Mortgage Arrears Problem in Ireland.

th3 s1aught3r

What will happen now for people who want to fix a rate on an exisitng or new mortgage. If the banks suspect the ECB will be raising rates later this year and next year, will they be unwilling to fix at a rate today, as they will be losing on them when the rates start to go up ??

Dob74

yekahS wrote: »

Or how about this for a mad idea, people pay back the amount they borrowed.

That's funny the banks have been bailed out by the gov, so why arent homerowners how had to pay over the odds because of our corrupt planning system.
And anyway if you are loaned money for a house you should be able to hand the house back to the bank to clear your debt. Instead of having it follow you for ever.
So like most neo liberals one law for powerful another for common man.

th3 s1aught3r

yekahS wrote: »

Why do people feel its their "right" to own their home?

I rent my home as I can't afford to buy one. Whats the problem? I have about 50k in savings, and in a few years I may buy a home I can afford. In the meantime, I'll continue to save for one. It is completely unfair for me to have to subsidise someone who jumped face first into buying a home they cannot afford. If your mortgage is unpayable, then you should forfeit your home. Its not your neighbours fault that your house is too expensive for you.

Irish people seem obsessed with owning their house. In Switzerland for example, only 22% of people own their home.

Bully for you
But maybe those people who bought a house could afford it at that time and now they cant
There have been a lot of wage cuts and redundencies in Ireland in case you had not noticed

mm_surf

th3 s1aught3r wrote: »

What will happen now for people who want to fix a rate on an exisitng or new mortgage. If the banks suspect the ECB will be raising rates later this year and next year, will they be unwilling to fix at a rate today, as they will be losing on them when the rates start to go up ??

Same as before:
The banks look to see what the likely average rate will be over the period and offer a deal accordingly - it isn't fixed at the current rate.

e.g. if the current rate is 2%, and the bank figures the rate will rise to 12% over the next 5 years, with an average of say 6% over that 5 year period - they might offer a "5 year fixed rate of 6%"

Usually such deals are pitched 0.5% or so in the banks favour to allow for a boo-boo on their side.

It can be a bit of a gamble, but you'd know exactly what your repayments over the period would be. For example, using teh above figures, if it turned out the average rate was lower over the 5 year period, you'd be over-paying. But if the average was higher, you'd be paying less than you would on a variable rate.

M.

sarumite

Dob74 wrote: »

That's funny the banks have been bailed out by the gov, so why arent homerowners how had to pay over the odds because of our corrupt planning system.
And anyway if you are loaned money for a house you should be able to hand the house back to the bank to clear your debt. Instead of having it follow you for ever.
So like most neo liberals one law for powerful another for common man.

No one "had" to pay over the odds...those chose to. Furthermore, if you borrow money, you should pay that money back. If the price of your house increases, I doubt you would hand that extra money to the bank so I don't think the reverse should be the case either.

Rareroastbeef

sarumite wrote: »

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.

Ok, then what if the country/gov enacts legislation to creat a huge 'fixed' interest rate deal among the banks. Let's say at a rate of 5% over 5-7 years, with favourable/fair 'get out' penalties. Surely, this would keep the impact of the ECB's rate rises out of it (similar to ordinary fixed rates.)

Rareroastbeef

Unrealistic, I'd love to hear your feedback.

Rareroastbeef

th3 s1aught3r wrote: »

What will happen now for people who want to fix a rate on an exisitng or new mortgage. If the banks suspect the ECB will be raising rates later this year and next year, will they be unwilling to fix at a rate today, as they will be losing on them when the rates start to go up ??

The banks currently will raise all variable/fixed rates to cover this. What is frightening now is that some are removing fixed rates from the choice customers have. This, along with the fact that they are aware that nobody can switch banks for a better deal means that mortgage holders are now flies in their web and they can basically eat them up.

sarumite

Rareroastbeef wrote: »

Ok, then what if the country/gov enacts legislation to creat a huge 'fixed' interest rate deal among the banks. Let's say at a rate of 5% over 5-7 years, with favourable/fair 'get out' penalties. Surely, this would keep the impact of the ECB's rate rises out of it (similar to ordinary fixed rates.)

I don't know if the EU would allow such anti-competitive legislation, especially if the Government tried to make it retro-active (i.e. affecting current mortgages holders) If the ECB rate was to go above such a rate banks simply wouldn't offer mortgages as they would be running at a loss. I would also worry about the interest rates after the 5-7 year period is up. Offering a mortgage is a risk to banks and as with any risk they will reasonably expect a return on their investment. If they arent going to make money on the first 5-7 years, then they will certainly look to make their return on the remaining period.

I dare say a such move with cripple first time buyers as the profit margin for the banks would be so low that they would probably only offer mortgages to virtually risk free customers. Obviously the government could pass draconian legislation forcing banks to offer at such low rates, however that would certainly get them in trouble.

Chris_5339762

Rareroastbeef wrote: »

The banks currently will raise all variable/fixed rates to cover this. What is frightening now is that some are removing fixed rates from the choice customers have. This, along with the fact that they are aware that nobody can switch banks for a better deal means that mortgage holders are now flies in their web and they can basically eat them up.

Wait what? Of course you can switch banks.

And if/when fixed rates are removed and variables go to, say 7%, a foreign company can come in and offer a fixed rate at say 6%. Everyone will flock to them.

Rareroastbeef

Chris_5339762 wrote: »

Wait what? Of course you can switch banks.

And if/when fixed rates are removed and variables go to, say 7%, a foreign company can come in and offer a fixed rate at say 6%. Everyone will flock to them.

Sorry, what I meant to say was that you can switch banks so long as your wages and ability to pay your mortgage hasn't changed for the worst. Unfortunately, some are now laid off, working shorter days, reduced salaries...that, along with the banks being jittery to take on business that may possibly default, is the recipe for a no in a lot of banks for a lot of people.

There really isn't an incentive for foreign banks to come into the market. Halifax left the market as there's no profit anymore here. Everyone's skint.

th3 s1aught3r

Rareroastbeef wrote: »

The banks currently will raise all variable/fixed rates to cover this. What is frightening now is that some are removing fixed rates from the choice customers have. This, along with the fact that they are aware that nobody can switch banks for a better deal means that mortgage holders are now flies in their web and they can basically eat them up.

If someone went to the bank tomorrow and wanted a 3-5 year fixed rate, what would they be looking at % ?

dan_d

Chris_5339762 wrote: »

Wait what? Of course you can switch banks.

And if/when fixed rates are removed and variables go to, say 7%, a foreign company can come in and offer a fixed rate at say 6%. Everyone will flock to them.

I don't think it's as easy now to switch banks.Especially if you're in NE. A lot of banks won't touch mortgages now. Why would they? Most of them are struggling with what they have on their books in terms of mortgages, they're very unwilling to take on any more.You can try to do it, but I don't think it's as easy as it was.

Interest rates are only going up....the banks f*&ked up, someone's got to pay.:mad:

ferike1

If those who can pay pick up the slack for those who can't it would be an absolute disgrace. When will people start taking responsibility for the decisions they made?

I am 23 and just started working, I can't even think about buying a house, getting a loan or anything of the sort but my taxes will rise and any potential loan I want to take out (fat chance) will be punitively punished to make up for those who lacked foresight.

Now tell me, why on earth should I be made to pay for these people? This goes beyond welfare, this is typical of all that is wrong with our society, it is everyone's fault but my own. Yes the banks were pushing the loans like cheap candy but in fairness you have to be pretty stupid to take out a loan that is an unrealistic amount compared to your salary. If you can't think rationally then don't expect others to do it for you.

Gumbo

ferike1 wrote: »

I am 23 and just started working, I can't even think about buying a house, getting a loan or anything of the sort but my taxes will rise and any potential loan I want to take out (fat chance) will be punitively punished to make up for those who lacked foresight.

your 23 and only entering the workforce now, so obviously youve been in college, who paid for that? taxes also pay for education and free college education that youve been receiving up until now.

ei.sdraob

In all fairness to him/her

the user copped on quickly to the reality of how Ireland operates

ferike1 wrote: »

This goes beyond welfare, this is typical of all that is wrong with our society, it is everyone's fault but my own.

now @ferike1 you have 2 options:

1. emigrate
2. play the system, if you cant beat them join them and all that

unfortunately option 3. "change the system" seems unachievable tho we do have a small chance in the elections..

danbohan

ferike1 wrote: »

If those who can pay pick up the slack for those who can't it would be an absolute disgrace. When will people start taking responsibility for the decisions they made?

I am 23 and just started working, I can't even think about buying a house, getting a loan or anything of the sort but my taxes will rise and any potential loan I want to take out (fat chance) will be punitively punished to make up for those who lacked foresight.

Now tell me, why on earth should I be made to pay for these people? This goes beyond welfare, this is typical of all that is wrong with our society, it is everyone's fault but my own. Yes the banks were pushing the loans like cheap candy but in fairness you have to be pretty stupid to take out a loan that is an unrealistic amount compared to your salary. If you can't think rationally then don't expect others to do it for you.

wrong with our society, it is everyone's fault but my own

ogh you will be emigrating , we cant be having bright ones with attitudes like that staying here, you would contaminate the rest

De Dannan

ferike1 wrote: »

you have to be pretty stupid to take out a loan that is an unrealistic amount compared to your salary. If you can't think rationally then don't expect others to do it for you.

I love the hindsight thats 20/20 around here
Are you saying that you would not have taken out a mortgage if you were say tens years older and had a family ?

Its very easy to say that now :rolleyes:

Jaysoose

De Dannan wrote: »

I love the hindsight thats 20/20 around here
Are you saying that you would not have taken out a mortgage if you were say tens years older and had a family ?

Its very easy to say that now :rolleyes:

I also love the fact that mortgage arrears help is going to be the straw that breaks the camels bank and people are going to leave the country over.

Not the fact that every cent in tax revenue currently paid is being pumped into the banks to prop up the current twisted banking system wether we like it or not.

Not the fact that the policticians are determined to sink the whole country by continuing to spend more on the public service/expenditure than we earn. And think that going onto the frontline for some weakest link style showbiz 'debate' while offering no credible solutions between the lot of them shows them as forward thinking people.

Not the fact that our current crop of politicians looking for our votes are the same people that walked us into this mess, and are quite happy to pay themselves and their retiring colleagues massive pensions and payoffs.

Its the mere 'idea' of assisting fellow taxpayers with their mortgages that is causing them to throw their toys out of the pram and declare they will leave the country.

Its one warped society we live in when people like Bertie/sean fitz and Ivor calelly can swan around the place while ordinary people (however short sighted) are demonised for looking for help.

EggsAckley

Is this a viable solution? Constantin Gurdgiev and Brian Lucy seem to think it should work - I get it in principal but whats the chance of it working in reality

Treehouse72

EggsAckley wrote: »

Is this a viable solution? Constantin Gurdgiev and Brian Lucy seem to think it should work - I get it in principal but whats the chance of it working in reality

What is your source for this?

EggsAckley

Treehouse72 wrote: »

What is your source for this?

@GTCost or @brianmlucey

Sarn

EggsAckley wrote: »

Is this a viable solution? Constantin Gurdgiev and Brian Lucy seem to think it should work - I get it in principal but whats the chance of it working in reality

This was discussed elsewhere. My understanding is that you or the government would have to be in a position to buy the bond on your own property to get it to work and essentially negate your debt. Where would the cash come from? If someone else buys the IOU for €100 k, they're going to want to make a profit on it. Either way the bank would make a €100 k loss that would need to be funded by the taxpayer.

ferike1

kceire wrote: »

your 23 and only entering the workforce now, so obviously youve been in college, who paid for that? taxes also pay for education and free college education that youve been receiving up until now.

No you misunderstand. I don't mind paying taxes, hell I don't mind paying back a loan (if Ireland had a proper graduate loan system that would be great!), I am paying back my loan for my masters at the moment. I wouldn't even mind paying high taxes if you received something in return for them, proper infrastructure, healthcare and a decent public service. What gets me is the tax increases that will get me nothing and destroy my future wealth creation. As for the banks that gets me angry too but everyone is paying for that. This is just taking advantage of those people left over who are still able to pay.

With regards to the benefit of hindsight, maybe it was just my parents who drilled it into my head not to live beyond my means. I wouldn't even consider starting a family until I had the proper means to support myself free from the burden of a debt I couldn't service, hence why I don't have a credit card.

Jaysoose

ferike1 wrote: »

No you misunderstand. I don't mind paying taxes, hell I don't mind paying back a loan (if Ireland had a proper graduate loan system that would be great!), I am paying back my loan for my masters at the moment. I wouldn't even mind paying high taxes if you received something in return for them, proper infrastructure, healthcare and a decent public service. What gets me is the tax increases that will get me nothing and destroy my future wealth creation. As for the banks that gets me angry too but everyone is paying for that. This is just taking advantage of those people left over who are still able to pay.

With regards to the benefit of hindsight, maybe it was just my parents who drilled it into my head not to live beyond my means. I wouldn't even consider starting a family until I had the proper means to support myself free from the burden of a debt I couldn't service, hence why I don't have a credit card.

The fact that your parents drilled it into your head about saving etc doesnt excuse the fact that you coldnt have bought a home while you were in college so hindsight in your case is skewed.

ferike1

Jaysoose wrote: »

The fact that your parents drilled it into your head about saving etc doesnt excuse the fact that you coldnt have bought a home while you were in college so hindsight in your case is skewed.

But I didn't buy a house while I was in college and I wouldn't have. Maybe just because I did economics and finance? Look I am not trying to sound like a smartass here but its all about doing research and making decisions for yourself and not following the crowd.

Okay yes there is hindsight element I will admit but that is still too easy an excuse. There are quite a few people like myself who are older and didn't fall into this trap. Why didn't they do it?

Mister men

ferike1 wrote: »

But I didn't buy a house while I was in college and I wouldn't have. Maybe just because I did economics and finance? Look I am not trying to sound like a smartass here but its all about doing research and making decisions for yourself and not following the crowd.

Okay yes there is hindsight element I will admit but that is still too easy an excuse. There are quite a few people like myself who are older and didn't fall into this trap. Why didn't they do it?

You don't sound like a smartass at all. I did'nt do a college degree and i knew this would happen back in 2001. People got greedy it's that simple.

fliball123

uberalles wrote: »

+ 1

I had consistent rent hikes from 1998 (600 Punts) to 1400 PM for a two bed apt in Dublin city. In 2006 our rent was increased by 180 PM!
No one gave a feck about our situation.

Tenants have few rights compared to our European neighbours.

The one big advantage is I can give back the keys if you try make me
pay for other people who took out mortgages they now cant afford. I will leave the country. Thats a deal breaker, a final straw for me.

Dont renters have the right to move if they raise the rent too much...A mortgage holder in neg equity does not have this choice

dearg lady

Chris_5339762 wrote: »

Wait what? Of course you can switch banks.

And if/when fixed rates are removed and variables go to, say 7%, a foreign company can come in and offer a fixed rate at say 6%. Everyone will flock to them.

not if you're in negative equity ya can't.

ferike1 wrote: »

If those who can pay pick up the slack for those who can't it would be an absolute disgrace. When will people start taking responsibility for the decisions they made?

I am 23 and just started working, I can't even think about buying a house, getting a loan or anything of the sort but my taxes will rise and any potential loan I want to take out (fat chance) will be punitively punished to make up for those who lacked foresight.

Now tell me, why on earth should I be made to pay for these people? This goes beyond welfare, this is typical of all that is wrong with our society, it is everyone's fault but my own. Yes the banks were pushing the loans like cheap candy but in fairness you have to be pretty stupid to take out a loan that is an unrealistic amount compared to your salary. If you can't think rationally then don't expect others to do it for you.

are you serious, you're 23, and you JUST started working?? if so, you have some cheek to get all on your high horse about people making foolish decisions, and you potentially having to help them, when you have contributed nothing yet.

ei.sdraob

EggsAckley wrote: »

Is this a viable solution? Constantin Gurdgiev and Brian Lucy seem to think it should work - I get it in principal but whats the chance of it working in reality

Constantin is himself in negative equity haven fallen for the bubble, so no conflict on interest there :rolleyes:

while he has interesting articles this is just an example of "meeism" we were talking about in this thread