Irish Property Market 2020 Part 2

Docmac

With recession on the horizon (or here already .... just waiting to slap us in the face), can I ask any views on fixing mortgage ASAP for a decent chunk eg 5/10 years? Is this a good idea now, for example the 5 year fixed across several institutions approx 2.45-2.55%. Would anyone do a 10 year fix? Seems log a long slog commitment but would love to hear any thoughts re interest rates and potential projections.

TheSheriff

Docmac wrote: »

With recession on the horizon (or here already .... just waiting to slap us in the face), can I ask any views on fixing mortgage ASAP for a decent chunk eg 5/10 years? Is this a good idea now, for example the 5 year fixed across several institutions approx 2.45-2.55%. Would anyone do a 10 year fix? Seems log a long slog commitment but would love to hear any thoughts re interest rates and potential projections.

Would expect interest rates to only go one way for the foreseeable future, and that is down.


https://www.irishexaminer.com/business/economy/arid-40023476.html

Bass Reeves

Docmac wrote: »

With recession on the horizon (or here already .... just waiting to slap us in the face), can I ask any views on fixing mortgage ASAP for a decent chunk eg 5/10 years? Is this a good idea now, for example the 5 year fixed across several institutions approx 2.45-2.55%. Would anyone do a 10 year fix? Seems log a long slog commitment but would love to hear any thoughts re interest rates and potential projections.

At present below are the approx figures on a 250K loan
2 year fixed is about 2.3% 1100/month
5 year fixed is about 2.5% 1120/month
10 year fixed is about 2.% 1180/month

% year fixed seems to be a no brainer if you want security as there is only a 20 euro difference. 10 Year is an 80/month difference or near a thousand a year extra in repayments.

Governments are printing money to flood into economies inflation is more of a risk than deflation. Central bank interest rates are below 0% to force people to spend. However more mortgage lenders are entering the Irish market at present and this has increased competition on mortgage rates.

20 years ago variable rates were the way to go banks always loaded fixed rates at the expense of borrower. Nowadays with a lot of money at fixed terms and banks lending policies leaning heavily towards fixed rates it really a matter of choosing the term you are comfortable with.

PommieBast

JamesMason wrote: »

One thing you can be sure of is that there is a lot of uncertainty.

For me the real uncertainty is what is going to happen politically. There are already questons over property rights from the current government, and one look at the opposition benches makes me thinks about whether holding illiquid assets in Ireland is a good idea.

landofthetree

JamesMason wrote: »

I keep reading on this thread such phrases as prices fell XX %...after the crash.. after the boom...when the recession hit...the downturn etc.
Do people not realise that the global economy (and our economy) is having the biggest catastrophe since the wall Street crash of 1929?
We are in recession...the mother of them all.
Let that sink in.

Governments are keeping the show on the road. America are giving out $600 a week in pandemic payments. The UK 80% of wages up to £2500 a month.

Its only when all this stops that people will see the problems ahead.

Bass Reeves

PommieBast wrote: »

For me the real uncertainty is what is going to happen politically. There are already questons over property rights from the current government, and one look at the opposition benches makes me thinks about whether holding illiquid assets in Ireland is a good idea.

You better sell up and leave, Russia and China are good options

fliball123

Myhome down another 100 available properties from yesterday if this continues you can have the mother of all recessions and the father of pandemics but the economic principal of supply v.s Demand equals price will mean the price drops some are talking about here will not be happening

landofthetree

fliball123 wrote: »

Myhome down another 100 available properties from yesterday if this continues you can have the mother of all recessions and the father of pandemics but the economic principal of supply v.s Demand equals price will mean the price drops some are talking about here will not be happening

What about the property developers?

They have borrowed at rates of 5%-20%. They have to build what they borrowed for and then sell it or go bankrupt.

I can see a few going under either way.

fliball123

landofthetree wrote: »

What qbout the property developers?

They have borrowed at rates of 8% to 20%. They have to build what they borrowed for and then sell it or go bankrupt.

Dont know anything about that but can I ask you have you any proof of all of these borrowings at 20% (seems overly excessive unless they borrowed from a loan shark), Also are companies not getting wiggle room with regards to loans during Covid? Anyways there are always REITS and vulture funds ready to come in as well as the government are actively looking to buy housing stock so they will have plenty of options. Look all I know is that people are fluffing on here about price drops and are forgetting/ignoring that supply is going down at a much faster rate than prices. I have been watching this number since Covid started and its falling day on day with out exception with the price drops there is a minuscule % of properties price dropping on a day to day basis like less 20/30 out of 18.5k and also there are about 5/15 price increases going on at the same time.

I am not telling anyone to buy or sell just putting facts up for people to make a decision that is best for them

Cyrus

Pelezico wrote: »

Oh yes...we are in a recession. And it is very big.

i dont think we are, you do understand the definition right?

landofthetree

Cyrus wrote: »

i dont think we are, you do understand the definition right?

A recession is happening now. A record one. In a few months the stats will confirm it.



The eurozone’s gross domestic product fell 40.3% on an annual basis, far exceeding the 32.9% contraction in the U.S. economy over the same period, according to data published Friday. That was equivalent to a 12.1% decline from the previous quarter, pushing the bloc as a whole into recession, by far the sharpest drop since comparable records began in 1995, the European Union’s statistics agency said in a statement.

https://www.wsj.com/articles/eurozone-economy-contracts-by-record-40-11596191720

Marius34

Cyrus wrote: »

i dont think we are, you do understand the definition right?

Why are you saying so? Is it because Ireland has not published 2020 Q2 GDP results yet?
It is clear that 2020 Q2 will be negative, which means technically Ireland entered recession from April, and more realistically from March, but I think there are no monthly GDP data in Ireland.

In general recession is seen to have started end of February, with most countries entering recession March or April.

https://en.wikipedia.org/wiki/COVID-19_recession

AlmightyCushion

Marius34 wrote: »

Why are you saying so? Is it because Ireland has not published 2020 Q2 GDP results yet?
It is clear that 2020 Q2 will be negative, which means technically Ireland entered recession from April, and more realistically from March, but I think there are no monthly GDP data in Ireland.

In general recession is seen to have started end of February, with most countries entering recession March or April.

https://en.wikipedia.org/wiki/COVID-19_recession

A recession is 2 consecutive quarters of negative growth. i think Ireland had growth in the first quarter this year. Obviously, the second quarter will not be the same. If we go back to growth in quarter 3 then we would have avoided recession. Saying that, the economy will still have contracted a lot and we still have a global pandemic to deal with so even if we do avoid a recession, it's not all sunshine and lollipops here.

If q2 growth is -0.1% and q3 growth is -0.1% that is a recession. However, if q2 growth is -20% and q3 growth is +0.1% then that is not a recession. Although, in the second scenario your economy and GDP is much, much lower.

Cyrus

AlmightyCushion wrote: »

A recession is 2 consecutive quarters of negative growth. i think Ireland had growth in the first quarter this year. Obviously, the second quarter will not be the same. If we go back to growth in quarter 3 then we would have avoided recession. Saying that, the economy will still have contracted a lot and we still have a global pandemic to deal with so even if we do avoid a recession, it's not all sunshine and lollipops here.

If q2 growth is -0.1% and q3 growth is -0.1% that is a recession. However, if q2 growth is -20% and q3 growth is +0.1% then that is not a recession. Although, in the second scenario your economy and GDP is much, much lower.

thanks i was trying to see if any of the economic experts understood that, people are throwing around terms that they dont understand.

Hulk Hands

By the US definition we're bang in a recession. The pedantry is a bit petty. It's obvious enough what's meant, even if we haven't had the timeframes to comply exactly yet

Bass Reeves

Marius34 wrote: »

Why are you saying so? Is it because Ireland has not published 2020 Q2 GDP results yet?
It is clear that 2020 Q2 will be negative, which means technically Ireland entered recession from April, and more realistically from March, but I think there are no monthly GDP data in Ireland.

In general recession is seen to have started end of February, with most countries entering recession March or April.

https://en.wikipedia.org/wiki/COVID-19_recession

Every downturn us different. In normal downturns people stop spending because of reduced income, losses of savings etc. This.one is different for the last 4+5 months discretionary spending had ''been'' stopped from spending.

Main area of stoppage is holidays pubs and restaurants. The rest of the economy is trundling along. However a substantial section of consumers have accumulated extra savings. A large section have also had to change plans regarding travel. Two friends of my daughter are in this situation. Both are in relationships one couple has decided to buy there first home. If you g people accumulate savings the most likely avenue where it will go is into a house deposit.

Marius34

AlmightyCushion wrote: »

A recession is 2 consecutive quarters of negative growth. i think Ireland had growth in the first quarter this year. Obviously, the second quarter will not be the same. If we go back to growth in quarter 3 then we would have avoided recession. Saying that, the economy will still have contracted a lot and we still have a global pandemic to deal with so even if we do avoid a recession, it's not all sunshine and lollipops here.

If q2 growth is -0.1% and q3 growth is -0.1% that is a recession. However, if q2 growth is -20% and q3 growth is +0.1% then that is not a recession. Although, in the second scenario your economy and GDP is much, much lower.

That's not a definition of Recession. Maybe it used to be sometime in the past, or still used by some institutions, but it's not a general case.

https://en.wikipedia.org/wiki/Recession
https://www.forbes.com/advisor/investing/what-is-a-recession/
https://www.investopedia.com/terms/r/recession.asp

Marius34

Bass Reeves wrote: »

Every downturn us different. In normal downturns people stop spending because of reduced income, losses of savings etc. This.one is different for the last 4+5 months discretionary spending had ''been'' stopped from spending.

Main area of stoppage is holidays pubs and restaurants. The rest of the economy is trundling along. However a substantial section of consumers have accumulated extra savings. A large section have also had to change plans regarding travel. Two friends of my daughter are in this situation. Both are in relationships one couple has decided to buy there first home. If you g people accumulate savings the most likely avenue where it will go is into a house deposit.

Yes, I totally agree with you, this crisis is very different. Which has much bigger impact on economical activities, but probably way less on property prices, some of the reasons you mentioned.

Cyrus

Hulk Hands wrote: »

By the US definition we're bang in a recession. The pedantry is a bit petty. It's obvious enough what's meant, even if we haven't had the timeframes to comply exactly yet

well given the explicit doomsday scenarios being painted i think its incumbent on everyone to work with facts rather than hyperbole, dont you?

MrMusician18

Bass Reeves wrote: »

You would be surprised

I would indeed be surprised. I just don't see that many people finding the discipline to put this unspent money towards a deposit if they didn't have the discipline to find ways around non essential spending before this.

And even if they do, what is the net effect? Maybe an extra 10-15k at best to spend.

Pelezico

The economy went into recession sometime in late Feb..early March.

Since then , we have had a severe downturn, unprecedented in modern times.

We are in a deep recession and many companies will not recover.

As for the pedants who would insist on adherence to strict definitions, there is a standardised methodology for assessing the difference between a recession and a depression.

fliball123

MrMusician18 wrote: »

I would indeed be surprised. I just don't see that many people finding the discipline to put this unspent money towards a deposit if they didn't have the discipline to find ways around non essential spending before this.

And even if they do, what is the net effect? Maybe an extra 10-15k at best to spend.

The thing is do they cant really spend it on in a lot of other areas as in holidays or pubs so there is a good chance a lot of saving is going on and 10k more for a deposit means (providing you have the wage to match) you can get a house for 100k more than you could of if your a FTB and 50k more if your not so it is significant

Melanchthon

fliball123 wrote: »

The thing is do they cant really spend it on in a lot of other areas as in holidays or pubs so there is a good chance a lot of saving is going on and 10k more for a deposit means (providing you have the wage to match) you can get a house for 100k more than you could of if your a FTB and 50k more if your not so it is significant

On the flip side how many companies paying out bonuses and so on this year?

Bass Reeves

Melanchthon wrote: »

On the flip side how many companies paying out bonuses and so on this year?

No bonus would match that most bonuses are halved by tax

fliball123

Melanchthon wrote: »

On the flip side how many companies paying out bonuses and so on this year?

Bonuses are not being considered by most banks at the moment anyways as its not certain income.

PropQueries

fliball123 wrote: »

Dont know anything about that but can I ask you have you any proof of all of these borrowings at 20% (seems overly excessive unless they borrowed from a loan shark), Also are companies not getting wiggle room with regards to loans during Covid? Anyways there are always REITS and vulture funds ready to come in as well as the government are actively looking to buy housing stock so they will have plenty of options. Look all I know is that people are fluffing on here about price drops and are forgetting/ignoring that supply is going down at a much faster rate than prices. I have been watching this number since Covid started and its falling day on day with out exception with the price drops there is a minuscule % of properties price dropping on a day to day basis like less 20/30 out of 18.5k and also there are about 5/15 price increases going on at the same time.

I am not telling anyone to buy or sell just putting facts up for people to make a decision that is best for them

I don’t think the vulture funds etc. will be a big player this time around. Last time, they were able to buy in bulk and at significant discounts from NAMA, the Irish banks and the UK banks leaving Ireland. This time, would they really be interested in outbidding Joe Bloggs for a 1990’s three bed semi-detached in Lucan?

Also, I don’t think the Government has the cash to continue outbidding Joe Bloggs as we already have one of the highest debt levels in the world in per capita if not GDP terms.

Smouse156

fliball123 wrote: »

Bonuses are not being considered by most banks at the moment anyways as its not certain income.

Out of interest, which banks do consider bonuses? What if you only have worked one year and have one years bonus?

MrMusician18

fliball123 wrote: »

The thing is do they cant really spend it on in a lot of other areas as in holidays or pubs so there is a good chance a lot of saving is going on and 10k more for a deposit means (providing you have the wage to match) you can get a house for 100k more than you could of if your a FTB and 50k more if your not so it is significant

You'll have to clarify your numbers there. I don't see how an extra 10k deposit could have a 10x multiplier.

Broadly, you need your 20% deposit and you can borrow 3.5x your salary. Any extra savings can be used to reduce the mortgage size or increase the value of the purchase by the same amount. The capacity to borrow isn't changed.

Sarn

MrMusician18 wrote: »

You'll have to clarify your numbers there. I don't see how an extra 10k deposit could have a 10x multiplier.

Broadly, you need your 20% deposit and you can borrow 3.5x your salary. Any extra savings can be used to reduce the mortgage size or increase the value of the purchase by the same amount. The capacity to borrow isn't changed.

Based on a 10% deposit, say 20k, would allow you to borrow for a 200k house. An extra 10k would allow you to borrow for a 300k house. This is assuming you haven’t maxed out your salary multiple.

MacronvFrugals

Sarn wrote: »

Based on a 10% deposit, say 20k, would allow you to borrow for a 200k house. An extra 10k would allow you to borrow for a 300k house. This is assuming you haven’t maxed out your salary multiple.

That assumption is bigger than the children's hospital final bill