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Mortgage Arrears Problem in Ireland.
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Unrealistic wrote: »Reading back I see now that I actually wrote the opposite of what I intended. Apologies for the confusion. What I had intended to write was that in the short term it would be less expensive to keep people in their homes but the longer the repayment moratorium has to last the closer we get to the economic tipping point where it makes more sense from a pure cost point of view to repossess now than to prolong the agony.
If we knew things were going to pick up (I don't mean property prices rising but just better employment opportunities so people could resume servicing their debt) in a year or two then I would agree that from a pure cost/benefit point of view it would be better to give people a moratorium than turf them out into tax payer funded rental accommodation. That is why I made the reference to it being indefinite. We've already effectively had a two year moratorium. I'm sure two years ago many people thought two years would be sufficient to give people some breathing space. How many years do you think it will take now? I couldn't even begin to hazard a guess other than that it is going to be many years before we see the employment situation begin to improve. Indefinite is just the correct term to describe any unknown time frame.
As an interesting aside it is not automatic that someone who is unfortunate enough to have his house repossessed will end up on rent supplement. Someone who can no longer afford their mortgage at higher interest rates might still be able to afford rent at current market rates without government support.
Lastly, you say that you have never 'looked for anything' but it seems that you make a distinction between a mortgage payer getting money from the taxpayer into his hand to help you pay his mortgage (a bailout in your terms?) and having the taxpayer pay the same amount directly to the bank so that the bank can afford to give him a repayment extension of some sort (leniency in your terms?). Now I agree there is a distinction in the long term if the leniency option merely postpones repayments that the mortgage holder will eventually make at a later date but it is still not without cost. Every €1 not paid by a mortgage holder this year is another €1 that the taxpayer has to borrow from the ECB and inject into the banks to keep them afloat. I am not saying that leniency shouldn't be an option, just that it should be clearly understood that availing of it at a time when banks are insolvent and being kept alive by the taxpayer is the same thing as availing of a state handout.
I agree with much of what you have said and your next post relating to being careful as we were indeed careful at the time we bought too. I think there is an assumption that many people struggling with mortgages actually did buy in the boom, are in negative equity or bought without giving it a second thought. There are some but not everyone.
Personally speaking, we bought a house well before 2004 when prices were very low (and realistic), and sold that house in late 2003, in early 2004 we bought to be nearer family so we would have childcare facilities (ie parents) rather than paying overpriced childcare costs while we worked. So we didn't acquire a 90% loan, nowhere near it as we had money from the sale of a house to inject into the new one. We are not in negative equity, we are struggling with monthly payments and I am presently selling everything (yes, this old laptop may well be selling online soon whomever posted the sell everything comment, I'm already selling everything else but this laptop is my connection to getting a job).
Having rented for a decade, I can see both points of the argument and by god did we live in some sh1tholes over those years without any rights. My circumstances may be slightly different to others in that my husband is self-employed in retail that is going downhill rapidly alongside most of the businesses around him (but that's another forum thread) and as such, we're entitled to sweet fa so that may be what's getting me more frustrated than anything.
With regard to your affording rental point, in our case, the mortgage is not much more than rental prices, so it is a case we would be looking for rental supplement after we give up the business.
With regard to the leniency issue, I am not talking about non-payments, I am talking about longer stretches of IO payments or IO/smaller capital payments, therefore the home owner pays more in the end and the tax payer is burdened less and/or more mortgage holders stretching their mortgages for longer so they themselves will have to pay. I am not sure how this will affect the taxpayer. For us though, as we're not 21 anymore, stretching our mortgage means we'll be dead before we get to pay it off so it's not really a reality.
As much as the likes of Ciaran and his ilk posting here, we're not all looking to dig deep into your blue woolly gaberdines for all your 50 cents, we're looking for the best solution in order for the mortgage holder to pay as best he can without affecting others and if that's not possible, leave the house with his debt (or flee like I'm watching others do, leaving others with more tax to pay).0 -
Great to hear from someone who actually exercised prudence and took time to consider the biggest financial decision of their lives.
Just as an example which highlights the lack of financial education, my younger brother (18 at the time, and just having left school), had a small loan with the local credit union.
The time came when he needed a car for work and a car loan was arranged again with the credit union.
He asked us with all seriousness "You know I still have the 1st loan? Will they forget about that now with the Carl loan?"
:rolleyes:
Things like this make me think it's time economics was taught in schools. Fiscal responcibility, or even fiscal literacy, needs to become ubiquitous in this country.0 -
Unrealistic wrote: »The crazy thing is that if we tightened up the rules across the board it wouldn't mean fewer people would be able to buy houses. It would just mean that prices would stay at an affordable level as the purchasing power of the whole market would be limited. If banks were again obliged to issue mortgages limited to an 80% LTV ratio and a cap of 2.5 times earnings then house prices will settle at that level and people won't be immediately plunged into potential default situations by interest rates rising a few points.
A fact that most of the media and the majority of our politicians and real estate agents are completely and totally missing. I have several friends who have not bought yet, and are waiting and saving.One or 2 are very impatient and view every move on interest rates and deposit increases as a huge setback. I keep trying to explain your point above to them, and they just don't seem to get it!
Fair play on your prudence.We ourselves are doing something similar, however not quite to the same extent. We are overpaying every year, as per what our rate was when we first got the mortgage, we stipulated the conditions to our (bemused) broker at the time of buying, among other things. However that's been slightly undercut by my losing a job, not once but twice....though we are still overpaying into the account every month, I'm not sure how long it'll be kept up.But we won't be defaulting or missing payments.
As I've said before....I don't advocate bailing out everyone who comes looking for it, so they can maintain their lifestyles. But something will have to be done. Interest rates are only going to continue to rise - and the only premise I have for this is that, Irish banks, at any rate, are so screwed that almost their only option is to raise interest rates. But they will have to make allowances of some sort for those who are in serious trouble. In terms of numbers - how big a percentage is that actually?? I think the number I saw was 300,000 in arrears?? How many of them, if they managed to get a job, would be able to start paying back again, I wonder? The reason I ask is that people talk as if half the population are in arrears - but that's not the case.0 -
The 300,000 figure was the high end of the range for estimates of mortgages in negative equity. Accurate statistics are not available but, based on the info that is publicly available, it is reasonable to assume that in excess of 50% of those mortgages in negative equity relate to buy to let or second homes rather than family homes.But they will have to make allowances of some sort for those who are in serious trouble. In terms of numbers - how big a percentage is that actually?? I think the number I saw was 300,000 in arrears?? How many of them, if they managed to get a job, would be able to start paying back again, I wonder? The reason I ask is that people talk as if half the population are in arrears - but that's not the case.
The last estimate I saw of mortgages in trouble making repayments was 70,000 with the potential to increase to 100,000 by the end of this year. Again the big question is how many of those relate to family homes.0 -
dolphin city wrote: »
Assuming you qualify and for fear of repeating myself, mortgage interest relief from the state: "short term", rental supplement from the state not "short term". Extra benefit.
Mortgage "Interest" Relief on "interest" of your mortgage.
Rental Supplement - standard rates for counties in Ireland.
you are missing the big difference tho = rental supplement are for people on the bones of their ass with no assets - wheareas mortgage relief is on an ASSET. Surely people are not expected to get supplementary payments for their mortgage.0 -
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With all these new taxes I'm having a hard time getting by on what I earn. I would like supplementary income to my income.
Whaddya say?0 -
dolphin city wrote: »
you are missing the big difference tho = rental supplement are for people on the bones of their ass with no assets - wheareas mortgage relief is on an ASSET. Surely people are not expected to get supplementary payments for their mortgage.
I am not classing them as the same, you asked where the extra benefit was, I stated it, now you're asking me to reason it and are implying I don't know the difference.
I have to laugh at the constant suppusitions on this board - who are these "people" you are talking about that are expecting to get supplementary payments for their mortgage?
Would you prefer now to remove the mortgage interest relief as a short term payment as it is based on an asset and not based on someone on "the bones of their ass with no assets"?0 -
dolphin city wrote: »
you are missing the big difference tho = rental supplement are for people on the bones of their ass with no assets - wheareas mortgage relief is on an ASSET. Surely people are not expected to get supplementary payments for their mortgage.
It's not correct.
It's not Mortgage Relief. It's Mortgage Interest Relief. The gov. will only contribute towards your mortgage interest as it's not technically an asset. Your principal is an asset and they will not contribute to this because of this fact. Your interest is the money the banks make from sell you the loan obviously. So they're basically contributing to the interest on the money you owe the bank. (This is pure profit for the bank.)
Speaking of people 'on the bones of their asses' whatever that means, I now quite a few people paying about 65euro a week for a house and they are making more than people who bought their homes. The government are subsidising there rest of the rent for them. This, the tax payer pays and guess what, the person paying it is the home owner usually as they are the ones working to pay their own mortgages.
There seems to be a lot of begrudgery on the boards and I think there are many more people who didn't purchase a home through sheer laziness, apathy, immaturity, etc. and these people are now jumping on the bandwagon and are actually delighted that it turned out bad for the home buyers. I'm not saying all of them, but a good proportion I'd imagine.
If this makes them feel a bit better for their lack of goals in life and inability to reach their goals, then so be it. But please take it easy on those of us who wanted to buy a home for our families, worked damn hard to do it, achieved it. And that even though through the inability of our gov. to regulate our banks, lost out bigtime.
By the way, I am not saying this about everyone on this board, but I have noticed some posters seem to revel in others misfortune. I feel sorry for them as they obviously aren't happy people in real live.0 -
Rareroastbeef wrote: »There seems to be a lot of begrudgery on the boards and I think there are many more people who didn't purchase a home through sheer laziness, apathy, immaturity, etc. and these people are now jumping on the bandwagon and are actually delighted that it turned out bad for the home buyers. I'm not saying all of them, but a good proportion I'd imagine.
I don't want to attack you as I realise this is your first post on boards.ie, but I think this sentiment is so far of the mark on a number of reasons. I think I disagree with just about everything in this particular paragraph.0 -
I don't want to attack you as I realise this is your first post on boards.ie, but I think this sentiment is so far of the mark on a number of reasons. I think I disagree with just about everything in this particular paragraph.
Look, I don't mean to upset anyone. I should rephrase that. I shouldn't have said most people, I am aware that people who rent are fine and there is nothing wrong with that for the majority of them, however a few who couldn't be arssed are jumping on the bandwagon. Obviously, you sound sensible, but I'm not talking about you. I'm sorry you feel that way, but I stand by this opinion as I know some of these people personally.0 -
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Rareroastbeef wrote: »Look, I don't mean to upset anyone. I'd like to say that some of these people are jumping on the bandwagon. Not most. I'm sorry you feel that way, but I stand by this opinion as I know some of these people personally.
There is no bandwagon to jump on here.....there are two different sides to argument. Though when you start saying people didn't buy houses out of laziness, apathy or immaturity I wasn't upset, merely bemused. I think there are many reason people didn't buy a house, I for one couldn't afford it at the time. I think some people who did buy are guilty of apathy and immaturity to be honest. Personally I take no pleasure in the knowledge that my sister is in negative equity, however I don't for one minute consider myself a "begrudger" for not agreeing to some form of debt forgiveness.0 -
There are quite a few people on boards.ie that have obviously been building up their frustrations over the years at the property market, all set up by Section 23 (thanks again FF), the greedy estate agents aka vultures, solicitors, etc, and the general Irish public was taken on a money-grabbing ride. Now they're here to take out their frustrations with an aim to attack anyone who went and bought a house for the sake of bringing up their families, as there's no one here who bought to make lots of cash here posting. Let's blame them because it had nothing to do with all those investors et al.
Just to be clear, you are 100% correct. I know, because I am one of these people. You seem to think - judging by your sarcastic tone - that this is something to be ashamed of. You couldn't be more wrong. In fact, I'm proud to be a member of the reality-based community. So let me put it to you straight:
I feel enormous resentment, anger and bitterness towards "ordinary" folk who pumped up the property bubble and voted FF repeatedly. I am not ashamed of this in the least - it is the natural human response to the pig-ignorant, obnoxious, idiotic nonsense I had to listen to in the boom from the kinds of "ordinary" folk you now seek to absolve of blame. I was there mate, I saw it - ordinary folk were jerks during the fake boom.
I think these people should now be made pay for their mistakes - otherwise, I will be paying for them either through recapitalisation money for the banks and/or subsidies for these people on their mortgages. Where is the justice in that? Furthermore, I want the value of their houses to crash to a sustainable level because this would be good for our competitiveness and for the large majority of our citizens who would have lower mortgages and rent in future. I also want these people to benefit from a sane new bankruptcy regime and to be helped to find comparable rental accommodation once their homes are repossessed.
So, the thing you were accusing people of and see as a negative, I embrace as a positive. Perhaps if you got off your high horse you might see this in the round and not in terms of your narrow sectional interest.0 -
What if you bought a house and never voted FF? I suppose people like that are fair game to be hated as well?:rolleyes:
Unrealistic, I see an article in today's Times that gives percentages of defaulters for the different banks but I don't think it gives actual numbers.Just to qualify my other post.
http://www.irishtimes.com/newspaper/finance/2011/0218/1224290139512.html0 -
I don't doubt that is true and I think it's wrong. I can't understand how someone on €40k can avail of rent supplement or be entitled to social housing.Rareroastbeef wrote: »Speaking of people 'on the bones of their asses' whatever that means, I now quite a few people paying about 65euro a week for a house and they are making more than people who bought their homes. The government are subsidising there rest of the rent for them.
You seem to be contradicting yourself here. If you are talking about people on rent allowance who are earning more than people paying mortgages then surely they are paying more taxes as well?Rareroastbeef wrote: »This, the tax payer pays and guess what, the person paying it is the home owner usually as they are the ones working to pay their own mortgages.
Maybe it's just my perspective but I think immaturity might better describe people who blindly proceed with a house purchase on a 90-100% mortgage at 8 times earnings leaving themselves no wiggle room for a decline in fortunes or an increase in interest rates.Rareroastbeef wrote: »There seems to be a lot of begrudgery on the boards and I think there are many more people who didn't purchase a home through sheer laziness, apathy, immaturity, etc.
Anyone in that situation has my sympathy. Like Sarumite above I have a sibling in this boat. But that sympathy is tempered by the frequent failure of those who find themselves in that position to face up to some basic truths.Rareroastbeef wrote: »But please take it easy on those of us who wanted to buy a home for our families, worked damn hard to do it, achieved it. And that even though through the inability of our gov. to regulate our banks, lost out bigtime.
1) You say you wanted to buy a home and you achieved that. But what you actually achieved was entering a commitment to buy a home over 20 or 30 years and you have not bought your home until you have fulfilled that commitment. The basic principles of the agreement you signed up to are very simple; you can live in the house as long as you keep paying what you owe. If you stop paying you have to walk away from the house. Mortgage holders who are in trouble have been very lucky that that have not been held to the deal they signed up to and have been given the breathing space of the moratorium.
2) You have repeated something that I saw on journal.ie today as well. This whine that the banks and the government to blame but the poor mortgage holders are the innocent party. This is nonsense. Anyone who took out a mortgage in the bubble years and who overextended themselves directly contributed to the bubble and bears a share of the responsibility for the situation the country is in now. The banks are responsible for providing credit recklessly, the government is responsible for allowing them to do so, the developers, estate agents and property journalists are responsible for hyping the market and the people who bought property are responsible for borrowing more than they could afford to pay more than a property was worth.
I think that a big part of the polarised nature of the argument on this subject is not that people are unwilling to see struggling mortgage holders get help of some sort. It is more nuanced than that as it is more of a resentment towards helping out struggling mortgage holders who still fail to recognise that they played a large role in their own downfall.0 -
I believe there are about 800k residential mortgage on the combined books of the banks so that would suggest 45k in trouble at the 90 day measure. But that doesn't include people who are behind but by less than 90 days or who have negotiated an interest only window etc. so we could still be at the 70k mortgages in trouble listed in other articles recently.What if you bought a house and never voted FF? I suppose people like that are fair game to be hated as well?:rolleyes:
Unrealistic, I see an article in today's Times that gives percentages of defaulters for the different banks but I don't think it gives actual numbers.Just to qualify my other post.
http://www.irishtimes.com/newspaper/finance/2011/0218/1224290139512.html0 -
Treehouse72 wrote: »Just to be clear, you are 100% correct. I know, because I am one of these people. You seem to think - judging by your sarcastic tone - that this is something to be ashamed of. You couldn't be more wrong. In fact, I'm proud to be a member of the reality-based community. So let me put it to you straight:
I feel enormous resentment, anger and bitterness towards "ordinary" folk who pumped up the property bubble and voted FF repeatedly. I am not ashamed of this in the least - it is the natural human response to the pig-ignorant, obnoxious, idiotic nonsense I had to listen to in the boom from the kinds of "ordinary" folk you now seek to absolve of blame. I was there mate, I saw it - ordinary folk were jerks during the fake boom.
I think these people should now be made pay for their mistakes - otherwise, I will be paying for them either through recapitalisation money for the banks and/or subsidies for these people on their mortgages. Where is the justice in that? Furthermore, I want the value of their houses to crash to a sustainable level because this would be good for our competitiveness and for the large majority of our citizens who would have lower mortgages and rent in future. I also want these people to benefit from a sane new bankruptcy regime and to be helped to find comparable rental accommodation once their homes are repossessed.
So, the thing you were accusing people of and see as a negative, I embrace as a positive. Perhaps if you got off your high horse you might see this in the round and not in terms of your narrow sectional interest.
Feel free to keep feeling angry and bitter, wallow in it, don't attempt to throw your negativity at me, I'm not looking for anything from you, nor did I pump up the bubble, I was there from the start of it before it went upwards, I wouldn't have bought in the thick of it, I didn't talk about it with people as it sickened and shocked me and everyone around me -- take the time to read the entire thread, not just one or two posts, nor did I vote for Fianna Fail. I'm blaming all, for the record, I said "set up" I didn't say blame them entirely, as you can't just blame one or two, so please feel free to read through the entire thread before you go rattling off on one.
My high horse died in the 1980s. Remember them? I do "mate".0 -
Unrealistic wrote: »
I believe there are about 800k residential mortgage on the combined books of the banks so that would suggest 45k in trouble at the 90 day measure. But that doesn't include people who are behind but by less than 90 days or who have negotiated an interest only window etc. so we could still be at the 70k mortgages in trouble listed in other articles recently.What if you bought a house and never voted FF? I suppose people like that are fair game to be hated as well?
Unrealistic, I see an article in today's Times that gives percentages of defaulters for the different banks but I don't think it gives actual numbers.Just to qualify my other post.
http://www.irishtimes.com/newspaper/finance/2011/0218/1224290139512.html
I just found this report on the Moody's analysis which gives actual numbers. 45k over 90 days and a further 40k renegotiated. So that means we're already at 85k which suggests 100k is too low an estimate for the end of this year.
http://www.build.ie/national_news.asp?newsid=1231390 -
Unrealistic wrote: »I don't doubt that is true and I think it's wrong. I can't understand how someone on €40k can avail of rent supplement or be entitled to social housing.
You seem to be contradicting yourself here. If you are talking about people on rent allowance who are earning more than people paying mortgages then surely they are paying more taxes as well?
Apologies for the muddle. What I mean is, yes, they are paying taxes too, but some are working under the table, welfare with nixers, etc. too. Some are netting more than some full-timer workers on basic salaries, however in today's climate the majority of homeowners would be working and paying tax, in order to be approved for their mortgage and able to commit and maintain a mortgage. Therefore I'm just pointing out that their taxes do contribute to people receiving rent supplement. I'm also not saying that people receiving rent supplement don't also pay taxes, just that mortgage holders do.
Maybe it's just my perspective but I think immaturity might better describe people who blindly proceed with a house purchase on a 90-100% mortgage at 8 times earnings leaving themselves no wiggle room for a decline in fortunes or an increase in interest rates.
I totally agree with you there. I have heard tales and know people who took out these mortgages and put a 30k wedding on the mortgage too. Bad enough that you have a home in negative equity, but paying over thirty years for a wedding cake is insanity. I wouldn't have sympathy for these people either, they were usually the ones ordering bottles of champagne is the local pub in the height of the boom.
I guess I am describing middle income families who at the time didn't overstretch themselves. Saved 30percent of their deposit and both had 'reliable' jobs. Didn't buy the trophy house of the mcmansion but a roof over their heads so that they could bring up their families. It doesn't seem logical now, but looking back, these people didn't see the tsunami ahead with job losses, huge tax increases, price increases, etc. These are the people who are in the siht now.
Anyone in that situation has my sympathy. Like Sarumite above I have a sibling in this boat. But that sympathy is tempered by the frequent failure of those who find themselves in that position to face up to some basic truths.
1) You say you wanted to buy a home and you achieved that. But what you actually achieved was entering a commitment to buy a home over 20 or 30 years and you have not bought your home until you have fulfilled that commitment. The basic principles of the agreement you signed up to are very simple; you can live in the house as long as you keep paying what you owe. If you stop paying you have to walk away from the house. Mortgage holders who are in trouble have been very lucky that that have not been held to the deal they signed up to and have been given the breathing space of the moratorium.
Yes. You are right. It's not achieved until 20/30 years, however we achieved the hard slog of saving every penny to make up the downpayment. Living frugally for years, then finally getting approved and getting the home. (It was looked on as an achievement as nobody knew that things would collapse. The future looked bright. People set down roots when they bought.) If you'll remember another nasty part of that was the 'gasumping' and the huge competition at the time and the bidding wars that broke out when buying property. It wasn't so easy when funds were low to manage to buy at a price you could afford.
2) You have repeated something that I saw on journal.ie today as well. This whine that the banks and the government to blame but the poor mortgage holders are the innocent party. This is nonsense. Anyone who took out a mortgage in the bubble years and who overextended themselves directly contributed to the bubble and bears a share of the responsibility for the situation the country is in now. The banks are responsible for providing credit recklessly, the government is responsible for allowing them to do so, the developers, estate agents and property journalists are responsible for hyping the market and the people who bought property are responsible for borrowing more than they could afford to pay more than a property was worth.
I agree again with you. Some of the reckless ones blame everyone but themselves. However, the banks, regulators, gov. are to blame. To say they are not, is not true. They are not scapegoats. They are to blame. Simple as that. They are the reason the economy collapsed. Not John and Mary who both had good jobs and bought a home based on their salaries and projected income for the years to come. We all can't take the blame for the idiots who lived beyond their means even before they lost their jobs.
I think that a big part of the polarised nature of the argument on this subject is not that people are unwilling to see struggling mortgage holders get help of some sort. It is more nuanced than that as it is more of a resentment towards helping out struggling mortgage holders who still fail to recognise that they played a large role in their own downfall.
There is a lot of resentment out there. It's normal. Things are bad for everyone. But I guess how you are effected is who you are, your lifestyle, what's important to you, etc. so everyone is effected differently. I am neither for or against. I just wanted to say that people shouldn't be so nasty to each other. Everyone has their own problems.0 -
Sorry.
I screwed up that reply.
I put most of my answers to your comments as a quote of your comments too.
I edited it to put in blue. Apologies (again.)
Teething pains.:)0 -
The only way the government is going to help out mortgage holders from the bubble is if it gets more expensive not to. This is a possibility given the effective ownership of many banks by a basically mandateless Fianna Fail. Ideally of course the best solution is to focus entirely on creating good, well paying jobs, and get the mortgages paid that way. Lets hope the incoming government recognises that.0
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I would thank you but I can't seem to find the button for it.
Maybe the homeowners will set up some type of 'Union' for all homeowners and organise a structured default akin to what Morgan Kelly mentioned.
They would have excellent negotiation powers now that the banks have started to turn the screw on mortgageholders by the way of interest rises, removal of fixed rates, etc.
They could basically do deals with the banks themselves as one unit rather then waiting for a toothless government to do it.
Problem solved....renters wouldn't be resentful of their use of taxes and taxes could go to work elsewhere.0 -
This is the bit that continues to amaze me. That people still don't understand that we, the taxpayers, are keeping the banks afloat by pumping money into them so doing a deal with the banks is effecitvely doing a deal with your fellow taxpayers as they are the ones who are going to have to pay for it. If you negotiate an interest only holiday for a year then you pay €X less to the bank for that year. So the hole in the bank's finances increases by €X and the tax payer has to increase funding for the banks by €X to plug that hole.Rareroastbeef wrote: »They could basically do deals with the banks themselves as one unit rather then waiting for a toothless government to do it.
Problem solved....renters wouldn't be resentful of their use of taxes and taxes could go to work elsewhere.
I don't think it's just renters who would be resentful of that but anyone who has fully paid for their own home or who is still paying for the own home and not looking for a handout.0 -
The government is already helping mortgage holders and we are paying for it. How much of the billions that have gone into the banks already have been to directly fund the two year house repossession moratorium?Amhran Nua wrote: »The only way the government is going to help out mortgage holders from the bubble is if it gets more expensive not to.
I'm not saying it is wrong for the government to help. I think there were good arguments for the moratorium. But it should be recognised that substantial help has already been given and the taxpayer is already significantly out of pocket as a result.
I wish Fianna Fail owned the banks but unfortunately all of us do.Amhran Nua wrote: »This is a possibility given the effective ownership of many banks by a basically mandateless Fianna Fail.
Indeed that's the best medium term solution but job creation is a slow process and people are in trouble with their mortgages right now.Amhran Nua wrote: »Ideally of course the best solution is to focus entirely on creating good, well paying jobs, and get the mortgages paid that way. Lets hope the incoming government recognises that.0 -
Unrealistic wrote: »This is the bit that continues to amaze me. That people still don't understand that we, the taxpayers, are keeping the banks afloat by pumping money into them so doing a deal with the banks is effecitvely doing a deal with your fellow taxpayers as they are the ones who are going to have to pay for it. If you negotiate an interest only holiday for a year then you pay €X less to the bank for that year. So the hole in the bank's finances increases by €X and the tax payer has to increase funding for the banks by €X to plug that hole.
I don't think it's just renters who would be resentful of that but anyone who has fully paid for their own home or who is still paying for the own home and not looking for a handout.
Thanks for that. It's food for thought. Thinking outloud, I understand that concept. However, the fact is that the taxpayer is getting screwed anyway. I think that the taxpayer will not reap the rewards of mortgage rates going up by large amounts. I am talking about a union type system that are negotiating with the banks and not allowing them to raise interest rates to 8/9 percent so that they can profit. I am imagining an idea where the banks are advised that everyone will pay 5percent interest on their mortgage for a certain period and will go no further. If the banks lose on this, then some of the banks will have to fail. That's capitalism.
I don't believe there should be anything free for mortgage holders, not interest only years, etc. I thought an interest only year would be tacked on to the end of the mortgage term anyway. Just fair treatment for customers and less profit and greed for banks.
I also can't see that if the banks make huge profits, the taxpayer will reap the rewards. Firstly, that profit will go to the current government, then what will be left of it won't go to Mary and Tom down the road. If they do, so many people will leave their homes, have them repossessed, they won't get paid on the other hand and it will even lower the cost of buying a home therefore pushing people further into negative equity. It will also keep people from spending money. A low profit over the long term is better for the banks and the people and with some agreement in place, that can be achieved I'd imagine. Any government profit will go into rent assistance schemes. There are no winners in this. There is no way to play this without some sections of society getting hurt.
Nobody's getting a 'handout' then. They are just forcing the hand of the bank to make smaller margins and agree to payments over longer at cheaper interest rates. The banks are only out for themselves. There is no such thing as too much, at least this way their hand can be forced a bit. It also might raise morale for the people as they might feel they have some control in matters.
It's just my twopence hapennys worth anyway.0 -
I don't think you've thought this through. If banks fail they will be liquidated. The assets will be sold and whatever money comes in from the sale will be used to pay back depositors and bondholders. But it won't be anywhere near enough so, because of the bank guarantee, our tax money will have to be used to make up the difference (if the country hasn't itself defaulted at that stage). What about those assets that are sold? Your mortgage is one of those assets. It gets sold to a vulture fund at pennies on the pound. You owe €200k, your house is only worth €120k and the vulture fund buys your mortgage for €100k. Then the vulture fund says 'to hell with moratoriums' pay or get out now. You are forced out and the vulture fund sells the house for €120k and has made an instant 20% profit. You're out on the street but, as you say, that's capitalism.Rareroastbeef wrote: »Thanks for that. It's food for thought. Thinking outloud, I understand that concept. However, the fact is that the taxpayer is getting screwed anyway. I think that the taxpayer will not reap the rewards of mortgage rates going up by large amounts. I am talking about a union type system that are negotiating with the banks and not allowing them to raise interest rates to 8/9 percent so that they can profit. I am imagining an idea where the banks are advised that everyone will pay 5percent interest on their mortgage for a certain period and will go no further. If the banks lose on this, then some of the banks will have to fail. That's capitalism.
Stop thinking about the banks as separate evil entities. Yes, they were, that but now the banks are us. There is no profit. Those banks will never show a profit ever. There is only tax payer funded losses. If you get an interest only year then that is like taking out a separate 20 year loan for the principle amount you would have paid that year. The taxpayer has to give that money to the bank this year.Rareroastbeef wrote: »I don't believe there should be anything free for mortgage holders, not interest only years, etc. I thought an interest only year would be tacked on to the end of the mortgage term anyway. Just fair treatment for customers and less profit and greed for banks.
I'm not saying there shouldn't be an interest only period but please stop thinking this is something that can be done by squeezing some imaginary evil bankers. The reality is that we all have to pay for it now.0 -
Rareroastbeef wrote: »Thanks for that. It's food for thought. Thinking outloud, I understand that concept. However, the fact is that the taxpayer is getting screwed anyway. I think that the taxpayer will not reap the rewards of mortgage rates going up by large amounts. I am talking about a union type system that are negotiating with the banks and not allowing them to raise interest rates to 8/9 percent so that they can profit. I am imagining an idea where the banks are advised that everyone will pay 5percent interest on their mortgage for a certain period and will go no further. If the banks lose on this, then some of the banks will have to fail. That's capitalism.
Unfortunately even if the banks didn't look to increase profits, interest rates will probably go up sooner or later anyway.0 -
Thanks.Unrealistic wrote: »I don't think you've thought this through.
Yea, you are right. I haven't thought this through. You are very knowledgable and as I said before great food for thought. Thinking outloud again, if banks fail and are liquidated, it might change the dymanic. Maybe we will be so pushed to the edge that we will have to disappoint the bond holders (a separate arguement).
Maybe then our tax money won't be used to make the difference. Maybe it might start a series of events that may make us better off then we are now. Maybe everything will be on the table again for the whole country.
Sometimes a frightened animal has to be cornered before they attack.
Is this alternative much better?
(if the country hasn't itself defaulted at that stage).
What happens then. Like above?
What about those assets that are sold? Your mortgage is one of those assets. It gets sold to a vulture fund at pennies on the pound. You owe €200k, your house is only worth €120k and the vulture fund buys your mortgage for €100k. Then the vulture fund says 'to hell with moratoriums' pay or get out now. You are forced out and the vulture fund sells the house for €120k and has made an instant 20% profit. You're out on the street but, as you say, that's capitalism.
Yes, and then plan d comes into effect where we stay in the homes until the legislation runs out (two years before eviction) and then we leave and rent.
The most dangerous are the ones with nothing to lose.
Also, as far as I am aware, selling off the mortgage for a few pennies would be a last resort for the bank if they thought they might make more than a few pennies with a settlement agreement. Also multiply this with whatever number of mortgage holders would be in the group, 30k or so? (just guessing). I don't think they would sell them so fast.
We'll then join the renters of the world and hopefully have enough savings to have some money to put into our children's education.
Stop thinking about the banks as separate evil entities.
I am not thinking of them as separate. I am thinking of them as part of the taxpayers (similar to a boil on the taxpayers necks). However, that does not make me believe that they are after the taxpayers interests wholly. If that were the case, then the government would have been after our interest because we vote them in and as experience showed the weren't unfortunately. I just don't do blind loyalty to whover has taken over.
There is only tax payer funded losses. If you get an interest only year then that is like taking out a separate 20 year loan for the principle amount you would have paid that year. The taxpayer has to give that money to the bank this year.
If there is only taxpayer funded losses, then if the taxpayer has one doller left and the bank is owed two, let the bank sing for the other doller they're owed. How is our current situation working in this regard. How much worse can things really get.
I'm not saying there shouldn't be an interest only period but please stop thinking this is something that can be done by squeezing some imaginary evil bankers. The reality is that we all have to pay for it now.
When the bankers and main purportrators of the crash are prosecuted, I won't feel that they are evil as I will feel justice will have been done, until this time, I will feel that they are evil. And by the way, I don't think they are imaginary. I think the gov. want's us to think they are imaginary. They helped to cause this and why should we just forget about them so easily and deny they existed.
Again, thank you for challenging my thoughts on this. I'm sure you will have excellent rebuttals to my answers, but I enjoy your thoughts, they are well thought out and technical, compared to my own which as I said is just thinking off the cuff.0 -
Unfortunately even if the banks didn't look to increase profits, interest rates will probably go up sooner or later anyway.
Yes, I understand.
But if legistation was laid down to ensure that banks wouldn't go above a certain rate for a certain time, there would be nothing they could do.
Like the 'trackers' that are now extinct. Even though these are nonprofitable, the banks had to stick to the terms of the contract.
Now, I know it's not practicable to have an interest rate of 1percent, say keeping them under 5/6 percent....that would be something that would really help people. Stability would ensue as people's main worry is not paying their mortgage and it would show in the local economy as people may begin to spend their savings and relax a bit.
Just a thought.0 -
Rareroastbeef wrote: »Yes, I understand.
But if legistation was laid down to ensure that banks wouldn't go above a certain rate for a certain time, there would be nothing they could do.
.
Although the Government cannot impose legislation to stop the ECB from raising their interest rates. If the ECB go above a certain rate, then those on non-fixed mortgages will see theirs rise to that rate as well. No amount of government legislation will change that fact.0 -
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I think that's not a bad idea (limiting the banks "profit margin") in the short term, but I'd rather see a good dose of help for those in trouble, rather than a little bit of help for everybody.
Although there should still be scope in Ireland for having the Mortgage Interest Supplement applicable for the same length of time as Rent supplement. Its not paying off anybody's capital, and in that respect rent or mrtgage, its a contribution to keeping a roof over the head of someone in financial trouble (as per the means test)
I took a look at the book of estimates for 2010, and it shouldn't be that much extra expense (expanding "temporary" MIS into "indefinate" MIS).
Total for Supplementary Welfare Allowances was €1.1B. I'm assuming that covers all the schemes run through Community Welfare Officers of the HSE, so should cover RS, MIS, and everything else. Changing the temporary nature of the MIS shouldn't be that much, surely? Would it even amount to 30% (€300 million or so?)
However, looking at the estimates under welfare its pretty scary what we are spending money on. Child Benefit costs the same as Jobseekers Allowance? Add in OPFA and it's a 50% biggger bll than JA?
Is Child Benefit taxable yet? (sorry wasn't paying attention to the last budget in *that* much detail)
M.0
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