2021 Irish Property Market chat - *mod warnings post 1*

2Mad2BeMad

yagan wrote: »

Aren't Credit Unions starting to issue mortgages?

They do or at least some do.

Mine allows you to borrow upto 300k at 4.9% over a max period of 25years.
Thats 1719e monthly and total cost of credit is 215k
So all in all you would be paying 515k back to them.
And I thought they were community focused.

Seems like there offering it because they were forced to but decided to make the interest high to turn people off it.
Crazy money

morrissey1307

2Mad2BeMad wrote: »

They do or at least some do.

Mine allows you to borrow upto 300k at 4.9% over a max period of 25years.
Thats 1719e monthly and total cost of credit is 215k
So all in all you would be paying 515k back to them.
And I thought they were community focused.

Seems like there offering it because they were forced to but decided to make the interest high to turn people off it.
Crazy money

Think I seen somewhere that our local CU is 20% LTV across the board as well. Which would instantly push out most, if not all of the first time buyers.

L1011

I would expect that the CUs cost of funding the mortgage is quite high to begin with, so the profit on the rate charged likely isn't huge

yagan

2Mad2BeMad wrote: »

They do or at least some do.

Mine allows you to borrow upto 300k at 4.9% over a max period of 25years.
Thats 1719e monthly and total cost of credit is 215k
So all in all you would be paying 515k back to them.
And I thought they were community focused.

Seems like there offering it because they were forced to but decided to make the interest high to turn people off it.
Crazy money

If the market is gummed up and gravity eventually collapses prices then I can see those who's being saving a lot availing of a credit union mortgage if it works like their other loans; that is the interest burden can work out cheaper if you overpay on installments.

Cyrus

woejus wrote: »

link was broken - this your boy? always liked that cul de sac of aspirational US style mini-mansions

https://www.myhome.ie/residential/brochure/26-knocknacree-park-dalkey-co-dublin-a96-k8r9/4490615

That Sheemore one, it's definitely priced to start a fight.

Nice elevated site, I always expected someone to assemble those four mid-century gaffs and demolish the lot.

Whenever Jesus loses his appeal, the two huge houses (Harvieston & Ardfallen) on the opposite corner will be interesting sales.

sorry must have missed a digit, yes thats the one.

be interesting to see how sheemore goes!

I though ardfallen was a family home? arent they building another house in the back garden? what a site in fairness.

I love the two houses opposite the pedestrian entrance to the dart station on the cunninham road side aswell.

boredatwork82

yagan wrote: »

If the market is gummed up and gravity eventually collapses prices then I can see those who's being saving a lot availing of a credit union mortgage if it works like their other loans; that is the interest burden can work out cheaper if you overpay on installments.

I suppose this is the only way it works. If you could overpay without penalty it may be an option to consider.

yagan

boredatwork82 wrote: »

I suppose this is the only way it works. If you could overpay without penalty it may be an option to consider.

I can see it being extremely popular for trades people who'd do a pretty good job of upgrading their homes.

During the lockdowns a DIY revolution has being happening.

AlmightyCushion

boredatwork82 wrote: »

I suppose this is the only way it works. If you could overpay without penalty it may be an option to consider.

In that case would you not just get a variable rate from a bank which will be cheaper than the credit union. Even if you went with a fixed rate and waited until the fixed rate was up to pay off a lump sum you had saved it would probably work out cheaper than paying the credit union 5%.

yagan

AlmightyCushion wrote: »

In that case would you not just get a variable rate from a bank which will be cheaper than the credit union. Even if you went with a fixed rate and waited until the fixed rate was up to pay off a lump sum you had saved it would probably work out cheaper than paying the credit union 5%.

The banks loan will still be a fixed term and the set interest would be due even if you paid it off before term.

With a credit union loan a borrower could clear the entire debt in one go with an inheritance for instance without any fixed term costs attached.

Interest is the rent on capital but as a credit union shareholder you're lending to yourself.

Claw Hammer

yagan wrote: »

The banks loan will still be a fixed term and the set interest would be due even if you paid it off before term.

That is not true. There might be a penalty for breaking out of a fixed penalty contract but no way is all of the projected interest due unless it is accrued.

yagan

Claw Hammer wrote: »

That is not true. There might be a penalty for breaking out of a fixed penalty contract but no way is all of the projected interest due unless it is accrued.

That depends on what the bank has offered you, whereas there's no penalty with a credit union.

DataDude

Claw Hammer wrote: »

That is not true. There might be a penalty for breaking out of a fixed penalty contract but no way is all of the projected interest due unless it is accrued.

Varies from lender to lender but yeah, none of them go anywhere near this hard on you. Most are actually fairly favourbale. Of the ones I'm aware of:

AIB - Overpayment x (Your Fixed Rate - AIB Fixed Rate for period closest to the remaining period of your fixed rate) ^ (Years left at your fixed rate). Crucially here, for example, the 1,2,3,4 year fixed rates are all higher than the 5 year fixed rate with AIB. So you could overpay the fully amount of your mortgage at any time without any penalty if you have a 5 year fixed, based on their rules as I read them.

PTSB - Overpayment x (Your Fixed Rate - Interbank Interest Rate for duration left to end of fixed term) ^ (Years Left at fixed rate)

Ulster Bank - Can overpay up to 10% of the loan amount each year without penalty, after that similar to PTSB

Claw Hammer

yagan wrote: »

That depends on what the bank has offered you, whereas there's no penalty with a credit union.

It is never the case that the full interest due over the life nof the mortgage has to be paid. The most is a penalty for breaking out of a fixed mortgage rate which might be a few months interest at most. Most fixed terms are no longer than 5 years so it is rarely the case that anyone pays the early redemption penalty.

Cyrus

DataDude wrote: »

Varies from lender to lender but yeah, none of them go anywhere near this hard on you. Most are actually fairly favourbale. Of the ones I'm aware of:

AIB - Overpayment x (Your Fixed Rate - AIB Fixed Rate for period closest to the remaining period of your fixed rate) ^ (Years left at your fixed rate). Crucially here, for example, the 1,2,3,4 year fixed rates are all higher than the 5 year fixed rate with AIB. So you could overpay the fully amount of your mortgage at any time without any penalty if you have a 5 year fixed, based on their rules as I read them.

PTSB - Overpayment x (Your Fixed Rate - Interbank Interest Rate for duration left to end of fixed term) ^ (Years Left at fixed rate)

Ulster Bank - Can overpay up to 10% of the loan amount each year without penalty, after that similar to PTSB

there is supposed to be a standard formula for this but AIB dont play ball on it.

Also the ulster bank break fee is limited to 6 months interest as a max charge

Early Redemption Charge
If you pay off a fixed rate mortgage before the end of the agreed fixed period or change to another interest rate before the end of the agreed fixed rate period, an early redemption charge will be applied. This charge will be either an amount calculated using this formula or six months interest, whichever is lower:
Redeemed amount x (R - R1) x Time remaining in days until the end of the fixed rate period) divided by 360.

DataDude

Cyrus wrote: »

there is supposed to be a standard formula for this but AIB dont play ball on it.

Very surprised to hear this, have you experience with them? They have quite detailed information on the calculation on their website (they're actually the most transparent). Would have thought consumer would have strong protections here?

I probably won't go with them as they're not the cheapest for me, but I was half considering them purely due to the very favorable early repayment terms!

https://aib.ie/our-products/mortgage/Home-Mortgages-Regulatory-Information

Cyrus

DataDude wrote: »

Very surprised to hear this, have you experience with them? They have quite detailed information on the calculation on their website (they're actually the most transparent). Would have thought consumer would have strong protections here?

I probably won't go with them as they're not the cheapest for me, but I was half considering them purely due to the very favorable early repayment terms!

https://aib.ie/our-products/mortgage/Home-Mortgages-Regulatory-Information

no im with ulster bank, i signed up to the 5 year fixed rate 3 years ago which is a bit annoying now :pac: but i make use of the 10% overpayment every year.

this thread has all the info

https://www.askaboutmoney.com/threads/it-may-be-much-cheaper-than-you-think-to-break-out-of-a-fixed-rate-early.204442/

apparently AIB have interpreted the EU directive on calculation of early redemption different to everybody else

AIB have a different policy to all the other lenders. They base fee on the difference between your rate (x%) and their fixed rate for the remaining term (x+/-%).

DataDude

Cyrus wrote: »

no im with ulster bank, i signed up to the 5 year fixed rate 3 years ago which is a bit annoying now :pac: but i make use of the 10% overpayment every year.

this thread has all the info

https://www.askaboutmoney.com/threads/it-may-be-much-cheaper-than-you-think-to-break-out-of-a-fixed-rate-early.204442/

apparently AIB have interpreted the EU directive on calculation of early redemption different to everybody else

Understood that AIB use their own rates rather than interbank rates like everyone else.

But my reading is that this is actually better for customers with the essentially inverted nature of their rates. 5 year rate is the lowest they have, so based on their formula, they'd actually owe you money if you tried to break early, assuming they hadn't increased their fixed rates in the interim. (although I'm sure they'd net it out at zero!)

Timing belt

[Deleted User] wrote: »

Why you need additional capital requirements if everybody pay mortgages and you are overloaded with growing people savings ?

the growing savings are all held in current accounts and not in savings or notice accounts so the banks have to hold HQLA (bonds or central bank placements) which costs the bank so the increase margins on lending to recoup costs unless they charge negative rates

Cyrus

DataDude wrote: »

Understood that AIB use their own rates rather than interbank rates like everyone else.

But my reading is that this is actually better for customers with the essentially inverted nature of their rates. 5 year rate is the lowest they have, so based on their formula, they'd actually owe you money if you tried to break early, assuming they hadn't increased their fixed rates in the interim. (although I'm sure they'd net it out at zero!)

ah maybe so, might not have been the case back when that thread started as people were complaining about the AIB redemption charges.

doesn't make sense when you think about it!

Timing belt

schmittel wrote: »

Surely that's the same for all Eurozone banks. Why would it cause our banks to charge higher margins than their European counterparts?

It all depends on the make up of their banking book...if the banks have excess liquidity like the Irish banks then yes they will also have a cost due to negative rates and bond yields which the Irish banks compensate for with higher margins on lending...But I believe the make up of their banking books are different with more fixed term lending and less current account balances...plus a lot of the countries are not restricted by central bank lending limits and have been offering crazy lending to reduce the excess liquidity. Even the european systemic risk board have highlighted their concern with some of the countries lending policies.

enricoh

One of the countries you'd hope would kick up a fuss alongside us to retain the corporation tax status quo is waving surrender. We are going to have to get our competiveness back to entice future investment I reckon, no better place to start than accommodation costs! Better chance of house prices going up 10% instead for 2021, we dont do sensible in this country!

https://www.irishtimes.com/business/economy/dutch-ready-to-support-us-move-to-reform-global-corporate-tax-regime-1.4542270?mode=amp

When the Americans initiate such a proposal and get backing from big countries like Germany and France, it would be surprising if a deal isn’t reached,” Hans Vijlbrief, deputy finance minister in the Dutch caretaker government after last month’s election, said in an interview on Monday. “Tax competition is becoming something of the past.”

hometruths

Timing belt wrote: »

It all depends on the make up of their banking book...if the banks have excess liquidity like the Irish banks then yes they will also have a cost due to negative rates and bond yields which the Irish banks compensate for with higher margins on lending...But I believe the make up of their banking books are different with more fixed term lending and less current account balances...plus a lot of the countries are not restricted by central bank lending limits and have been offering crazy lending to reduce the excess liquidity. Even the european systemic risk board have highlighted their concern with some of the countries lending policies.

But what is the biggest factor affecting the make up of the the banking books in Ireland vs their euro counterparts?

I'd say it is the difference in capital requirements. Do you disagree?

TobyHolmes

what is considered a commutable distance for the purposes of a mortgage?

AlmightyCushion

yagan wrote: »

The banks loan will still be a fixed term and the set interest would be due even if you paid it off before term.

With a credit union loan a borrower could clear the entire debt in one go with an inheritance for instance without any fixed term costs attached.

Interest is the rent on capital but as a credit union shareholder you're lending to yourself.

yagan wrote: »

That depends on what the bank has offered you, whereas there's no penalty with a credit union.

None of this is true in the scenario I suggested. If you get a variable rate from a bank it will be cheaper than the rate from the credit union and you can absolutely pay it off at any stage during the mortgage without owing anything else in interest or fees.

Paying 5% on a variable rate to the credit union when you can get a variable rate of less than that from a bank makes no sense.

L1011

Timing belt wrote: »

the growing savings are all held in current accounts and not in savings or notice accounts so the banks have to hold HQLA (bonds or central bank placements) which costs the bank so the increase margins on lending to recoup costs unless they charge negative rates

I'd doubt that - the nature of current accounts being cleanable out by card skimmers and zero interest, but legally defined as savings accounts taking actual seconds to set up with most banks would leave only a few willing to carry vast sums in their current account

TobyHolmes

L1011 wrote: »

I'd doubt that - the nature of current accounts being cleanable out by card skimmers and zero interest, but legally defined as savings accounts taking actual seconds to set up with most banks would leave only a few willing to carry vast sums in their current account

not really... alot of savings accounts have a maximum you can deposit a month so once you deposit that amount - the rest of your money is sitting in your current... just waiting..

L1011

TobyHolmes wrote: »

not really... alot of savings accounts have a maximum you can deposit a month so once you deposit that amount - the rest of your money is sitting in your current... just waiting..

That's generally those that are still notionally interesting bearing (0.1% or whatever); most banks have a 0% account that removes it from your current account at the very least. Most of these have a ~100k max balance and no monthly limits.

If you're (generic third person you, not you specifically) earning enough to be running the risk of hitting every and all limits your bank has on savings accounts; but weren't pre-COVID, you may want to reassess what the hell you were spending it on! Because the 'excess' savings issue is entirely money that was being spent pre-March 2020 and now is not.

TobyHolmes

L1011 wrote: »

That's generally those that are still notionally interesting bearing (0.1% or whatever); most banks have a 0% account that removes it from your current account at the very least. Most of these have a ~100k max balance and no monthly limits.

If you're (generic third person you, not you specifically) earning enough to be running the risk of hitting every and all limits your bank has on savings accounts; but weren't pre-COVID, you may want to reassess what the hell you were spending it on! Because the 'excess' savings issue is entirely money that was being spent pre-March 2020 and now is not.

i suppose it depends on who you bank with re your first point
re your second point yeah you are exactly right - the amount of money people used to spend. most of mine went on travel lol anyway its great not to spend and save save save is the new motto.

standardg60

AlmightyCushion wrote: »

None of this is true in the scenario I suggested. If you get a variable rate from a bank it will be cheaper than the rate from the credit union and you can absolutely pay it off at any stage during the mortgage without owing anything else in interest or fees.

Paying 5% on a variable rate to the credit union when you can get a variable rate of less than that from a bank makes no sense.

Unless the CU rate is an actual genuine reflection of the risk taken by a lender providing a mortgage in this country. Maybe the foreign owned banks that are leaving have taken the view that the state banks are issuing rates that cannot rationally lead to profits when defaults are taken into account.

I think rising savings will make many people spend less because when you get what you never had you starting think not spend it and try save more.
I was spending money for live in pleasure from 2004 to 2009 and did not have any savings
4 years of unemployment after and work for different CE skims made me think differently
I created some savings in last 10 years and I cant spend any extra penny because I remember how hardly those money was saved and I dont want stay with empty pockets again
Many people has same life style and many of them brain was badly damaged by 2008 recession
Dont think people will get rid of them savings easily as government and PA hope