Irish Property Market chat II - *read mod note post #1 before posting*

Ok, I think i know where is the problem. It's due to comparing deposits of 2020 vs 2018/2019 saving. Those are not the same thing.

As from Timing belt shared graph, we can see Covid deposit growth is over twice higher than pre-Covid.

I'm confused by my own links, so apologies. Cash deposits for households with banks did or did not increase substantially more from 2019 to 2020 compared to 2018 to 2019?

About time, its a joke here in NZ

I bought a house in June and the same house would now cost at least $100k extra

Fierce quiet these days in this thread.

Here is an update on the proposed alternative to the SHD set out in the Land Development Agency Bill, which was approved in July and takes power to remove "the so-called reserve function of councillors to have a veto or control over the disposal of local authority lands", which of course has irked the anti-progress politicians like Senator Victor Boyhan who, in what appears to be a total and complete lack of awareness of our local government system, made the following comments as part of his objection to the LDAB;

"the system has served the country and local councils well” and that councillors had "huge knowledge".

The very existence of fast-track planning is a policy failure in itself.

The planning process should be sufficiently well-resourced and fast to not need a fast-track lane. Especially so if the fast-tracked projects are to be large scale - as large scale developments are the ones needing the most scrutiny.

There are very real planning failures in this country that need fixed - but things like SHD and going straight to ABP is like paying for the express lane in disneyland - it gives an advantage to those with deep pockets, but also will run out of capacity. What then - a super SHD for the largest developments whereby they get an even faster expedited process?

There is a report from 2019 from the department of finance “Risk Weighted Assets in Ireland - The Link to Mortgage Interest Rates” that outlines RWAs as the main reason our interest rates are higher, the main reason return in equity is lower, and the main reason competition is decreasing.

The reason RWAs are high here (from the report) is relatively prudent regulation that secures against another financial crash.

I don’t think I ever said interest rates aren’t effected by repossession. I said I haven’t seen any evidence that changing those laws would actually lower interest rate (as interest rates are more complicated than one thing). So you get rid of something that may protect you if you are unfortunate enough to get into financial difficulty and then interest rates don’t go down for some other reason anyway. It’s weird to accuse someone of being blinded by ideology when you don’t present any data to support your own position.

The level of critical thinking here lads is embarrassing. I didn’t know I was walking into the blame all the bad things on some minority circlejerk.

It’s in the report. They are required to hold a much higher percentage of capital against every loan, than prior to 2007, to prevent insolvency in case of a financial crash or downturn.

The risk itself is based on total predicted loss, loss given default as a factor (ability to repossess). But it’s also a factor of how much a percentage security is decided to be sufficient to prevent insolvency of the bank. For instance banks hold as much as four to five times 2007 amounts, which makes them safer today.

There are more factors to a repossession than just throwing someone out on the street and being able to recover the loss. And these are also calculated in the risk. For example it’s less of a loss to have a default for a home in arrears for the last 3 years of a 35 year mortgage, than one 3 years into a 35 year. It’s a complicated topic, with many factors, and screwing over the little guys by removing laws that are designed to protect the little guys demand some serious scrutiny.

My point was RWAs are higher as a result of stricter regulations than pre-2007, which is a factor that affects mortgage interest rates and they are not solely relatively higher by just the inability to swiftly repossess every home. RWAs themselves are based on the risk of non-preforming loans. I am not denying that. Banks also must decide a figure for how much capital they secure based on that probability and that figure is a higher percentage than was used before we had the global financial crisis. The point is there are other factors that affect the interest rate. Repossession is a factor, another is how much exposer you have to a non-performing loan (e.g. what part of the lifetime it’s at). We are also living with a legacy of the 2007 crash still that dictates RWAs that will arguably be less an issue as each year passes, and because of our current higher RWAs, a future crash may be softer.

Some of you are quite eager to be right on this and for me to be completely wrong that the debate keeps shifting from where I started, tryna make me defend the idea that eviction laws have zero impact on interest rates, or how would I feel if someone decided not to pay me back on a loan. Where I started was roughly:

1. Making repossession easier does not conclusively mean lower interest rates. I was even willing to concede this if provided some solid evidence.
2. Making repossession easier has other significant costs to people affected and to taxpayers etc. that people don’t seem to want to acknowledge or care about.

So is there any substantial threat to this not going ahead as per the bill that was approved? Could it be taken out at this point if the pressure is applied? Or is this all just a huff and puff from the councilors that are worried about losing some power?

I wish at this point they would just declare an emergency and go scorched earth on the process.

There are over 15k Mortgages in arears for more than 5 years according to the Central bank data which accounts for 30% of all arears.... And included in this are 5,400 mortgages in arears for more than 10 years.

As Cruizer said nobody is looking for repossession for someone that missed a few payments due to coming on hard times but to be in a house for 10+ years and refuse to pay and not expect to be evicted is a joke....

I'm not sure how you expect anyone to provide evidence that easier repossessions conclusively means lower interest rates. Most countries do not make repossession of a property difficult to begin with. Ireland is an outlier in terms of how few properties get repossessed.

https://www.irishexaminer.com/business/arid-30912414.html

We do have real world evidence that the lack of an effective repossession process will lead to higher interest rates though.

KBC, who were the cheapest mortgage provider in the market, are pulling out due to issues with profitability. The reason they can't make money is due to the high percentage of non performing loans on their books. They currently hold 10.3 billion in outstanding mortgages. 1.4 billion, or, 13.5% of their outstanding funds are non performing. Their performing loans will be sold to BofI, who have significantly higher mortgage rates. This is real world evidence that people who were paying their mortgage will have to pay higher interest rates to cover those not paying.

Is it fair to ask the hypothetical question if you had more than paid of the cost of your loan, had further paid 10-20% deposit, and then fell into arrears in the latter half of your mortgage, is it fair the bank easily repossesses your home?

Yes it is 100% fair as the bank will not just repossess without exploring other avenues first such as "Payment Breaks", "Interest Only Repayments", "Restructuring the Debt".

"I tried to give a few examples in my last few posts. Take another example; we know 15k+ mortgages are in arrears over 5 years. But that alone doesn’t prove not being able to reprocess every one of these is a loss for the bank.

I don't follow your logic here... If the mortgage is in arrears and not being paid it is a loss to the bank simple as.... If you are suggesting that the bank has received enough money to cover the principle lent and therefore is no longer at a loss then this is flawed logic as there are costs associated with the mortgage that the bank would need to recover... E.g. The bank still needs to pay for the cost of funds lent out regardless of whether this cost of funds is sourced from the customer deposits or from the wholesale markets.

We haven’t looked at how mature those mortgages were, how many of them have already paid for more than the principal loan amount by the time the fell into arrears, etc.?"

As with 99% of lending the Repayments that are made in the latter years of the loan are predominately related to the principal loan amount.

Lets also be clear no-one is saying that the lack of repossession is the only reason for higher mortgage rates but it is the most significant factor. And ever since the "Dunne Judgement" borrowers defaulted more on their mortgages because they were no longer afraid that their property would be repossessed.

Two hotels are due to open in the coming months on Camden St and George's St, a Premier Inn and a Wetherspoons. These properties replace derelict buildings so it's quite a boost for the area. That being said, they'll likely not see a whole lot of business until 2022.

The Wetherspoon's is quite nice, from the photos.

https://www.jdwetherspoon.com/pubs/all-pubs/republic-of-ireland/county-dublin/keavans-port

Got to love the statements like this where somebody claims a value of being overpriced but no logic to it. Why do feel this way? What calculations have you done to come to such a conclusion? Demand and supply drives prices not feelings.

Product can be not affordable, but yet this doesn't tell if it's overpriced. Not affordable and Overpriced is not the same thing.