increase in county Dublin for the last quarter of 2017 are between 2.1% and 3.2%, that is massive for just one quarter:




How long have you been looking, and have you found a place?

--

CalRobert

Henbabani wrote: »

I must share something, lately i move in to Dublin and start the hunting race to get an apartment, i have to tell you that the rpz are working, i saw few apartments in really good locations like ifsc, donnybrook, 1BDR aparment that goes for 1,150-1,250 only because of the rpz, so a lot of critisicm wrote on the rpz, it's probably not the best solution but, it's better than nothing, there's no other chance that one bedroom apartment in the IFSC goes for only 1,250€.

Imagine a thousand people want to buy a car.
Now imagine there are only 500 cars for sale.
Cars will, of course, get very expensive! About as much as the richest 500 can afford.
Because cars are expensive, other companies will say "there's a lot of profit to be made there, let's build some more cars", so they do, and there are now more cars, and they get cheaper because now the potential car buyer is competing with fewer people.


Now, If I said you could only sell cars for 500 Euro, two things would happen.
1) Nobody would build more cars, because it turns out they're a lot more expensive than that to make
2) Because you can't offer more money for a car, anyone who isn't the absolute best positive car buyer gets screwed. To be honest I'm one of a couple in our thirties with stable jobs and good incomes. I even fix stuff myself and don't complain.
We're dream renters - which is why we could get a place in 2016. (I rented from the same landlord in 2013 and he knew us well). If we were students, or god forbid, self-employed, we'd just be screwed.

Normally, if another group - say, three students - wanted to rent our two bedroom city centre flat, they could at least offer the landlord more money, but they can't, because that's against the law.


OK, the anology isn't perfect, but basically if you make life horrible for anyone trying to build a home, you're not going to get homes built, which means the existing ones will be really expensive. It's not complicated.

oceanman

CalRobert wrote: »

Imagine a thousand people want to buy a car.
Now imagine there are only 500 cars for sale.
Cars will, of course, get very expensive! About as much as the richest 500 can afford.
Because cars are expensive, other companies will say "there's a lot of profit to be made there, let's build some more cars", so they do, and there are now more cars, and they get cheaper because now the potential car buyer is competing with fewer people.


Now, If I said you could only sell cars for 500 Euro, two things would happen.
1) Nobody would build more cars, because it turns out they're a lot more expensive than that to make
2) Because you can't offer more money for a car, anyone who isn't the absolute best positive car buyer gets screwed. To be honest I'm one of a couple in our thirties with stable jobs and good incomes. I even fix stuff myself and don't complain.
We're dream renters - which is why we could get a place in 2016. (I rented from the same landlord in 2013 and he knew us well). If we were students, or god forbid, self-employed, we'd just be screwed.

Normally, if another group - say, three students - wanted to rent our two bedroom city centre flat, they could at least offer the landlord more money, but they can't, because that's against the law.


OK, the anology isn't perfect, but basically if you make life horrible for anyone trying to build a home, you're not going to get homes built, which means the existing ones will be really expensive. It's not complicated.

that's very well explained....

oceanman

oceanman wrote: »

that's very well explained....

True.
However look what happened when there were loads of property developers spitting out properties back in 2006/2007.

Nothing is ever perfect.

LirW

Augeo wrote: »

True.
However look what happened when there were loads of property developers spitting out properties back in 2006/2007.

Nothing is ever perfect.

The effect that has on the sales VS the rental market is slightly different though. When the demand is high and you engage building for high supply everyone wants that piece of cake, corners are cut and people want to bag in as much money with the smallest amount of work.
If you have high supply on the rental market though, this can actually improve the quality of rental property because to archive top price, you want to present the property well and attractive. The way it is at the moment you have kips that haven't seen a day of maintenance since the 1970s and yet the landlord can still charge through the haddocks for it.