AIB & BOI - open for business

spank_inferno

The last few days have seen advertisements from the big 2 banks relating to their renewed eagerness to loan mortages.

I heard on the radio that a condition of the €7 billion bail out was that a part of it was to be used to make it easier to lend to first time buyers.

I submit that this sounds like a bad idea at best and lunacy at worst for these reasons:

- The housing market is in the deflationary stage in its cycle
Encouraging first time buyers to mortgage up with generous temporary
interest rates will cod some into purchasing a property that is still likely
to decrease in value

- Further to the above this seems more like an effort by the government to bail out the
Construction Industry Federation.
I dont believe the young people of Ireland bleeding jobs by the thousands are worried about
purchasing that charming basement appartment for €350,000.

It just feels like the government honestly feel that wealth creation can happen again from flogging overpriced properties.

Where is the media campaign encouraging cut price business loans for SME's?
(all the better for retaining/creating jobs)

Anyway, I just feel this could end up being good money (borrowed money) after bad.

thebman

Well nobody in their right mind would be buying now unless they are in the Public sector TBH and even then they should think twice.

So the banks can try to lend it but there isn't a market for it at the moment.

Why don't they lend it to businesses to keep them afloat instead?

Tech3

Exactly I would be interested in going for a mortgage in a few years time. Looking at the prices at the moment, an average of 300 thousand for a house would be a ridiculous amount of money to borrow.

Looking at it from a personal perspective I would be more inclined to wait a few years to see how much house prices will drop in order to get better value for my money. FF obviously see this was going to happen and this new so called incentive for first time buyers will not encourage them to buy.

thebman

Step on should be going to secure businesses future so that peoples jobs become more secure and then they will try to buy houses.

Until people think they have job security and the housing market is in a good condition they simply will not buy.

I love how in the new ads half the screen is taken up with a big warning that your house could be at risk if you stop making mortgage payments. Are people that stupid? Were they getting complaints or something from people who didn't know what a mortgage was? :rolleyes:

stepbar

It's only lunacy if a first time buyer expects to make a "profit" out of their first home. For far too long FTBers were flipping houses after a year or so and using the profits to buy another. My stance on this is if you are a FTB and want to buy a house to live in then you should expect to be happy living there for at least the next 10 - 20 years of your life. Otherwise don't buy. Negative equity should not come into the equation (within reason of course).

dresden8

thebman wrote: »

Well nobody in their right mind would be buying now unless they are in the Public sector TBH and even then they should think twice.

So the banks can try to lend it but there isn't a market for it at the moment.

Why don't they lend it to businesses to keep them afloat instead?

Way to bring the public sector into this conversation!

Congrats.

mumhaabu

The banks will now loan to buyers but will give nothing to people building their own houses or those with businesses who need a little to ride out the recession. I know one guy who is doing well and building his own house in full time employment and the same with his wife, tried three different banks for a small loan equivelent to around 100K and was refused each time. If he was buying a house he would get it. The recapitalisation of banks is a bailout for FF Builders, Developers and the diaspora of the Galway Races tent.

It is a disgrace what is going on, these banks should be left rot in their own mess.

SeanW

Yeah, I saw something on the news a few weeks ago about businesses having to lay off people or even fold because they can't even get the day-to-day credit they require, even (in the case of shops) for things like stock.

That this will continue while all the attention goes to First Time Buyers and mortgages, comes as no surprise. Remember, to FF, if you're not a property developer in the Old Boys Club, you don't exist.

gurramok

Good to see posters seeing this as a conjob. Roll back time to a few years ago and hardly anyone would see the real reason for it, a sop to CIF.

Average FTB mortgage is 230k-250k, that only caters for 4,000 buyers who are in secure jobs and debt free and can actually afford the asking prices so this scheme is a long shot.
If FTB's did jump into this trap and some will without any knowledge of the housing market, this will torpedo the rental market as some buyers are renting rather than buying at the mo.

And to add, this is adding bank debt onto the oung shoulders of naieve FTB's, its a disgrace.

So yeh, ask yourselves, why have they not allocated a few billion for companys/businesses?

Dannyboy83

dresden8 wrote: »

Way to bring the public sector into this conversation!

Congrats.

Its a valid point, the only job security in industry at the moment is primarily in the public sector.

Dannyboy83

As an FTB (i.e. the person this is aimed at), here is my answer:

1. My employers are doing quite well, that said, I honestly have no idea of the short to medium term job security at my company and the prospects look grim in the industry.

2. There are very real prospects that I may be paying 30% standard tax and 50% on whatever may be left of my salary (i.e. 0) next year or the year after. If that happens, there is a good chance I will emigrate.

3. Many of the "affordable houses" have a very long clawback period. That doesn't suit me given the dire state of our economy.

4. Given that the houses are still insanely over-inflated, I would still not buy out of principle. If I wasn't sucked in during the bubble, why would I be sucked in twice as bad when the bubble has burst?
I would buy now if I saw a bargainand I was confident of repayment. I wouldn't buy because I feel its my patriotic duty to do so, any less than I enjoy paying a levy for a fiasco in which I did not participate.

Lastly, I may be mistaken here, but isn't this **Sub Prime lending**?
Presumably the vast majority of the workforce outside the public sector and even within it are sub prime at the moment, while we wait for reform.
Is this not what started the whole mess to begin with?

gurramok

Dannyboy83 wrote: »

Lastly, I may be mistaken here, but isn't this **Sub Prime lending**?
Presumably the vast majority of the workforce outside the public sector and even within it are sub prime at the moment, while we wait for reform.
Is this not what started the whole mess to begin with?

It sounds like a form of it. Teaser rates to get people into buy when economic times are bad.
Its 2003-2005 all over again, rates will double/triple from the present 2% when the Eurozone(note: not Ireland) economy climbs again.

So yes, its a mess in the making susbsidised by taxpayers.

mumhaabu

It is sub-prime lending basically as the target audience as probably the most unsecure financially in Ireland. All you will hear from now from the propaganda machine is how prices are bottomed out and what a great time it is to buy when the truth is anyone who buys now will be in Negative Equity by 2010. Now is a good time to build for those with one-off sites etc. as constuction workers are in great supply and rates are well down, materials also due to the lower price of oil. But the FF machine won't give those guys a dime as this won't suit their developer buddies.

What is happening here is the government are giving money to the banks to lend to first time buyers who will subsequently buy into a rapidly collapsing market. Alot of these will then fail to meet repayments and hey presto they are stuck in negative equity that even the banks can't foreclose on to get their money back. Then this money will be written down and another bailout sought, but who cares as FF builders and developers will have got their money from the sales. We as the public can then finance all these bailouts with out massivly high taxes while the FF builders and politicans skip off to Malaga and Spain avoiding taxes and will sleep walk FG into power and then when the sh1t really hits the fan blame them for everything which they had nothing to do with.

Hey presto one General Election later and the FF dictatorship will hop back into power for another 30 years. It will be like how Garett Fitzgerald got the works in the 80's for trying to balance the books after the mess FF and Haughey left behind. Similary with Bush and Obama, the predeccessor always sets up the successor to fail.

FF laughing all the way to the banks! :mad:

faceman

mumhaabu wrote: »

It is sub-prime lending basically as the target audience as probably the most unsecure financially in Ireland. All you will hear from now from the propaganda machine is how prices are bottomed out and what a great time it is to buy when the truth is anyone who buys now will be in Negative Equity by 2010. Now is a good time to build for those with one-off sites etc. as constuction workers are in great supply and rates are well down, materials also due to the lower price of oil. But the FF machine won't give those guys a dime as this won't suit their developer buddies.

What is happening here is the government are giving money to the banks to lend to first time buyers who will subsequently buy into a rapidly collapsing market. Alot of these will then fail to meet repayments and hey presto they are stuck in negative equity that even the banks can't foreclose on to get their money back. Then this money will be written down and another bailout sought, but who cares as FF builders and developers will have got their money from the sales. We as the public can then finance all these bailouts with out massivly high taxes while the FF builders and politicans skip off to Malaga and Spain avoiding taxes and will sleep walk FG into power and then when the sh1t really hits the fan blame them for everything which they had nothing to do with.

Hey presto one General Election later and the FF dictatorship will hop back into power for another 30 years. It will be like how Garett Fitzgerald got the works in the 80's for trying to balance the books after the mess FF and Haughey left behind. Similary with Bush and Obama, the predeccessor always sets up the successor to fail.

FF laughing all the way to the banks! :mad:

Your argument makes no sense. You're suggesting that FTB's are sub prime and that mortgage lending is going to increase topre 2008 levels. Thats not the case. The recapitilisation instructs banks to increase mortgage lending by a limited percentage (its either 10 or 20% I cant remember). Given the low take up of mortgages at present and that mortgage draw downs are down over 50%, the increase in cash is only going to make a small difference, and presumably to those who can afford to take a mortgage.

Your house is only in negative equity if you need to sell it. The buyer must understand the implications and trade offs of buying a house in the current market. Anyone who doesnt, truly has their head in the sand.

BlackWizard

faceman wrote: »

Your argument makes no sense. .. Given the low take up of mortgages at present and that mortgage draw downs are down over 50%, the increase in cash is only going to make a small difference, and presumably to those who can afford to take a mortgage.

But what if Brians Keynesian stimulus plan ends up working. What if the propaganda machine gets going and does its job. Everything might be okay, providing owners can continue paying their mortgages. But with the big picture of Ireland in the next not looking so good I find it hard to imagine many new international companies setting up. But we might find a good few international firms moving out if Ireland starts trying to reduce it's deficits.