Property Market 2019

FutureGuy

https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage

A Danish bank is offering customers -0.5% interest rates on mortgages.

That’s not a typo. Negative interest rates.

ECO_Mental

FutureGuy wrote: »

https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage

A Danish bank is offering customers -0.5% interest rates on mortgages.

That’s not a typo. Negative interest rates.

Holy ****! 20 year fixed 0%....30 year fixed 0.5%...now that's what we want

airportgirl83

ECO_Mental wrote: »

FutureGuy wrote: »

https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage

A Danish bank is offering customers -0.5% interest rates on mortgages.

That’s not a typo. Negative interest rates.

Holy ****! 20 year fixed 0%....30 year fixed 0.5%...now that's what we want

No, you don't. Rates can be negative BUT fees charged by the bank are not.

airportgirl83

Amongst other things borrowers could have trouble accessing negative rates. Given the risk this would present to lenders, they may restrict access to only the most creditworthy borrowers.

lawred2

I'd presume that it's easier for a bank to get the keys back when dealing with delinquent borrowers in Denmark

lawred2

airportgirl83 wrote: »

No, you don't. Rates can be negative BUT fees charged by the bank are not.

?

Would they been charging fees of 200-300k on a 400k mortgage?

airportgirl83

Negative rates are not a good sign. They indicate that banks are scared and predict a substantial crash in the near future. They are willing to lend money at negative rates and accept a small loss rather than risking a bigger loss by lending money at higher rates.

I do not know bank fees set up by the Danish Bank. The point that I'm making is that you are still very likely to owe money to the bank despite the interest rate being negative.

lawred2

airportgirl83 wrote: »

Negative rates are not a good sign. They indicate that banks are scared and predict a substantial crash in the near future. They are willing to lend money at negative rates and accept a small loss rather than risking a bigger loss by lending money at higher rates.

I do not know bank fees set up by the Danish Bank. The point that I'm making is that you are still very likely to owe money to the bank despite the interest rate being negative.

What?

voluntary

airportgirl83 wrote: »

No, you don't. Rates can be negative BUT fees charged by the bank are not.

Between 0.75% and 1% interest is a norm on continental mortgages. Negative interest may sound like a shock, but it's just 1 pp below the norm. It's like one Irish bank offering 2.3 percent mortgages in Ireland while another does 3.3%

Irish are and have always been screwed. Everything here is more expensive then elswhere. Food, cars, alkohol, cigarettes, entertainment, housing, even clothes and majority of services.

But hey, in return we get a beautiful Irish weather, a world class healthcare, top notch education system and crime free cities

nak

voluntary wrote: »

Between 0.75% and 1% interest is a norm on continental mortgages.

Friends of mine recently took out a mortgage in Switzerland with 0.9% interest.

voluntary

June's CSO report on residential property prices is out. With some local exceptions the prices were roughly unchanged in Dublin.

In Dublin, residential property prices rose by 0.1% in the year to June, with house prices unchanged and apartments rising by 0.1%. The highest house price growth in Dublin was in South Dublin at 3.6%, while Dun Laoghaire-Rathdown saw a decline of 4.0%.

https://cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexjune2019/

The_Conductor

airportgirl83 wrote: »

Negative rates are not a good sign. They indicate that banks are scared and predict a substantial crash in the near future. They are willing to lend money at negative rates and accept a small loss rather than risking a bigger loss by lending money at higher rates.

I do not know bank fees set up by the Danish Bank. The point that I'm making is that you are still very likely to owe money to the bank despite the interest rate being negative.

Its Denmark- they structure their mortgages in a different manner.

1. Loan is max 4 times gross annual income (before tax and deductions)
2. LTV is max of 95%
3. Borrower has to show they have saved 5% of the property price in cold hard cash
4. The next 15% of the purchase price is at personal loan rates and is fully floating.
5. The remaining 80% is at the cheaper mortgage rate

The 5% you save up for the downpayment, does not earn interest in the bank.
The 15% is at a personal rate (currently 8.5%), and is a term loan (typically 10 years)
The remaining 80% is at a very low rate (in June 2019 this was 1.50%) and is on a longer term than personal repayment (typically 20 years, but 30 years is becoming more common).

A larger downpayment is sought for any pre-1992 properties. 1992 was the year they imposed rent controls in Denmark- and if any pre-1992 property is ever let, the rent control is strictly enforced- and compliance is thoroughly monitored. They do have a clause to reclaim a property for personal use (same as we have in Ireland)- however, you have to give 1 year's notice to the tenant.

Its a different scenario than it is in Ireland- and while a negative interest rate sounds like a great deal- its only telling part of the story- the 15% on a personal rate that has to be repaid first- is the tough part of this.

In Denmark the market commentators suggest that unless you intend to live in a property for at least 10 years, that there is no point whatsoever in buying. Also- foreigners comprise a far higher proportion of property purchasers in Denmark- than the their demographic percentage would suggest would be the norm.

There is one key difference in how lending institutions fund their borrowing requirements in Denmark- and elsewhere in the EU. When a Danish bank (or other lender) issues a bond in the market to raise funds for lending- the actual mortgages associated with the loan the Danish lender makes- are the collatoral associated with the bond they issue. So- any given borrower is aware that their property is associated with a particular bond issued by lender- and in turn- if there is ever cause to foreclose on a property (and the numbers of foreclosures are low)- repossessions are readily granted on all different property types- there is no fooling around like in the Irish market.

Of interest in an Irish context- the year that Denmark brought in rent controls and actually started policing them- was the peak year for property repossessions in Denmark- landlords abandoned the sector- and esp. unloaded their pre-1992 built properties, as it was financially unviable to continue to let them. Jingle mail (where a landlord who had only been paying the interest component on a mortgage of a rental property)- resulted in a peak of 4,600 residential properties being surrendered to banks- the majority of which were in the 8 weeks following the enactment of new legislation which conferred additional rights on tenants. Mortgage bond prices rose- before settling into a downward spiral (last year, 2018, they averages 1.5%, and the average mortgage rate in 2018 was 2.0% on a 30 year mortgage).

The core difference for Danish lenders operating in the residential mortgage market in Denmark- is the 'pre-payment' model (whereby the lender acts as a glorified clearing house, matching mortgage bonds to specific morgage loans and putting the property themselves up as collatoral against default.

The whole premise of the low mortgage rates in Denmark- is how transparent the system is- and how the protections are built-in to protect the investments of anyone who buys mortgage bonds.

Until such time as the Irish cop the hell on, and get over our lack of enthusiasm for foreclosing on non-performing loans- we can expect to pay a premium on our mortgage rates- and people have to accept that the reason our mortgage rates are as high as they are- is precisely because the risk associated with Irish mortgages is so much higher than the risk associated with (in this instance) Danish mortgages. If we ever want to bring Irish rates down to reasonable levels- it would be an idea to ape the Danish system- the pre-payment model- which is precisely the advice the ECB gave the Irish authorities in 2007, before all hell broke loose.

Edit:
Something else- is the concept of 'Living Accommodation' (which covers 98% of all apartments constructed since 1992). Under this concept (known locally as bopælspligt)- if a property is vacant for >6 months in a calendar year it legally *has* to be let. You cannot leave it vacant- so if you have to go away for work purposes, or for any other reason, and your property is vacant for a combined period of > 6 months in a calendar year- you are legally obliged to let it on the rental market- and if you want it back- you have to give the occupant 1 year's notice of your intent to move back in.......... Terms such as this- explain on one level, why buying is considered risky!

Browney7

voluntary wrote: »

June's CSO report on residential property prices is out. With some local exceptions the prices were roughly unchanged in Dublin.



https://cso.ie/en/releasesandpublications/ep/p-rppi/residentialpropertypriceindexjune2019/

Yeah June 18 to June 19 shows a flatline and realistically this is based on sales agreed at April (factoring in time to close sales etc). Estate Agents have sight on what levels deals are being struck at in May June July so any silence or admissions of weaker growth to come could be seen as further small drops coming. Realistically, affordability considerations are causing this along with a vast majority of pent up demand being satisfied over the past 12 to 18 months.

Definite two tier property market emerging between Dublin and ex Dublin (houses in Midlands and border regions showing large increases).

Interesting times ahead.

terrydel

Browney7 wrote: »

Yeah June 18 to June 19 shows a flatline and realistically this is based on sales agreed at April (factoring in time to close sales etc). Estate Agents have sight on what levels deals are being struck at in May June July so any silence or admissions of weaker growth to come could be seen as further small drops coming. Realistically, affordability considerations are causing this along with a vast majority of pent up demand being satisfied over the past 12 to 18 months.

Definite two tier property market emerging between Dublin and ex Dublin (houses in Midlands and border regions showing large increases).

Interesting times ahead.

Im seeing huge drops in the Wicklow area that we've been looking in over the last year, as well as many of the houses I've saved in daft being on the market a virtual eternity. Anecdotal more or less , but I think the market has seriously bottomed out if not gone slightly into reverse, possibly holding out to see how brexit pans out who knows. But I think the high water mark has been reached.

The Student

The_Conductor wrote: »

Its Denmark- they structure their mortgages in a different manner.

1. Loan is max 4 times gross annual income (before tax and deductions)
2. LTV is max of 95%
3. Borrower has to show they have saved 5% of the property price in cold hard cash
4. The next 15% of the purchase price is at personal loan rates and is fully floating.
5. The remaining 80% is at the cheaper mortgage rate

The 5% you save up for the downpayment, does not earn interest in the bank.
The 15% is at a personal rate (currently 8.5%), and is a term loan (typically 10 years)
The remaining 80% is at a very low rate (in June 2019 this was 1.50%) and is on a longer term than personal repayment (typically 20 years, but 30 years is becoming more common).

A larger downpayment is sought for any pre-1992 properties. 1992 was the year they imposed rent controls in Denmark- and if any pre-1992 property is ever let, the rent control is strictly enforced- and compliance is thoroughly monitored. They do have a clause to reclaim a property for personal use (same as we have in Ireland)- however, you have to give 1 year's notice to the tenant.

Its a different scenario than it is in Ireland- and while a negative interest rate sounds like a great deal- its only telling part of the story- the 15% on a personal rate that has to be repaid first- is the tough part of this.

In Denmark the market commentators suggest that unless you intend to live in a property for at least 10 years, that there is no point whatsoever in buying. Also- foreigners comprise a far higher proportion of property purchasers in Denmark- than the their demographic percentage would suggest would be the norm.

There is one key difference in how lending institutions fund their borrowing requirements in Denmark- and elsewhere in the EU. When a Danish bank (or other lender) issues a bond in the market to raise funds for lending- the actual mortgages associated with the loan the Danish lender makes- are the collatoral associated with the bond they issue. So- any given borrower is aware that their property is associated with a particular bond issued by lender- and in turn- if there is ever cause to foreclose on a property (and the numbers of foreclosures are low)- repossessions are readily granted on all different property types- there is no fooling around like in the Irish market.

Of interest in an Irish context- the year that Denmark brought in rent controls and actually started policing them- was the peak year for property repossessions in Denmark- landlords abandoned the sector- and esp. unloaded their pre-1992 built properties, as it was financially unviable to continue to let them. Jingle mail (where a landlord who had only been paying the interest component on a mortgage of a rental property)- resulted in a peak of 4,600 residential properties being surrendered to banks- the majority of which were in the 8 weeks following the enactment of new legislation which conferred additional rights on tenants. Mortgage bond prices rose- before settling into a downward spiral (last year, 2018, they averages 1.5%, and the average mortgage rate in 2018 was 2.0% on a 30 year mortgage).

The core difference for Danish lenders operating in the residential mortgage market in Denmark- is the 'pre-payment' model (whereby the lender acts as a glorified clearing house, matching mortgage bonds to specific morgage loans and putting the property themselves up as collatoral against default.

The whole premise of the low mortgage rates in Denmark- is how transparent the system is- and how the protections are built-in to protect the investments of anyone who buys mortgage bonds.

Until such time as the Irish cop the hell on, and get over our lack of enthusiasm for foreclosing on non-performing loans- we can expect to pay a premium on our mortgage rates- and people have to accept that the reason our mortgage rates are as high as they are- is precisely because the risk associated with Irish mortgages is so much higher than the risk associated with (in this instance) Danish mortgages. If we ever want to bring Irish rates down to reasonable levels- it would be an idea to ape the Danish system- the pre-payment model- which is precisely the advice the ECB gave the Irish authorities in 2007, before all hell broke loose.

Edit:
Something else- is the concept of 'Living Accommodation' (which covers 98% of all apartments constructed since 1992). Under this concept (known locally as bopælspligt)- if a property is vacant for >6 months in a calendar year it legally *has* to be let. You cannot leave it vacant- so if you have to go away for work purposes, or for any other reason, and your property is vacant for a combined period of > 6 months in a calendar year- you are legally obliged to let it on the rental market- and if you want it back- you have to give the occupant 1 year's notice of your intent to move back in.......... Terms such as this- explain on one level, why buying is considered risky!

Can't see the above ever happening with our culture. It certainly appears to be a more straightforward business relationship but I can't see it happening in Ireland.

If it did it would at least let people know what rules they are to follow rather than the constant changing of rules we currently have.

Browney7

terrydel wrote: »

Im seeing huge drops in the Wicklow area that we've been looking in over the last year, as well as many of the houses I've saved in daft being on the market a virtual eternity. Anecdotal more or less , but I think the market has seriously bottomed out if not gone slightly into reverse, possibly holding out to see how brexit pans out who knows. But I think the high water mark has been reached.

True and I think anyone who was sitting on property or thinking of selling are probably thinking now is a good time to cash in the chips.

terrydel

Browney7 wrote: »

True and I think anyone who was sitting on property or thinking of selling are probably thinking now is a good time to cash in the chips.

Barring an ever decreasing number of areas, I think anyone sitting on it has waited too long and missed the boat, tho in the sense that its probably going to go down more than up from now on, yes it is a good time to cash in.

voluntary

terrydel wrote: »

Barring an ever decreasing number of areas, I think anyone sitting on it has waited too long and missed the boat, tho in the sense that its probably going to go down more than up from now on, yes it is a good time to cash in.

Nobody missed the boat just yet, but I agree, the remaining folks who wanted to sell but have been waiting because the prices were increasing would likely now speed up their efforts.

If the demand is still there when the remaining folks cash out, then it's very likely the prices will go up again after the current 6 or so months correction.
The only obstacle to price increases would be a recession or some form of an economic shock causing unemployment to increase drastically.

airportgirl83

voluntary wrote: »

terrydel wrote: »

Barring an ever decreasing number of areas, I think anyone sitting on it has waited too long and missed the boat, tho in the sense that its probably going to go down more than up from now on, yes it is a good time to cash in.

Nobody missed the boat just yet, but I agree, the remaining folks who wanted to sell but have been waiting because the prices were increasing would likely now speed up their efforts.

If the demand is still there when the remaining folks cash out, then it's very likely the prices will go up again after the current 6 or so months correction.
The only obstacle to price increases would be a recession or some form of an economic shock causing unemployment to increase drastically.

Why would prices start rising after 6 months?

With global tensions, no-deal or deal Brexit (both not ideal for Irl) and current mortgage restrictions, I'd say further increases (if any) will be very modest to non-existent.

Also, cashing in is not as quick as you might think. It took almost 12 months from putting up my house for sale to receiving money in the bank. Property was renovated, in a desirable South Dublin location yet still really noticed people taking their time within anything over €500k...

bamayang

voluntary wrote: »

airportgirl83 wrote: »

No, you don't. Rates can be negative BUT fees charged by the bank are not.

Irish are and have always been screwed. Everything here is more expensive then elswhere. Food, cars, alkohol, cigarettes, entertainment, housing, even clothes and majority of services.

But hey, in return we get a beautiful Irish weather, a world class healthcare, top notch education system and crime free cities

We do have 2 of those 4 though!

Mad_maxx

Spoke to an estate agent in Galway today, said prices are back 10%

Mad_maxx

voluntary wrote: »

Between 0.75% and 1% interest is a norm on continental mortgages. Negative interest may sound like a shock, but it's just 1 pp below the norm. It's like one Irish bank offering 2.3 percent mortgages in Ireland while another does 3.3%

Irish are and have always been screwed. Everything here is more expensive then elswhere. Food, cars, alkohol, cigarettes, entertainment, housing, even clothes and majority of services.

But hey, in return we get a beautiful Irish weather, a world class healthcare, top notch education system and crime free cities

Our residential mortgage culture is unique, it's a separate issue to one of cultural acceptance of poor value in general

Banks lend unsecured here

ZX7R

Mad_maxx wrote: »

Spoke to an estate agent in Galway today, said prices are back 10%

Do you the prices have fallen 10% in Galway

lfen

Myhome.ie let’s you view the market trends for a particular area i.e. shows if prices are up or down and by what percentage. Every area I look at shows a decrease... Could be a good sign..

holliehobbie

Just checked my area on that and the prices are all going up! Dublin City though not commuter belt.

lfen

holliehobbie wrote: »

Just checked my area on that and the prices are all going up! Dublin City though not commuter belt.

South County Dublin all down and a lot of Wicklow also. Hopefully Dublin City is next in line

AlmightyCushion

lfen wrote: »

Myhome.ie let’s you view the market trends for a particular area i.e. shows if prices are up or down and by what percentage. Every area I look at shows a decrease... Could be a good sign..

Where do you see this?

lfen

AlmightyCushion wrote: »

Where do you see this?

Click on ‘for sale’ and select an area, say Dalkey. You’ll get a list of search results.
Click on a property.
Scroll down below the property description and you’ll see ‘market trends’
Click on that and using Dalkey as an example you will see below info-

Dalkey has seen 11 price changes over the last 3 months
2 increases
9 decreases
Overall decrease of
-6%

AlmightyCushion

lfen wrote: »

Click on ‘for sale’ and select an area, say Dalkey. You’ll get a list of search results.
Click on a property.
Scroll down below the property description and you’ll see ‘market trends’
Click on that and using Dalkey as an example you will see below info-

Dalkey has seen 11 price changes over the last 3 months
2 increases
9 decreases
Overall decrease of
-6%

I see it now. Thanks.

tobsey

lfen wrote: »

Click on ‘for sale’ and select an area, say Dalkey. You’ll get a list of search results.
Click on a property.
Scroll down below the property description and you’ll see ‘market trends’
Click on that and using Dalkey as an example you will see below info-

Dalkey has seen 11 price changes over the last 3 months
2 increases
9 decreases
Overall decrease of
-6%

They are asking price decreases though. People were looking at the last sale similar to their own and adding 10% thinking the market is rising and by he time theirs closes it’ll increase by 10%. That’s not been the case for the last 12-18 months. The reductions just bring them back in line with realistic sale prices.