KBC want to leave the Irish Market

partyguinness

CarProblem wrote: »

I'd say (assuming we'd sufficient supply) a lot more working class people could afford houses at French/Belgian/German mortgage rates than the Irish ones if we had French/Belgian/German repo systems

Studies have shown when people get into trouble they pay credit card debt, car loans etc rather than the mortgage in Ireland - I assume this because there is (reasonably) seen to be no consequence of not paying one's mortgage. I remember telling a UK based colleague that - he was incredulous

Another big difference is the whole "credit rating" system in th UK. Honest to God, if you are late paying a car parking ticket for £40.00 5 years ago it is black marked on your record for every lender to see- that is even if you get past the "Computer says no" part.


Missed payments of any sort has massive consequences for your credit score. Now, you can still get by but you will be left with a mortgage provder that stiffs you for massive up front fees and up to 10% interest rates. After a few years the slate is wiped clean so you can start again.

c.p.w.g.w

partyguinness wrote: »

Another big difference is the whole "credit rating" system in th UK. Honest to God, if you are late paying a car parking ticket for £40.00 5 years ago it is black marked on your record for every lender to see- that is even if you get past the "Computer says no" part.


Missed payments of any sort has massive consequences for your credit score. Now, you can still get by but you will be left with a mortgage provder that stiffs you for massive up front fees and up to 10% interest rates. After a few years the slate is wiped clean so you can start again.

That's a bit extreme in fairness...it really should be based on a pattern of missed payments, not just one

The J Stands for Jay

The Student wrote: »

. If people were paying their mortgages why would a bank sell a performing loan book.

Why wouldn't a bank sell a performing loan book? They get a lump sum now that can be used to make profit, rather than waiting for it to trickle back in over 10-30 years. They also get rid of the risk of loans going bad in the future.

20silkcut

Is the lack of repossession keeping property prices artificially high in this country?
I’d imagine if there was more repossession and a higher turnover of properties on the market property prices would be lower.

partyguinness

c.p.w.g.w wrote: »

That's a bit extreme in fairness...it really should be based on a pattern of missed payments, not just one

Well, I suppose that is the difference. In Ireland we still have this "Ah sure he only missed a few payments...what harm" attitude. That uncertainty and wishay washy approach is a turn off.

VinLieger

20silkcut wrote: »

Is the lack of repossession keeping property prices artificially high in this country?
I’d imagine if there was more repossession and a higher turnover of properties on the market property prices would be lower.

Its definitely part of it, like you point out repossessions keep properties moving which is required for a healthy property market.

Varik

20silkcut wrote: »

Is the lack of repossession keeping property prices artificially high in this country?
I’d imagine if there was more repossession and a higher turnover of properties on the market property prices would be lower.

Probably not, it have an effect but it'd quickly trickle out.

People would start paying theirs or at least engaging and then that supply of stock would dry up.

Could argue it make prices go up, if there was less risk banks would compete more and finance would be more readily offered increasing demand.

Lower rates would drive the total cost of housing down, but maybe no initial price.

PhilOssophy

Our entire property system is utterly screwed up. We have a situation where people commute for 2 hours each way to an office in Dublin, and a 2 minute walk away there's a layabout in a social home who doesn't get out of the bed before midday having everything handed to him. "Oh but their whole family are in Dublin, they want to be close to them" is the routine peddled out mantra.....but the same doesn't apply to people who are paying their own way and paying for these layabouts at the same time.
And then SF stand up to defend these layabouts and pretend to represent the common man at the same time.

suicide_circus

partyguinness wrote: »

As someone who worked in the Irish mortgage property market between 2000-2010 and in England since then I can see the vast difference between enforcement in Ireland and in the UK.

In the UK, they take no ****. You stop paying- you’re out. No questions asked. Bankruptcy, insolvency and enforcement procedures are all well entrenched and developed. In comparison there is eff all in Ireland.

The speed of the Court procedure in the UK is dictated by the Courts- they set the deadlines not the lawyers. So, everything is moved along nice a swiftly.

Basically, in Ireland, you can stop paying, play the system to drag a matter out for years and the Court system is just not fit purpose or rather the system has not been put in place. The legal mechanism is simply non-existent. Judges will just kick the can down the road and of course the news headlines.

No wonder other lenders look in and go “Sod that”.

Anyone complaining about mortgage interest rates or vulture funds while simultaneously camapigning to stop or slow evictions needs to shot out of a cannon into the sun.

partyguinness

VinLieger wrote: »

Its definitely part of it, like you point out repossessions keep properties moving which is required for a healthy property market.

Plus repos are sold off by lenders at a significant discount.

The Student

McGaggs wrote: »

Why wouldn't a bank sell a performing loan book? They get a lump sum now that can be used to make profit, rather than waiting for it to trickle back in over 10-30 years. They also get rid of the risk of loans going bad in the future.

They are not getting a "profit" as they are no doubt selling at a loss. The sale of a performing loan book strikes me as a "fire sale" ie they want to get out of the business because the business environment is no longer profitable for them. Effectively they are cutting their losses.

Banks have always made their income in the main from interest payments on all loans.

That's exactly what banks do. People save money and the banks loan out those deposits. A loan going bad in the should not be of any worry to a bank in a normal operating property sector. If a loan goes bad you repossess the property and sell it to discharge the balance outstanding on the loan. That's why banks place a charge on a property until the mortgage is fully paid.

The Student

PhilOssophy wrote: »

Our entire property system is utterly screwed up. We have a situation where people commute for 2 hours each way to an office in Dublin, and a 2 minute walk away there's a layabout in a social home who doesn't get out of the bed before midday having everything handed to him. "Oh but their whole family are in Dublin, they want to be close to them" is the routine peddled out mantra.....but the same doesn't apply to people who are paying their own way and paying for these layabouts at the same time.
And then SF stand up to defend these layabouts and pretend to represent the common man at the same time.

Without getting into politics my view is that opposition parties can complain about whatever the govt does because thats what the opposition are supposed to do.

What strikes me about SF is that they don't actually stand up for "middle Ireland" nor do any of the parties on the "Left".

These parties think everyone should have a property, good wage and a good life but someone else should pay for it.

It is actually the "squeezed middle" who are carrying a large % of the finance the Govt collect.

Our social welfare system is too generous and nobody is willing to call it out. We are all aware of stories of people who spend their whole life on social welfare. We are all aware of inter generational families on social welfare.

Social welfare should not be a career choice.

Rant over. This topic relates to KBC leaving the market and the Irish societies view of "as sure he will pay it tomorrow" or "he only missed a few payments" is one of the reasons KBC and Ulster Bank are leaving the market.

It is by no means the only reason but it is definitely one of the reasons and anyone who believes different is either naive or in denial.

partyguinness

Ultimately Ireland is a very small market. You end up with a more players fighting over a small pie. For some institutions Ireland is just not worth it.

The J Stands for Jay

The Student wrote: »

They are not getting a "profit" as they are no doubt selling at a loss. The sale of a performing loan book strikes me as a "fire sale" ie they want to get out of the business because the business environment is no longer profitable for them. Effectively they are cutting their losses.

Banks have always made their income in the main from interest payments on all loans.

That's exactly what banks do. People save money and the banks loan out those deposits. A loan going bad in the should not be of any worry to a bank in a normal operating property sector. If a loan goes bad you repossess the property and sell it to discharge the balance outstanding on the loan. That's why banks place a charge on a property until the mortgage is fully paid.

The value of a mortgage is the discounted value of the future cash flows from the mortgage. If KBC use a different discount factor, or a different bad debt assumption, then both parties could pay/receive what they see as full price. They'll still make their profit on the transaction.

It seems like this decision to leave the market was brought about by BoI approaching KBC. They may have some strategic reason for this purchase that would lead them to place a higher value on the book than KBC. KBC can get a higher return on their capital in other markets, especially if they get it retuned to them in a lump sum as a result of selling the book.

PhilOssophy

The Student wrote: »

Without getting into politics my view is that opposition parties can complain about whatever the govt does because thats what the opposition are supposed to do.

What strikes me about SF is that they don't actually stand up for "middle Ireland" nor do any of the parties on the "Left".

These parties think everyone should have a property, good wage and a good life but someone else should pay for it.

It is actually the "squeezed middle" who are carrying a large % of the finance the Govt collect.

Our social welfare system is too generous and nobody is willing to call it out. We are all aware of stories of people who spend their whole life on social welfare. We are all aware of inter generational families on social welfare.

Social welfare should not be a career choice.

Rant over. This topic relates to KBC leaving the market and the Irish societies view of "as sure he will pay it tomorrow" or "he only missed a few payments" is one of the reasons KBC and Ulster Bank are leaving the market.

It is by no means the only reason but it is definitely one of the reasons and anyone who believes different is either naive or in denial.

You have hit the nail on the head. Almost every party seems to think that couples with a combined salary of 80k are doing so well that they should pay half of their income to them after that. They blindly ignore the fact that of that income they pay for commuting, medical, healthcare, mortgages, basically everything they have in their lives.

For the record - I have absolutely no problem with affordable housing for low-middle income earners, not everybody can afford high mortgage costs and these are the income earners who will probably produce our future college graduates. I wish these people all the best and good on them for making something of themselves.
I have a major problem with as you say "inter-generational families" whose first question is "who is paying for this for me". Those who believe "it wouldn't pay me to work" and this sort of mantra.

I don't want to drag the thread off topic but if we continue to just screw those who drive our economy, and artificially inflate house prices by not allowing evictions, we won't have a functioning housing market and we'll just scare would-be lenders off.

20silkcut

PhilOssophy wrote: »

You have hit the nail on the head. Almost every party seems to think that couples with a combined salary of 80k are doing so well that they should pay half of their income to them after that. They blindly ignore the fact that of that income they pay for commuting, medical, healthcare, mortgages, basically everything they have in their lives.

For the record - I have absolutely no problem with affordable housing for low-middle income earners, not everybody can afford high mortgage costs and these are the income earners who will probably produce our future college graduates. I wish these people all the best and good on them for making something of themselves.
I have a major problem with as you say "inter-generational families" whose first question is "who is paying for this for me". Those who believe "it wouldn't pay me to work" and this sort of mantra.

I don't want to drag the thread off topic but if we continue to just screw those who drive our economy, and artificially inflate house prices by not allowing evictions, we won't have a functioning housing market and we'll just scare would-be lenders off.

As a country we just don’t do evictions.
It always returns to the image of the RIC men with the battering ram outside the cottage.

How do you change that?

malinheader

20silkcut wrote: »

As a country we just don’t do evictions.
It always returns to the image of the RIC men with the battering ram outside the cottage.

How do you change that?

Very hard but has to start with serious restructuring of social welfare system imo.
Can't go on with a big majority of people better off on benefits than working. And I don't mean by a couple of euros.
This is where it all starts, thinking you're entitled to everything but responsible for nothing.

CarProblem

CarProblem wrote: »

Studies have shown when people get into trouble they pay credit card debt, car loans etc rather than the mortgage in Ireland - I assume this because there is (reasonably) seen to be no consequence of not paying one's mortgage.

That is correct. Credit card and car loan debt is going to cause you a lot more problems in the short term. If you have children, you can stop paying your mortgage until those children turn 18, and your property will not get repossessed in Ireland. NI is a different ball game completely. Their property market is on a different planet, in terms of health and affordability, than the RoI.

McGaggs wrote: »

Why wouldn't a bank sell a performing loan book? They get a lump sum now that can be used to make profit, rather than waiting for it to trickle back in over 10-30 years. They also get rid of the risk of loans going bad in the future.

Agree, it's a fantastic result for KBC. BoI have the security of the state, so they are not going to lose out either.

20silkcut wrote: »

Is the lack of repossession keeping property prices artificially high in this country? I’d imagine if there was more repossession and a higher turnover of properties on the market property prices would be lower.

It is part of the problem, but the market here is fundamentally screwed. I'm far from convinced that a flood of new properties into the market here, i.e. looking at supply and demand, would help things either. If the houses were sold at cost price, the average worker wouldn't be able to afford one. Government intervention would be needed to help them, and that has never worked out well in Ireland.

partyguinness wrote: »

Ultimately Ireland is a very small market. You end up with a more players fighting over a small pie. For some institutions Ireland is just not worth it.

If the market was healthy, and banks were allowed to repossess in a timely manner, it would be a very attractive proposition for banks. The economy pre-Covid was flying, lets not forget. The social housing model here is ludicrous. The model that you had in the 70/80s, i.e. the council estates, was much better.

Kermit.de.frog

malinheader wrote: »

Very hard but has to start with serious restructuring of social welfare system imo.
Can't go on with a big majority of people better off on benefits than working. And I don't mean by a couple of euros.
This is where it all starts, thinking you're entitled to everything but responsible for nothing.

How many decades now has this point of fundamental fairness been made and yet nothing is ever done?

Nothing will be done until workers take to the streets and demand change. They are the ones paying the bills.

Until a coherent movement is formed nothing will ever change and it's just pissing in the wind talking about it.

To make matters worse the electorate very nearly put in a party whose bread and butter is to make the situation considerably worse and even more unfair.

I think the whole Margaret Cash thing had an impact on people because it brought home to them the absolute piss take of a regime in this country for complete spongers who won't work.

Makes me laugh when I think what would her situation be if she was in the United States, for example. There wouldn't be a multi bedroom house with room for a pony, you can be bloody well sure of that.

Absolute insult to every decent person in Ireland.

Remember we pay twice for each of these individuals. We pay through the loss of productivity and income to the state never given and on top of that we pay them to sit on their arse.

20silkcut

suicide_circus wrote: »

Anyone complaining about mortgage interest rates or vulture funds while simultaneously camapigning to stop or slow evictions needs to shot out of a cannon into the sun.

Yes this is our equivalent of the brexit cake and eat it mindset.