Softening house market?

Donald Trump

https://www.boards.ie/discussion/comment/119690482#Comment_119690482

I'm not wasting any more time on this. But the bank cannot just increase long term lending (which mortgages are) based only off increased short term (or even demand) deposits. If you can't understand that, it's not my problem.

Did you never notice that banks will generally offer higher rates for longer term fixed accounts? Did you never wonder why that is? I mean if you think that all they need is regular demand deposits then why would the bother their arses paying more for longer term?

combat14

https://www.boards.ie/discussion/comment/119667616#Comment_119667616

if they are not going up they'll have to fall with rising interest rates and inflation

kaymin

https://www.boards.ie/discussion/comment/119689904#Comment_119689904

Deposits are not reserves, they are liabilities.

Reserves is part of the capital or net assets of the bank - any losses on loans and operations effectively reduce the banks capital / reserves. Hence why captial / reserves needs to be at a minimum level so the bank can suffer the losses without becoming insolvent / damaging the wider economy.

Banks 'create' money by leveraging their capital base by borrowing deposits from customers and lending it out.

Off topic so I'll stay quiet now

Q&A

https://www.boards.ie/discussion/comment/119690500#Comment_119690500

It's not wasted time for you... Go back reread what you think you know about your funding ratios but this time pay attention. Your attention to detail is poor on that matter and also on here. For example, you somehow think I referenced AIB first - that was someone else.

These ratios are about reducing short/medium term liquidity mismatch and ensuring money is there to meet outgoings as they fall due. That's a world apart from saying banks don't fund long term lending with short term deposits. I'll say it again this is the basics of what banks (retail banks at least) do.

Rather than just attacking everyone else for disagreeing with you and spouting on about your self indulgent knowledge of derivatives, why not tell us all how - you think - mortgage lenders in Ireland fund their lending. Feel free to use the AIB example you seem fixated on. Now I know you'll have to throw in plenty of petty comments for the sake of your own ego but do try and also answer the question?

kaymin

https://www.boards.ie/discussion/comment/119690259#Comment_119690259

Have to comment on this - Stable funding which is used in the NSFR calculation is defined as "types and amounts of equity and liability financing expected to be reliable sources of funds over a one-year time horizon under conditions of extended stress"

Note the emphasis on one-year time horizon i.e. not the time horizon of the bank's loan book.

Donald Trump

https://www.boards.ie/discussion/comment/119690704#Comment_119690704

Comment all you like. Emphasize what you like. I never said it did. It is an example of one regulatory metric which banks have to hit. You can go off and spend a few hours googling something and come back with a shallow understanding of it all you want. But it is better to spend 5 minutes reading what you are attempting to reply to first.

Within the bank itself, you are going to have risk people knocking the heads of your ALM guys anyway.

The wannabe accounting geniuses above going on about balance sheets and saying that mortgage rates don't have to go up because they will fund all the mortgages off 0% deposits..........they ironically seem to discount that fact that discount rates are going to have a large impact on that side of the balance sheet.

kaymin

https://www.boards.ie/discussion/comment/119690776#Comment_119690776

Yes, you did: 'If the Bank wants to give out a load of 30 year mortgages, it will have to issue on some longer-date debt itself in order to make sure it has some security over it's future requirements.' This is clearly false - it just needs a stable form of funding and deposits are deemed stable.

I'll repeat the quote I provided earlier from the liquidity risk note in the AIB accounts: 'Customer deposits represent the largest source of funding for the Group with the core retail franchises and accompanying deposit base in both Ireland and the UK providing a stable and reasonably predictable source of funds.'

You don't know what you're talking about.

Donald Trump

https://www.boards.ie/discussion/comment/119690565#Comment_119690565

We are back to the piggybank example. The other poster attached documents to explain the basics in relation to a retail bank such as AIB.

If you want to look at the balance sheet someone else posted, you can see that the answer in relation to where they get their longer term funding from. That is there - not to take in a euro and lend it out - but to have it as a capital reserve. Unlike deposits, that cannot be withdrawn on Monday.

I'm not wasting any more time on this. It's like trying to have a conversation with someone about the moon when all they are concerned about is telling you it is made of cheese. Go get yourself a job in finance.

Donald Trump

https://www.boards.ie/discussion/comment/119690797#Comment_119690797

Yes, you did: 'If the Bank wants to give out a load of 30 year mortgages, it will have to issue on some longer-date debt itself in order to make sure it has some security over it's future requirements.'

Yes, Mr. Genius. There will have future requirements. Getting longer maturity funding now means you have those locked in. I mentioned two quantites as an example. I did not say that these are the only two things that count. Nor did I say that they are once off requirements that only have to be computed now and you'll never have to do them again.

I'm not wasting any more time on this. There are plenty of well-paid jobs in the IFSC. Go get one. Granted they tend to be more back office, or some middle office type roles now, but it would be a foot in the door for you to use all your knowledge.

kaymin

https://www.boards.ie/discussion/comment/119690817#Comment_119690817

🤣 Thanks, I have one already. Why quote two ratios that do nothing to further your argument that funding maturity has to match loan maturity - as I said, you don't know what you're talking about.

Donald Trump

https://www.boards.ie/discussion/comment/119690828#Comment_119690828

Look, I don't care. You're trying to go off down some rabbit hole based on some nonsense that you think mortgage rates won't rise because demand deposit accounts are at zero percent return.

I don't place any weight on your waffle. Whatever you are doing, you are not in a position near the money. Maybe some day you will get there. But you're not getting any more of my time

kaymin

https://www.boards.ie/discussion/comment/119690862#Comment_119690862

I didn't make that argument. It was your rebuttal that was wrong though.

kaymin

https://www.boards.ie/discussion/comment/119690801#Comment_119690801

"If you want to look at the balance sheet someone else posted, you can see that the answer in relation to where they get their longer term funding from. That is there - not to take in a euro and lend it out - but to have it as a capital reserve. Unlike deposits, that cannot be withdrawn on Monday."

This is up there with Brian Lucey recommending Anglo sells the customer deposits to get out of their spot of difficulty.

Donald Trump

https://www.boards.ie/discussion/comment/119690897#Comment_119690897

I don't care. I'm not spoonfeeding it to you any further.

Q&A

https://www.boards.ie/discussion/comment/119690801#Comment_119690801

So according to you they're all financed by capital!

So using your 'logic' if a bank wants to issue an extra €1 of long term lending the bank has to raise €1 of capital.... In your world, why do they waste their time with deposits? All those fiddly branches and customer facing staff, seems an awful waste of resources, in your world.

CoffeeImpala

https://www.boards.ie/discussion/comment/119690319#Comment_119690319

If they are the LCR and NSFR ratios at the end of 2021 why can AIB not use the liabilities (mainly customer deposits) shown on the same balance sheet to issue new mortgages to customers until one of the ratios approaches 100%?

If you purchase property in the past but haven't taken out a mortgage you are still counted as a first time buyer.

Ubbquittious

The banks hardly need deposits. It's all fractional reserve funny money that they pull out of a Banker's magic hat. That magic hat was given to them in the 1700s when banking licenses were easy to get and they've been milking it for all it's worth ever since.

The banks are only laughing at the ordinary eejits on the street slaving away for 30 years to pay interest on the money they created effortlessly

onrail

Never mind all this financial mumbo jumbo. Will someone please just tell me that house prices are crashing to help me justify spending 50% of my income on rent over the last 15 years. Please and thanks.

byrne249

https://www.boards.ie/discussion/comment/119691794#Comment_119691794

Total agreement, these nonsensical arguments go nowhere and cannot predict whether a bank will raise rates or not.

I bought in 2018, I sold again in 2021, I'm sitting here waiting to get through probation so I can buy again, at all these times I thought it was the top of the market. Housing developments in my area in Meath are struggling to shift the last units in their current schemes with multiple viewings and emails. Dunshaughlin, Trim, Ratoath, Navan. I have started to notice tentative small price drops of 10k here and there on 2nd hand too.

A development in Galway city has two builds available according to daft from a scheme that released in January, the contractor at the showhouse told me in March most people on the waiting list dropped off it after the prices were released. Seems a lot of people have turned down buying at the current prices for most of this year.

Was looking at another house with an EA in Athenry who told me some contractors were not going to build again once they had completed a new scheme in the town, as they weren't sure they would even sell the ones they were building on account of the price. These anecdotes seem to be borne out by the chart someone else posted above that Galway has declined 5% already.

Demand is in the forecast business. I treat it like I treat my weather forecasts. It may be true. It may not be true.

Q&A

https://www.boards.ie/discussion/comment/119691794#Comment_119691794

Can't see it crashing, compare 2007 with 2022 and things are a lot more sensible on credit and the supply side isn't great.

When you look back at 2007 you had crazy lending standards and an economy that had been propped up by the same credit fuelled bubble.

Fast forward to today. Lending standards have kept a lid on credit. Factor in a continued undersupply of new housing. All while the economy is close to if not at full employment.

IMO it's employment that will determine big swings. Current uncertainty around interest rates might slow thing down but it's mass unemployment that is needed for a big house price fall - there's just too much pent up demand otherwise.

amacca

https://www.boards.ie/discussion/comment/119692790#Comment_119692790

I'd tend to agree.....they'll collapse if demand collapses. That means lots of unemployment and emigration......or WW3/massive Europe wide downturn, political strife etc etc

They might stagnate and slowly deflate in the short/medium term....or not even deflate much.

(Of course SF could tank the place or find a way to churn out houses but I'd say the latter is fairly unlikely ..... I'd be somewhat worried about the former...regardless of how much of a safe pair of hands some poll thinks Pearse Doherty might be as finance minister.)

Geuze

https://www.boards.ie/discussion/comment/119691794#Comment_119691794

No.

Soften = yes

Slowdown = yes

Crash = no, as there is no excess supply, and there is loads of latent demand

kaymin

https://www.boards.ie/discussion/comment/119691743#Comment_119691743

Fractional reserve banking is lending out the funds generated from customers deposits though.

David6330

I think we are seeing the start of a housing crash. It's going to drag on for a good few months, possibly years.

I also think we are heading into a corporate debt crisis and a sovereign debt crisis due to the rising interest rates and high debt loads.

All this is due to crazy money printing since March 2020 by the central banks who thought they could print their way out of trouble like in 2008.

dontmindme

https://www.myhome.ie/pricechanges

All properties->26/09/22 to 02/10/22

All Dublin

52 Price changes

41 Decreases

11 Increases

Rest of Ireland

117 Price changes

88 Decreases

29 Increase

road_high

The stats don’t lie. Lots of decreases going on

https://www.boards.ie/discussion/comment/119693982#Comment_119693982

But wait wait, listen to all the experts, this time its different!!!

landofthetree

https://www.boards.ie/discussion/comment/119693879#Comment_119693879

The western world deserves an almighty financial crash for the hysterical lockdowns and restrictions. Those restrictions and lockdowns were put in place to satisfy a few oddball types and the laptop classes who could work at home. It will be great when Facebook lays them off by the thousands.

tigger123

https://www.boards.ie/discussion/comment/119694709#Comment_119694709

A hot take right there.