Prime Time: Discussions on Negative Equity and the economy

paddylast

Its been featured many times on prime time about one way to help the economy is the whole area of debt forgiveness for mortgage holders.
If loans were reduced by say 5% it would give mortgage holders some glimmer of hope and start consumer spending again in the economy.

I realise many people will say this will all cost the taxpayer and aslo the financial regulator says there is no magic bullet on this.

if we did help out those in negative equity, instead of writing down debt now why not do this over a number of years.

For example if lenders decided not to charge interest for one month of the year? If your mortgage repayment was 1,000 euro then for this month all of the 1,000 would go against the principal. They could do this over a number of years.



anyone else have any ideas/thoughts on this?

Monty Burnz

paddylast wrote: »

For example if lenders decided not to charge interest for one month of the year? If your mortgage repayment was 1,000 euro then for this month all of the 1,000 would go against the principal. They could do this over a number of years.

My first thought is where does the money to do this come from?

paddylast

The guys proposing to take over EBS are talking of doing this.

IF NAMA is discounting the developers then surely there must be some hope for the individual mortgage holders.

Bob_Latchford

This is what low interest rates was supposed to do. If people cant afford to pay at these low rates then they themselves have made the error, its moral hazard on micro scale imo.

Sympathy for those who have lost their jobs etc, but selling up and bankruptcy have been the way to release yourself from unsustainable debt.

20Cent

Something has to be done, not sure what! But mass defaults would be setting ourselves up for another crash in a few years.

lmimmfn

ok im going to be hardcore, wtf is wrong with negative equity if you live in the house you bought???????????? its swings and roundabouts, you cant move of course until you get out of negative equity, but lets be honest here, do any home owners even consider they might be able to move in the next few years? im a homeowner, im not in negative equity but i dont see that i could move for at least 5-10 years.

However negative equity coupled with the issue of not being able to pay the mortgage is a different issue and this definately needs to be tackled, but a bailout for those is just nuts, for the simple fack that you are ****ing over those who either didnt buy in the insane times or those who bought buy paid off a lot of their mortgage. The only current solution i can see for people in this prediciment is for interest only payments on the mortgage or declaring bankruptcy.

The not charging interest option is absolutely insane, the banks are fecked as it is, they have to pay those monthly payments as well as the current ECB interest rate on their interbank lending( in fact its not even ECB interent rate now for irish banks because were so fecked ) so taking off the principle is just digging the banks further into debt screwing the country and its taxpayers even more.

One solution proposed in the sunday times a few weeks ago was for the banks( if they had capital, which they may have with IMF etc. ) to take a 50% stake in the homes of people with negative equity and struggling to pay the mortgage, so interest repayments are only half what they were, this kicks the can down the road, however it alows the homeowner to recover in the long term while short term having a smaller mortgage/interest repayments. The proposal was that once the 50% is paid off then the bank could offer the remaining 50% as a seperate mortgage.

I honestly still for the life of me CANNOT BELIEVE PEOPLE SIGNED UP TO 300,000+ Euro MORTGAGES, jesus did these people ever understand their undertaking? fair enough the banks are partially responsible, but its an absolutely insane amount of cash and people took that risk, end of story. I can have sympathy for people losing jobs, especially with famalies, but i cannot be sympathetic with idiocy

I dont mean to be a wanker but this whole concept of bail this out, bail that out, if devs and banks are getting bailed out why am i not, just the whole bailout attitude in this country is what got us in this stupid mess. The country is destroyed, we can only get money reducing expenditure on the public service/HSE/infrastructure etc. or generating cash from tax, any money whatsoever from bailouts just ****'s over the middle class again.

There should be a complete end to bailouts of any form other than the IMF/ECB one, chuck everything else, otherwise those of us not looking for a bailout may as well cut our losses and leave the country and leave it with 100% of the populas wanting bailouts but nobody is contributing.

paddylast

lmimmfn wrote: »

ok im going to be hardcore, wtf is wrong with negative equity if you live in the house you bought????????????

doesnt offer much hope to any young couple looking to trade up in the next few years if the value of their house is half of what they paid.

RichardAnd

paddylast wrote: »

doesnt offer much hope to any young couple looking to trade up in the next few years if the value of their house is half of what they paid.

The property ladder was an illusion. I never understood why paying 15 years wages before tax for a shoe box was a good idea. Renting is the way to go, if you don't like the house you're in, you can move easily. Sure, you may not own the property but to be honest, if you're only 4 years into a 40 year mortgage, you don't really own the house either when you think about it.

Senna

paddylast wrote: »

doesnt offer much hope to any young couple looking to trade up in the next few years if the value of their house is half of what they paid.

I have sympathy for those who are in genuine trouble, but anyone complaining because they cant trade up can feck off. If the NE is transferred to their new property, then fine. But whatever will be done need to benefit those who cannot pay due to unemployment, illness etc, not those who made a bad decision and are now looking to get out of their NE.

jimmycrackcorm

paddylast wrote: »

doesnt offer much hope to any young couple looking to trade up in the next few years if the value of their house is half of what they paid.

Must trade up!!!
Must trade up!!!
Must trade up!!!


Wait - shouldn't your user name be AlisonLast?

mistermouse

Thought about buying a few years ago but was absolutely concerned that it all wouldn't last and that lots of the things brought in to make us look good to europe and internationally would come back to bite us so I held off.

Its a fact that some in the likes of Dublin had no choice but to buy but in general this country's population went over the top for all the wrong reasons.

I do not think the banks should have been bailed out, particularly Anglo and do not support further measures for greedy people of any sort that mean I should have to pay for their need to look good, live in huge homes. Neither do I support the right for just any single parent to get a local authority house simply because they are a single parent.

People made their beds, signed up to agreements and if that means they need to ride out the storm then they need to, until things turn around, at which time they would probably get on the bandwagon again and either speculate or start keeping up with the neighbours again.

I assume that the Mortgage agreement was in english and in writing. If someone didn't read their agreement before signing up then, sorry, I came through the same education system and seemed to have paid a little more attention in school. Its harsh but a fact and not as harsh as me paying for anyone elses home

Having said that the Banks should take their hit, the bondholders too and people who took on serious mortgage agreements. The all speculated and lost and those of us who didn't shouldn't have to pay for any of them.

If the problem is that bad the banks will need to work with their debtors. Thats business. The rest of us are suffering in all sorts of cuts already without subsidising people to keep great homes

Oh and the Irish Independent really need to stop publishing articles about a journalist who has a good job and now it seems has a platform to soapbox her stupidity. Either the editor is quite clever letting her look silly or really were intent on patronising those who have real problems

keithclancy

Didn't buy a house a few years back when living in Ireland because I couldn't afford one, or at least it was more economical/flexible to rent than to buy anyway.

Looking back I saved a good bit renting a place that was "dead money"


300,000 Euro house then rented a 760 euros / month
2 years living there 760 * 24 = 18240

Considering I didn't have to pay interest it turned out much better.

When looking at places I could afford, they were totally overpriced, It was like a joke with the Estate agent walking in with a pair of dice to value the place.

Saw one place in Cork that was someones Garage converted into a studio apartment going for 150,000 euros .. I mean, seriously. Saw a few houses in Blackpool going for 180,000 that looked like a crime scene.

Left Ireland and moved to the Netherlands, after a year here we bought a house that we could afford in a nice area, have a Garden and an Office, bus stop is around 300 meters away, Airport is 5 bus stops away, city center is 4 bus stops away. Big Park about two minutes walk around the corner.

It cost us a little bit more than that Garage I saw in Cork all those years ago.

Honestly we did think we would move back to Ireland at some stage, but now we think thats never going to happen

Gumbo

Bob_Latchford wrote: »

This is what low interest rates was supposed to do. If people cant afford to pay at these low rates then they themselves have made the error, its moral hazard on micro scale imo.

i think its more to do with the fact that pay has been cut so much.
yes the interest rates are low, but couple that with the pay cuts people have taken and in reality the mortgage is still a high percentage of their salary.

my mortgage is now 52% of my monthly salary and with a child on the way, i am really worried for next year. i am really thinking about handing my keys back.

now i dont live a big lifestyle, i dont smoke, i go out maybe once a month max, i drive an 02 diesel car and live in Finglas.

ntlbell

kceire wrote: »

i think its more to do with the fact that pay has been cut so much.
yes the interest rates are low, but couple that with the pay cuts people have taken and in reality the mortgage is still a high percentage of their salary.

I would imagine it's more to do with bad financial planning, over extending etc. mortgages drawn down on two wages with the hope that both wages increasing in the future, no stress testing against wage cuts, jobs losses and higher interest rates.

Not you specifically, but in general.

rumour

kceire wrote: »

my mortgage is now 52% of my monthly salary and with a child on the way, i am really worried for next year. i am really thinking about handing my keys back.

I'll throw in my two pence worth here from the fortunate position of not having these problems.

I don't think the country should advocate mortgage forgiveness. This is collectively wrong and starts from the premise that we should add another bill to the state. Addirionally creating this expectation is symptomatic of the problems in this country, the state is not there to underwrite everyones personal affairs. Expecting the state to solve this is a bill too much.

However if you cannot pay and at 52% of your income going to the banks Iit is quite alot, I will say having some young ones myself kids are not that much of an expense until creche is involved. However how you manage your finances is entirely your choice and responsibility. The solution should your current affairs become unmanageable is entirely your choice also. I do not think we need new laws or some sort of national consensus to resolve this. The banks are lining up cash for mortgage defaults anyway.

My opinion is that you should make whatever plans you can to live somewhere else. With parents friends or emigrate. Then hand back the keys. Pragmatically emigration is best you will avoid the leeching class (lawyers, debt collectors and yes bankers) chasing you forever.

No law will be passsed to assuage your moral scruples in this choice. (IMO) You must consider your family first and make a choice but bear in mind it will always be your choice. There will be consequences however if enough people did this, what can they (the banks) realistically do?

However again I do not think we need thegovernment or a new law to make this decision for you. The responsibilty is yours.

Amhran Nua

If interest rates start being hiked up we may have to face a choice between figuring out which is cheaper, another bank recapitalisation after mass defaults or supplementing interest payments at the household level. I'd be much more in favour of getting as much well-paying employment into the country as humanly possible however, and letting mortgage holders work it off like everyone else.

Gumbo

ntlbell wrote: »

I would imagine it's more to do with bad financial planning, over extending etc. mortgages drawn down on two wages with the hope that both wages increasing in the future, no stress testing against wage cuts, jobs losses and higher interest rates.

Not you specifically, but in general.

totally agree, the banks should of said no to me, but i should of said no too, but hindsight is a great thing

sarumite

paddylast wrote: »

doesnt offer much hope to any young couple looking to trade up in the next few years if the value of their house is half of what they paid.

I think if you are in negative equity, then thinking about trading up shouldn't be high on your agenda. Personally I would have problems using tax payers money to help a couple trade-up.

Gumbo

sarumite wrote: »

I think if you are in negative equity, then thinking about trading up shouldn't be high on your agenda. Personally I would have problems using tax payers money to help a couple trade-up.

+1
the main agenda should be to pay it, trading up should be your lowest priority!

Cavehill Red

paddylast wrote: »

The guys proposing to take over EBS are talking of doing this.

IF NAMA is discounting the developers then surely there must be some hope for the individual mortgage holders.

You lot just don't understand what's happening, do you?

Of COURSE, there are discounts for developers.
Of COURSE, the banking debts are now the Irish taxpayer's debts.
Of COURSE, we have to pay Roman Abramovich and Swiss banks while cutting health and education.
Of COURSE, there won't be a single penny for distressed mortgagees.

You're being ridden into the ground, as individuals and as a nation, for the benefit of the hyperrich.
If you're going to accept that, and it seems most Irish people do, then at least stop whining about it.

Solid Snake

I for one am sick to death of hearing people bitch on about how "oh you made the mistake of buying into that mortgage, it's your fault that we're in this mess".

I bought in '05, something that was not out out of my price range and I could well afford. I still can and thank God I'm lucky enough to still have a decent paying job in the private sector.

Problem is that the banks basically controlled the price of houses due to cheap credit, they just flooded the market with it. If you had a family and needed security of somewhere to live then you bought to get that. This Bull**** of "oh I saw it coming and wasn't gonna pay those prices" wrecks my head. Get off your high horse! People paid the for the value of the property at that time. No one could have foreseen the exact series of events that are now unfolding, maybe it would have plateaued but not bottomed out.

Firstly if anyone should have been bailed out then it should be the people of this country, not the bloody banks! They orchestrated this mess and then we have the spineless Gob****es in Government helping out their best buddies by saying "ahh hold on lads, don't worry, we'll sort ye out, we can just use the tax". It's not the ordinary Joe Soap that has us where we are. Dont look around for who is to blame......look up the ladder. As the saying goes....Sh!t only runs one way.

Dempo1

I agree that there is too much obsession with the question of Negative Equity, people need to get passed this absurd issue. I'm not sure what other people think but i purchased my Humble Cottage as a HOME!

I do accept family's grow bigger and circumstances may dictate a large home but those consumed by the question of negative equity need to start facing up to harsh reality. I can not see property values ever returning to the levels they reached during the boom. Besides, negative equity only becomes an issue if the house is being sold. Ironically thousands of people get into negative equity scenario's the minute they purchase a new car and yet despite it being the second largest commitment in most households, few blink an eye lid when thousands in value are lost the minute they drive their new car off the forecourt of their local main dealer.

The bigger question is the actual payment of Mortgages and clearly the figures on those struggling is staggering and I have no doubt the situation is going to implode in the new year.

If people accept the Notion of their commitment being a HOME, i believe a number of mechanisms could be put in place. Accepting the inevitable Banks should be required to extend the mortgage term, even if the payments go into the next generation, afford ability is the key to relieving enormous stress on people. In reality the banks don't want the houses, the state can't afford to house people and ultimately in the even of repossession the debt still remains. Its not rocket science. Take the amount owed, work out a detail and realistic repayment schedule over an extended period which would include a FIXED interest for the period, done and dusted.

I also believe the previous principal of mortgage loans needs to be kicked t touch, Mortgages should now revert to personal loan type scenario, a single payment per month which draws down the capital amount outstanding, the current ludicrous situation where people see little or no reduction in their Mortgage balance for decades is a thing of the past.

We are were we are, a quote Cowen will live to regret, NAMA are resturcturing loans daily, why can't the same apply to Personal Mortgages, which seem to hold Untoucable status at the moment.

ntlbell

Solid Snake wrote: »

I for one am sick to death of hearing people bitch on about how "oh you made the mistake of buying into that mortgage, it's your fault that we're in this mess".

As much as you're tied of hearing it, I'm sure the other side are just as tired of hearing "the bank made me do it" "how am i suppose to know i have to research one of the biggest most important finacnial decsions of my life" "everyone was buying one" "rent is dead money" "ireland is different" "OH MY GOD YOU DON'T HAVE A PROPERTY PORTFOLIO??" "RENT? HUH?"

It goes both ways.

keithclancy

Solid Snake wrote: »

I for one am sick to death of hearing people bitch on about how "oh you made the mistake of buying into that mortgage, it's your fault that we're in this mess".

I bought in '05, something that was not out out of my price range and I could well afford. I still can and thank God I'm lucky enough to still have a decent paying job in the private sector.

Problem is that the banks basically controlled the price of houses due to cheap credit, they just flooded the market with it. If you had a family and needed security of somewhere to live then you bought to get that. This Bull**** of "oh I saw it coming and wasn't gonna pay those prices" wrecks my head. Get off your high horse! People paid the for the value of the property at that time. No one could have foreseen the exact series of events that are now unfolding, maybe it would have plateaued but not bottomed out.

Firstly if anyone should have been bailed out then it should be the people of this country, not the bloody banks! They orchestrated this mess and then we have the spineless Gob****es in Government helping out their best buddies by saying "ahh hold on lads, don't worry, we'll sort ye out, we can just use the tax". It's not the ordinary Joe Soap that has us where we are. Dont look around for who is to blame......look up the ladder. As the saying goes....Sh!t only runs one way.

In fairness, I had to listen to "That rent is dead money" and "you should buy a house" from when I was old enough to work.

I was called an idiot on multiple occasions for not buying a house.

I'm never said you were, neither am I on a high horse. I'm simply stating what happened.

lucianot

Solid Snake wrote: »

No one could have foreseen the exact series of events that are now unfolding, maybe it would have plateaued but not bottomed out.

That's not entirely true:

http://www.youtube.com/watch?v=a37sRjkLtWw

And I have to admit I don't want to pay for other people mortgages.

gonedrinking

In fairness, I think the OP and his subsequent replies on this thread are an attempt at satire. I read it as a stinging attack on the type of society we have become, where everyones debts get passed on to some other group, like a big game of musical chairs, loser takes all.

Panrich

We bought a house in 2002. We looked at our incomes and factored in interest rate hikes and loss of job etc. For that reason we went with a mortgage for a 4 bed semi rather than the 4/5 bed detached that we could have easily 'afforded' at the time. We have spent the last 8 years foregoing nights out/holidays and still have not fully finished furnishing our house.
My point is that I am now expected by some to pay to keep the less prudent in bigger/better/fully furnished/more valuable houses than me.

ei.sdraob

Panrich wrote: »

We bought a house in 2002. We looked at our incomes and factored in interest rate hikes and loss of job etc. For that reason we went with a mortgage for a 4 bed semi rather than the 4/5 bed detached that we could have easily 'afforded' at the time. We have spent the last 8 years foregoing nights out/holidays and still have not fully finished furnishing our house.
My point is that I am now expected by some to pay to keep the less prudent in bigger/better/fully furnished/more valuable houses than me.

yes

whats worse is that you are we are already paying for the feckless indirectly by giving good money to the banks

gurramok

Solid Snake wrote:

This Bull**** of "oh I saw it coming and wasn't gonna pay those prices" wrecks my head. Get off your high horse! People paid the for the value of the property at that time. No one could have foreseen the exact series of events that are now unfolding, maybe it would have plateaued but not bottomed out.

You'd want to get off your high horse there. I along with many other posters on this site have predicted the crash on this forum and the Accommodation forum since at least '06. We were laughed at as loonies back then, now the shoe is on the other foot.

oflahero

ei.sdraob wrote: »

yes

whats worse is that you are we are already paying for the feckless indirectly by giving good money to the banks

+1. There's only one 'fair' solution here (if 'fair' actually means anything anymore):

1. Major bankruptcy law reform - enable people to get out of an unpayable mountain of debt within 3 years and start again;
2. BUT - with repossessions. The price for escaping the debt must be the repossession of the gaff that was unaffordable in the first place. The less well-off in society cannot be expected to fund via tax the aspirational middle-class continuing to live in detached gaffs they can't afford.

Cons:
1. "Our house is our home - please don't kick us out of our home." Pan to lonely shot of stuffed toy sitting on bed, quivering lip of lady of the house, etc. The emotive argument. But surely short-term emotional pain is preferable to thirty or more years of paying off useless debt?
2. Who pays? The banks take a huge hit this way, thus leading to fear of further taxpayer recaps. Well, as of Sept 2008 our bank debt is our sovereign debt, and as of yesterday our sovereign debt is Europe's problem too. If Ajai Chopra & co. can't figure that one out, I don't know who will.

BingoMingo

lmimmfn wrote: »

I honestly still for the life of me CANNOT BELIEVE PEOPLE SIGNED UP TO 300,000+ Euro MORTGAGES, jesus did these people ever understand their undertaking? fair enough the banks are partially responsible, but its an absolutely insane amount of cash and people took that risk, end of story. I can have sympathy for people losing jobs, especially with famalies, but i cannot be sympathetic with idiocy

I dont mean to be a wanker but this whole concept of bail this out, bail that out, if devs and banks are getting bailed out why am i not, just the whole bailout attitude in this country is what got us in this stupid mess.

Absolutley Agree.

The word "bailout" is being trotted out with abandon by the media all around the world. To me a bailout is where you are given a gift of money
that is never to be repaid. It is not a loan. There are very few examples of this happening despite the fact that virtually every financial restructuring
deal or loan is nowbeing called a bailout.

The idea of debt foregiveness is proposing a genuine bailout - the money is lost forever. The idea has been rejected everywhere else in the world.
Why do we always think in Ireland that we are different.

The idea is unfair on those who have to pay for it and the issue of Moral Hazard cannot be overcome. People who can afford to make their payments will say "why bother" and the whole thing will snowball exponentially. To suggest to people that you can walk away from debt is a dangerous concept.

Solid Snake

gurramok wrote: »

You'd want to get off your high horse there. I along with many other posters on this site have predicted the crash on this forum and the Accommodation forum since at least '06. We were laughed at as loonies back then, now the shoe is on the other foot.

Fair points Gurramok and Keith, my post is not an attack on anyone here guys so don't get defensive. It's just all I'm hearing at the minute. I wish I had have found boards back before I got my mortgage but as I said I have no problem paying it. It is affordable.....for now:o

Keith I was in the same boat as you, as soon as I was working I was told that rent was dead money, unlike you I did buy into it but as I said I can afford my mortgage so no one is paying for mine.

jmayo

paddylast wrote: »

The guys proposing to take over EBS are talking of doing this.

IF NAMA is discounting the developers then surely there must be some hope for the individual mortgage holders.

And who the f&** is going to cover the cost of these discounts for individual mortgage holders ?
Oh yeah the taxpayers, including those of us who didn't rush out like headless chickens and were laughed at for predicting it was all a big bubble.

There should be no bailouts for ANYONE.

paddylast wrote: »

doesnt offer much hope to any young couple looking to trade up in the next few years if the value of their house is half of what they paid.

Perhaps you can offer my family some hope that we don't have to pay for everyone elses stupid decisions ?

Solid Snake wrote: »

I for one am sick to death of hearing people bitch on about how "oh you made the mistake of buying into that mortgage, it's your fault that we're in this mess".

Well a lot of us were sick to death of hearing for 10 years that you must buy, "rent is dead money", "only idiots rent", "you must get on the ladder".

Solid Snake wrote: »

I bought in '05, something that was not out out of my price range and I could well afford. I still can and thank God I'm lucky enough to still have a decent paying job in the private sector.

And I hope it continues for you.

Solid Snake wrote: »

Problem is that the banks basically controlled the price of houses due to cheap credit, they just flooded the market with it. If you had a family and needed security of somewhere to live then you bought to get that.

Fair enough some people felt they had to buy, because our rental legislation is not great when compared to our European neighbours.
They did for family reasons and security as you say, but why did singletons have to buy ?

Why did people have to buy shoeboxes that they knew would be unsuitable if/when they had a family ?

Solid Snake wrote: »

This Bull**** of "oh I saw it coming and wasn't gonna pay those prices" wrecks my head. Get off your high horse! People paid the for the value of the property at that time. No one could have foreseen the exact series of events that are now unfolding, maybe it would have plateaued but not bottomed out.

Grade A BULLS***.
And your whining about us non bubble believers wrecks my head.

Did you ever check out what some people were saying ?
I suppose you laughed at how stupid the likes of David McWilliams, Morgan Kelly or Richard Curran with his Aftershock documentary were, when they were going on about how it was a bubble ?
Shure anyone that voiced the above concerns were naysayers and should go off and committ suicide ?

Solid Snake wrote: »

Firstly if anyone should have been bailed out then it should be the people of this country, not the bloody banks! They orchestrated this mess and then we have the spineless Gob****es in Government helping out their best buddies by saying "ahh hold on lads, don't worry, we'll sort ye out, we can just use the tax". It's not the ordinary Joe Soap that has us where we are. Dont look around for who is to blame......look up the ladder. As the saying goes....Sh!t only runs one way.

And what are you suggesting, but using the taxpayers to bail out people who often made wreckless decisons ?
There should be no bailouts.

Or how do you suggest we frame this personal bailout ?
Your posts read "where is my bailout?" :rolleyes:
Well where is mine then ?
I lost money on a car whose engine blew up and can't be fixed.
It wasn't my fault, so why can't I get a bailout ?

gurramok wrote: »

You'd want to get off your high horse there. I along with many other posters on this site have predicted the crash on this forum and the Accommodation forum since at least '06. We were laughed at as loonies back then, now the shoe is on the other foot.

Very true.
Of course a lot of the ones now looking for personal bailouts were telling us how there would be no bubble bursting on the Bubble Bursting thread in the Accomodation forum.
That is if they bothered reading any such negative commentary. :rolleyes:

Sponge Bob

kceire wrote: »

totally agree, the banks should of said no to me, but i should of said no too, but hindsight is a great thing

KC, they will eventually bring in a simplified bankruptcy or 'personal examinership' system that will allow you to declare a 'bankruptcy' , take 3 years of pain (but no mortgage as such) and emerge with a clean slate at the end of it and with your debts 100% discharged. They will leave you your rent/food money and probably even the car during those three years.

Such a system will exist within 2 years. It has to given the astonishing levels of personal debt in Ireland. Hand nothing back until it does. Don't incur any more debt either, the stress ain't worth it.

But unless you declare yourself insolvent there will be no discounts or reliefs. You are either solvent or not.

sollar

I like the idea of reducing everyone who bought in the last 7 years mortgage by 5%. It would be a good psychological boost and might get people spending again.

gurramok

sollar wrote: »

I like the idea of reducing everyone who bought in the last 7 years mortgage by 5%. It would be a good psychological boost and might get people spending again.

As I have been prudent and did not buy a house, will my rent be reduced too?

keithclancy

sollar wrote: »

I like the idea of reducing everyone who bought in the last 7 years mortgage by 5%. It would be a good psychological boost and might get people spending again.

That wouldnt really be fair or feasible though.

I mean what if someone bought a house for 1 mil and another bought a house in the sticks for 200k ..

5% of 1mil is alot more than 5% of 200k

ntlbell

gurramok wrote: »

As I have been prudent and did not buy a house, will my rent be reduced too?

How about a sponsored 5% increase in your wages?

To you know, help you spend more.

BeeDI

sollar wrote: »

I like the idea of reducing everyone who bought in the last 7 years mortgage by 5%. It would be a good psychological boost and might get people spending again.

With the never, ever ending all pervasive negative media commentary, I think a 60% morgtage debt forgiveness, never mind 5%, wouldn't spark people into spending again, untill they have well and truley paid off the 40% balance, and stuck another €30k under the mattress.
People are in a zombie like state of shock, and are turning Japanese like, in their instinct to save and save. The hubris of the past ten years is dead for ever.
This country is going to develop exports, exports, exports, to bring in cash, because demestic consumer spending is in the next millenium

johnnyskeleton

paddylast wrote: »

If loans were reduced by say 5% it would give mortgage holders some glimmer of hope and start consumer spending again in the economy.

The argument that a mortgage bailout would increase consumer spending and therefore would have wider benefits beyond those of the homeowners is a fallacy, although it does appeal to homeowners as an argument because it allows them to think that they are not being bailed out for themselves, but for wider macroeconomic benefits.

It's all about the marginal propensity to consume. Brian Lucey, one of the proponents of a bailout engaged (through twitter) with this thread:

http://www.thepropertypin.com/viewtopic.php?f=19&t=34132

but never dealt with this argument.

Basically, if your aim is to increase consumption in the domestic economy, you should take money away from people who are less likely to consume and give it to people who are more likely to consume. However, I would argue that someone with massive debts will have a very low marginal propensity to consume because if they are in any way sensible they will have become very conservative after being stung by the property bubble bursting. So, if you give relief to someone in negative equity they are more likely to save it to avoid such a horrible situation recurring in future. Someone who was never in negative equity will not have such a negative experience and will be more likely to spend. The exception to this are the people who are completely spend thrift and while they (i.e. people who bought overpriced houses on subprime loans based on false income data and then took out equity releases to buy fancy cars, big weddings etc) are likely to spend any bailout money, on point of principle we should not be indulging these people to just keep on spending other people's money in such imprudent ways.

Thus, while a bailout for someone in negative equity might result in some level of increased spending, it will at the same time reduce the available funds of someone who is more likely to spend, and so the cumulative effect is actually to dampen consumption rather than increase it overall.

This point is conveniently ignored because, lets face it, people in negative equity are more numerous and vocal than those who are prudent, and therefore they are much bigger vote grabbers, which is the real reason for debt relief.

sarumite

sollar wrote: »

I like the idea of reducing everyone who bought in the last 7 years mortgage by 5%. It would be a good psychological boost and might get people spending again.

I like it as well....though its unfeasable. Its no different if I said that I bought a car 3 years ago and now its in negative equity. Perhaps I can get 5% of the value on that as well?

danbohan

sollar wrote: »

I like the idea of reducing everyone who bought in the last 7 years mortgage by 5%. It would be a good psychological boost and might get people spending again.

why not give them all jobs in the public service and salary's of 100k while your at it !, stop looking for handouts , people got themselves into the mess its up to them to get themselves out or fold .

Holy Warlord

If debt 'forgiveness' (aka the taxpayer picks up the tab) comes about then...

... to keep things equitable, those who rented through the ridiculous property bubble and those who declined to take on too-large mortgages (for they took on board the plain fact that value and wages can go DOWN as well as up)... should be given nice free houses and apartments too.

The money shall appear by 'magic', of course.

sarumite

Holy Warlord wrote: »

If debt 'forgiveness' (aka the taxpayer picks up the tab) comes about then...

... to keep things equitable, those who rented through the ridiculous property bubble and those who declined to take on too-large mortgages (for they took on board the plain fact that value and wages can go DOWN as well as up)... should be given nice free houses and apartments too.

The money shall appear by 'magic', of course.

It would help to fill up those ghost estates.

sollar

danbohan wrote: »

why not give them all jobs in the public service and salary's of 100k while your at it !, stop looking for handouts , people got themselves into the mess its up to them to get themselves out or fold .

I only said i like the idea, who wouldn't. I haven't given it any real thought to be honest. But if it was announced tomorrow i'd be whooping and dancing in delight. If it doesn't.. no big deal i'm not in negative equity and can manage my payments.

But we are in a pickle and something has to be done other than austerity. I don't pretend to have the answers but one thing is obvious, cutting, cutting and cutting is not cutting it either!!!

Amhran Nua

Sponge Bob wrote: »

Such a system will exist within 2 years.

No, it won't. It would wipe out the banks again.

sollar wrote:

I don't pretend to have the answers but one thing is obvious, cutting, cutting and cutting is not cutting it either!!!

Cutting is doing a pretty good job of it actually, certainly seems to be keeping Europe happy anyway. And the more we cut, the less we have to borrow.

krattapopov

Myself and my wife have an extremely large mortgage. We don't want a bailout. We knew what we signed up for. However our circumstances have changed, unfortunately a job was lost and happily now a child is on the way.

We want to be able to pay all of that money back. I don't want anyone else to burden my responsibilities. I was raised better than that.

I'm sure an awful lot of people who are in this situation feel the same way.

What we need is help in restructuring the debt in order to make it more affordable to us and more socially effective, including personal unsecured debt which is equally just as dangerous due to it's short term nature. We all know that hindsight if 20/20, it's time to stop criticising people over there previous actions if they are prepared to work towards fixing it themselves.

ntlbell

krattapopov wrote: »

Myself and my wife have an extremely large mortgage. We don't want a bailout. We knew what we signed up for. However our circumstances have changed, unfortunately a job was lost and happily now a child is on the way.

We want to be able to pay all of that money back. I don't want anyone else to burden my responsibilities. I was raised better than that.

I'm sure an awful lot of people who are in this situation feel the same way.

What we need is help in restructuring the debt in order to make it more affordable to us and more socially effective, including personal unsecured debt which is equally just as dangerous due to it's short term nature. We all know that hindsight if 20/20, it's time to stop criticising people over there previous actions if they are prepared to work towards fixing it themselves.

I rarley see people being critised on these boards, but what I often do see is someone suggest something like the above and in the same thread show that they still don't seem to have a grasp on WHY they're in the current situation.

People really need to start to understand and learn from the mistakes they've made and this is not a critique it's the facts.

You're not in the position you're in because circumstances changed, or because one of you lost your job, or because there's a baby on the way. You're in the position because you didn't plan for any of it. You don't need hindsight, you don't need to be an economist, you don't need a crystal ball.

In saying all that, there's no reason if you go to your lenders you can't come to a workable soloution for you a lot of people all ready have.

Gumbo

ntlbell wrote: »

People really need to start to understand and learn from the mistakes they've made and this is not a critique it's the facts.

the problem with mortgage's is that you'll never get the chance to fix it, a mortgage is now for life, not just for xmas

its hard when you know the financial mistake you made will eat at your earnings for the next 30-35 years

on that note im heading to the motors forum for some cheering up

20Cent

krattapopov wrote: »

Myself and my wife have an extremely large mortgage. We don't want a bailout. We knew what we signed up for. However our circumstances have changed, unfortunately a job was lost and happily now a child is on the way.

We want to be able to pay all of that money back. I don't want anyone else to burden my responsibilities. I was raised better than that.

I'm sure an awful lot of people who are in this situation feel the same way.

What we need is help in restructuring the debt in order to make it more affordable to us and more socially effective, including personal unsecured debt which is equally just as dangerous due to it's short term nature. We all know that hindsight if 20/20, it's time to stop criticising people over there previous actions if they are prepared to work towards fixing it themselves.

Good post. Sorry about your situation, I'm close to being in the same boat. Don't mind the begrudgers they don't think normal people should be allowed own homes just rent. If everyone stress tested to the levels suggested no one would buy anything. Homeowners are the only people not being bailed out, we are the only ones paying our debts yet the right wing still feel the need to put the boot in anyway!!

ntlbell

20Cent wrote: »

Good post. Sorry about your situation, I'm close to being in the same boat. Don't mind the begrudgers they don't think normal people should be allowed own homes just rent. If everyone stress tested to the levels suggested no one would buy anything. Homeowners are the only people not being bailed out, we are the only ones paying our debts yet the right wing still feel the need to put the boot in anyway!!

again, showing the attitude that you haven't learnt anything.

Owning a home is not a right. People all over europe live their whole lifetime renting without much issue, why should Ireland be any different?

If people stress tested and didn't buy untill they could comfortably afford it then house prices wouldn't be nearly as high as they were. demand drove up the price demand from thousands of people buying something they couldn't afford.