There is nobody taking out mortgages, I repeat NOBODY

Rabidlamb

From today's Indo:
http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-market-recovery-years-away-2850004.html

Mortgage lending has seized up, with just 3,550 new mortgages granted in April, May and June.

This is half the number issued in the same quarter a year ago, and a fraction of the 41,000 issued in the same three-month period in 2007

What housing market ?????... bad as it was last year now we learn that mortgage drawdowns are down 50% on that brutal year.
How is NAMA going to shift 1% of their stock at this rate ?.
How are conveyancing solicitors & auctioneers surviving at all ?.
This whole industry is smoke & mirrors, there is no industry.

iMax

That's what banks wanted isn't it ? Everyone giving them money & them not giving any out.

littleredspot

Shocking statistics all right but there's still a few cash buyers out there

munstergirl

littleredspot wrote: »

Shocking statistics all right but there's still a few cash buyers out there

One buyer in limerick at the moment, limerick city council snapping up all the 'bargains' 80 or so houses in last month.

Look at sale agreed on daft.

Rabidlamb

munstergirl wrote: »

One buyer in limerick at the moment, limerick city council snapping up all the 'bargains' 80 or so houses in last month.

Look at sale agreed on daft.

Visions of this single buyer being followed around by every auctioneer & solicitor like vultures.
Forgot about the revenue guy waiting for his 1%.
It's like bald men fighting over a comb out there.

AlekSmart

munstergirl wrote: »

One buyer in limerick at the moment, limerick city council snapping up all the 'bargains' 80 or so houses in last month.

Look at sale agreed on daft.

This appears to be a feature of the "Market" at the moment with Local Authorities apparently having budgets to spend on accquiring housing "Stock" to presumably rent back out at non-market rates...?

Is there a Notional Policy covering this behaviour ?

spank_inferno

Speaking from Wicklow, there is only one purchasing houses at the moment, his name is Wicklow County Council.

Private acquisitions, especially from those purchasing with a mortgage are very rare. The council however never seem to lack money.

My own example, after saving a while we have an very ample cash deposit available.
We found a suitable house & asked banks for a mortgage amounting to just 17% higher than our gross annual income.

To our genuine surprise, the banks wouldn't entertain us.
and thats for a double income, no kids couple!

Reloc8

spank_inferno wrote: »

Speaking from Wicklow, there is only one purchasing houses at the moment, his name is Wicklow County Council.

Private acquisitions, especially from those purchasing with a mortgage are very rare. The council however never seem to lack money.

My own example, after saving a while we have an very ample cash deposit available.
We found a suitable house & asked banks for a mortgage amounting to just 17% higher than our gross annual income.

To our genuine surprise, the banks wouldn't entertain us.
and thats for a double income, no kids couple!

Do I have this wrong or are you saying that on a gross annual income of say 80k, no banks would lend you 93k ? Or on 100 no one would lend you 117 ? or on 50 no one would lend you 58.5 ?

spank_inferno

Reloc8 wrote: »

Do I have this wrong or are you saying that on a gross annual income of say 80k, no banks would lend you 93k ? Or on 100 no one would lend you 117 ? or on 50 no one would lend you 58.5 ?

Thats it in a Nutshell.

I felt a bit rejected.... but it could be for the best considering everything.

jetsonx

But remember, Brian Cowen and Brian Lenihan assured us that with NAMA, credit
would get flowing into and out of the banks again.

Roadend

3550 people took them out in April sure.....

Reloc8

spank_inferno wrote: »

Thats it in a Nutshell.

I felt a bit rejected.... but it could be for the best considering everything.

That's just ludicrous (the unwillingness to lend).

I don't want to pry obviously but I presume there's nothing which you can think of which might explain the negativity.

thebman

Roadend wrote: »

3550 people took them out in April sure.....

Actually it is unclear from the part quoted from the article if that is each month or for all 3 months or it would have been specified for each month.

If I had to guess, I'd say it is for all 3 months. I can't believe the councils are buying houses while crippling businesses with rates. Why isn't it being reported if that is what they are at?

Don't know why they report 3 month figures. Presumably because it ends in 0 or something.

doubleglaze

Rabidlamb wrote: »

From today's Indo:
http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-market-recovery-years-away-2850004.html



What housing market ?????... bad as it was last year now we learn that mortgage drawdowns are down 50% on that brutal year.
How is NAMA going to shift 1% of their stock at this rate ?.
How are conveyancing solicitors & auctioneers surviving at all ?.
This whole industry is smoke & mirrors, there is no industry.

3550 mortgages in a 3-month period is FAR from "Nobody is taking out a mortgage"!

That said, 2Pack has some interesting theories over on thepropertypin.com regarding the shrinkage of credit in Ireland which might show that Nobody will be taking out a mortgage this time next year or so.

Rabidlamb

doubleglaze wrote: »

3550 mortgages in a 3-month period is FAR from "Nobody is taking out a mortgage"!

OP here, I used the term "Nobody" in the title as a piece of sarcastic hyperbole.
Rough sums you're looking at a 90% drop since 2006.

What struck me most was if that figure is extrapolated out for the year your looking at less than 15,000 mortgages.
Yes there will be cash deals but it doesn't scratch the surface of the vacant stock.

serfboard

~ 3,600 mortgages in 3 months is 1200 per month, which is ~ 60 mortgages per working day.

Which is 59 more than I thought were being taken out.

OMD

You can get a better picture here
http://www.ibf.ie/Libraries/Research_Statistics/ibf_pwc_mortgage_Q207.sflb.ashx
2005-2007 mortgages and here

http://www.ibf.ie/Libraries/Research_Statistics/175676pdf.sflb.ashx
2009-2011 mortgages.

Zubeneschamali

Rabidlamb wrote: »

Rough sums you're looking at a 90% drop since 2006.

OK, but we know that at the peak, the banks were lending too much to people who shouldn't have qualified, and some reduction is sensible.

What should the drop be?

OMD

Zubeneschamali wrote: »

OK, but we know that at the peak, the banks were lending too much to people who shouldn't have qualified, and some reduction is sensible.

What should the drop be?

It is hard to say but our population is increasing by about 60,000 a year. If our average household size is to stay the same we need about 20-25,000 new housholds a year. So either these are bought (either to own or to rent out) or existing houses currently vacant get rented out.

ardmacha

It is hard to say but our population is increasing by about 60,000 a year. If our average household size is to stay the same we need about 20-25,000 new housholds a year. So either these are bought (either to own or to rent out) or existing houses currently vacant get rented out.

The present situation is abnormal. Which means that if things pick up at all in a year or two construction will grow to cater for this normal demand. A boom won't return (hopefully) but there will be a noticeable pickup in employment if even normality returns.

nesf

spank_inferno wrote: »

Thats it in a Nutshell.

I felt a bit rejected.... but it could be for the best considering everything.

Depends on your area of work at the moment from what I've heard. Work in any area that's remotely unstable and/or be self-employed and the banks won't touch you for mortgage loans.

hinault

spank_inferno wrote: »

Thats it in a Nutshell.

I felt a bit rejected.... but it could be for the best considering everything.

Bloody hell.

Unfortunately your story illustrates just how useless Irish banks actually are.

Why the State decided to save these banks is beyond me.

hinault

nesf wrote: »

Depends on your area of work at the moment from what I've heard. Work in any area that's remotely unstable and/or be self-employed and the banks won't touch you for mortgage loans.

The Irish banks should be incinerated so.

They're not serving an purpose whatsoever.
And more importantly because their losses are indemnified by this State, they're preventing other lenders from entering the market and providing credit.

They should be allowed die.

nesf

hinault wrote: »

The Irish banks should be incinerated so.

They're not serving an purpose whatsoever.
And more importantly because their losses are indemnified by this State, they're preventing other lenders from entering the market and providing credit.

They should be allowed die.

Nah the Irish banks are just extremely risk adverse right now precisely because they're being bailed out by the taxpayer and just got their asses handed to them for being too risky during the boom. These things are cyclical.

hinault

nesf wrote: »

Nah the Irish banks are just extremely risk adverse right now precisely because they're being bailed out by the taxpayer and just got their asses handed to them for being too risky during the boom. These things are cyclical.

Perhaps.

But they're preventing other lenders from entering the Irish market because the losses of the Irish banks are indemnified by the State guarantee.
No lender could be expected to enter the Irish market given this unfair advantage.

In the meantime, in a country where there is demand for credit, none is forthcoming.
Japan, for slow learners.

nesf

hinault wrote: »

Perhaps.

But they're preventing other lenders from entering the Irish market because the losses of the Irish banks are indemnified by the State guarantee.
No lender could be expected to enter the Irish market given this unfair advantage.

In the meantime, in a country where there is demand for credit, none is forthcoming.
Japan, for slow learners.

We're not Japan, our banks actually have a good reason for being so risk adverse. We're in a recession caused partially by a financial crisis, credit is always going to be hard to get in these circumstances and I can't see why any foreign bank would want to get involved in the Irish market now, even if they could compete fairly.

jackiebaron

ardmacha wrote: »

The present situation is abnormal. Which means that if things pick up at all in a year or two construction will grow to cater for this normal demand. A boom won't return (hopefully) but there will be a noticeable pickup in employment if even normality returns.

Things aren't going to pick up. Who are you kidding? How are they going to pick up. The country will be in this morass for at least another 15 years...maybe 20.

The country's credit rating is so bad that foreign investors now favour Guatamala over Ireland. Shít, even Tunisia is a safer bet. You think that is going to be turned around in a year or two? Dream on. Then take a look at our industry.....exactly. What industry?? We had nothing but construction. And that will never return. This housing bubble will have left a worse taste in the mouth than the Penal Laws or the Land War.
It might have been profitable for Intel and Dell and Gateway and HP to set up shop in Ireland in the 90's but that is a distant memory what with the rise of India. Even if the corporation tax was to drop to zero it would still be more efficient to set up in Bangalore.

Maybe we can go back to making shelaleighs.

Dannyboy83

doubleglaze wrote: »

3550 mortgages in a 3-month period is FAR from "Nobody is taking out a mortgage"!

That said, 2Pack has some interesting theories over on thepropertypin.com regarding the shrinkage of credit in Ireland which might show that Nobody will be taking out a mortgage this time next year or so.

Those 3,550 are not first time buyers, or new acquisitions.
They're largely composed of people RE-mortgaging.

Source: A birdie told me.

thebman

jackiebaron wrote: »

Things aren't going to pick up. Who are you kidding? How are they going to pick up. The country will be in this morass for at least another 15 years...maybe 20.

The country's credit rating is so bad that foreign investors now favour Guatamala over Ireland. Shít, even Tunisia is a safer bet. You think that is going to be turned around in a year or two? Dream on. Then take a look at our industry.....exactly. What industry?? We had nothing but construction. And that will never return. This housing bubble will have left a worse taste in the mouth than the Penal Laws or the Land War.
It might have been profitable for Intel and Dell and Gateway and HP to set up shop in Ireland in the 90's but that is a distant memory what with the rise of India. Even if the corporation tax was to drop to zero it would still be more efficient to set up in Bangalore.

Maybe we can go back to making shelaleighs.

Things aren't quite that bad TBH. India and the like have their own problems if you actually look into them that make Ireland look like a safe haven even if you discounted EU access and the fact we speak English. Our culture being quite similar to American is a massive part of why they are here as there is less culture shock when they have to come over here.

Many of the multi-nationals are actually hiring but we do have way too few indigenous industry but part of the problem is when it starts up, it is usually bought out by UK/US companies and the costs cut by outsourcing if possible.

lmimmfn

i dont know if its relevent, but i got a mortgage 1 year ago, got approved by both AIB and BOI. 2 of us working, mrs working in the civil service and me private. Mortgage was around 1.7 times income.

At the same time( August last year ), some single guys at work were getting rejected.

I think its more down to circumstances now and people having so much less due to austerity measures than anything else.

Good loser

I believe the State is charging the banks 10.5% for the money they have given them.

As no mortgagee will pay this interest does it not make more sense for the banks to try and repay this money before laying out on mortgages?

Am I correct anyone?

DeVore

I got a mortgage and bought a house last December. Just sayin'...

And yes, money saved is the same as money earned so reducing a high interest debt or loaning money on a high interest loan are effectively the same thing to a bank. They'll plump for the highest one.

Also, whoever said that banks want our money but dobt want to loan it is being silly. Mortgages are catnip to banks. If they can be sure you will pay, they'll loan. Like they did with me.

DeV.

Zubeneschamali

jackiebaron wrote: »

Things aren't going to pick up. Who are you kidding? How are they going to pick up. The country will be in this morass for at least another 15 years...maybe 20.

This is just the reverse of the idea during the boom that we had broken the mould and the boom would never end. Of course things will pick up, it's the nature of economics.

IBEQ were on the radio this morning saying there would be small growth in 2011, the first in 4 years, and that we shouldn't apply more than the planned 3.6 billion in austerity measures.

Roadend

DeVore wrote: »

I got a mortgage and bought a house last December. Just sayin'...

Got one in April, must be one of the 3550 . They did try to pull the plug at the last minute over an estate services issue but I got that sorted and had no prblems whatsoever other than that.

Rabidlamb

Dannyboy83 wrote: »

Those 3,550 are not first time buyers, or new acquisitions.
They're largely composed of people RE-mortgaging.

Source: A birdie told me.

So the residential property market is essentially dead.
Time for a Ger Colleran headline methinks.

The_Honeybadger

Rabidlamb wrote: »

So the residential property market is essentially dead.
Time for a Ger Colleran headline methinks.

The property market will remain moribund until people like me (early thirties in a good job) can go into work on Monday morning not worried that they could be let go at any time. Coupled with this most sellers are still in denial and have their properties up for sale at hopelessly unrealistic prices. Sellers really should grasp that the market couldn't give a toss that they paid €300,000 for a cardbord box and they need to recoup €250,000 to maintain their current lifestyle. Is it any wonder banks won't lend. Things will return to normality at some stage, which will be 80% (approx) mortgages for couples with a good savings record, which is no harm really, speaking as a renter with a young family this will suit me down to the ground. The figures in the OP are hardly surprising, it would be very foolish to buy property now, we are returning to a banking system where banks will only be able to lend what they have on deposit with little access to money from the markets, on this basis property will continue to fall for the forseeable future. This fall in property prices is good for our competitiveness, some people who invested in property will be badly burned, many have been already, but thats life and the market will balance out eventually IMO.

nesf

mickeyk wrote: »

The property market will remain moribund until people like me (early thirties in a good job) can go into work on Monday morning not worried that they could be let go at any time.

Exactly and banks won't lend to you either until they're sure of that too.

iPlop

nesf wrote: »

Exactly and banks won't lend to you either until they're sure of that too.

The fundamentals are all wrong in the economy, one of the big issues with the banks lending which hasn't seen the light of day is lending to people with permenent jobs.


MOST jobs out there are contract, ALL my friends and family have had their T's & C's changed by their employer (with a payoff), everyone I know is on rolling contract these days, it's good for the employer and they can avoid future redundancy payments.


This is one of the problems with the housing market, you NEED a permenent job to get a mortgage or a loan, one of my friends is on 50k and can't get a mortgage because his job is not permenent it's a rolling contract, but his employer said he could be there for 15 years, this is part of the problem.

If people are not in permenent jobs there will be no lending by any bank to anyone, until that changes we're just going to go round in circles.

All the big MNC's in this country are are hiring contract 11 months or more unless it's at the top end of the game, HP, Intel, Wyeth etc...

nesf

Sink The Banana wrote: »

The fundamentals are all wrong in the economy, one of the big issues with the banks lending which hasn't seen the light of day is lending to people with permenent jobs.


MOST jobs out there are contract, ALL my friends and family have had their T's & C's changed by their employer (with a payoff), everyone I know is on rolling contract these days, it's good for the employer and they can avoid future redundancy payments.


This is one of the problems with the housing market, you NEED a permenent job to get a mortgage or a loan, one of my friends is on 50k and can't get a mortgage because his job is not permenent it's a rolling contract, but his employer said he could be there for 15 years, this is part of the problem.

If people are not in permenent jobs there will be no lending by any bank to anyone, until that changes we're just going to go round in circles.

All the big MNC's in this country are are hiring contract 11 months or more unless it's at the top end of the game, HP, Intel, Wyeth etc...

Everyone's paranoid about layoffs. Companies, banks and workers. It's just part of the business cycle really, sentiment is very low at the moment and that has knock on effects across the economy and it won't be fast in changing either. Just have to grin and bear it.

The_Honeybadger

Sink The Banana wrote: »

The fundamentals are all wrong in the economy, one of the big issues with the banks lending which hasn't seen the light of day is lending to people with permenent jobs.


MOST jobs out there are contract, ALL my friends and family have had their T's & C's changed by their employer (with a payoff), everyone I know is on rolling contract these days, it's good for the employer and they can avoid future redundancy payments.


This is one of the problems with the housing market, you NEED a permenent job to get a mortgage or a loan, one of my friends is on 50k and can't get a mortgage because his job is not permenent it's a rolling contract, but his employer said he could be there for 15 years, this is part of the problem.

If people are not in permenent jobs there will be no lending by any bank to anyone, until that changes we're just going to go round in circles.

All the big MNC's in this country are are hiring contract 11 months or more unless it's at the top end of the game, HP, Intel, Wyeth etc...

Permanent jobs don't really exist very much outside the public sector, almost anybody can get let go, their company could fold (we all know of businesses with many generations of history closing down), their company could decide to move sticks if it's an mnc etc etc. I'm sure banks will eventually lend to private sector workers again, but only ones with good saving records and a large deposit, you sure as hell won't see 100% mortgages for ftb's in the future, they never should have been allowed in the first place but I guess it is easy to be wise after the event. This isn't really a bad thing, I actually know a young couple who took out a 100% mortgage and a 20k car loan in the same week a few years back, FFS!! The american system may be one we should look at going forward, which places the onus on the bank to ensure the borrower can repay, if they can't then tough on the bank, they get the keys back and it's their problem, obviously some controls would have to be in place to differentiate between those who can't pay and those who can't be arsed to pay. I know this didn't prevent a bubble there but it sound like a better system than the one we have and should ensure the banks are more careful in the future if / when things do get better and they are in a position to lend to people again.

DoneDL

I don`t think for a moment that banks do not have the money to lend but I do think that banks have become risk averse. The banks will say that they are happy to lend but have set the bar so high that they can guarantee the loan application will be rejected. It doesn`t matter how much collateral you guarantee they will say no. Small business are the ones most at risk so where does that leave everyone else.

OMD

Dannyboy83 wrote: »

Those 3,550 are not first time buyers, or new acquisitions.
They're largely composed of people RE-mortgaging.

Source: A birdie told me.

Of that 3550, 1503 were first time buyers and 999 were people moving to new properties. 441 were people remortgaging and 467 were top up mortgages.

thebman

OMD wrote: »

Of that 3550, 1503 were first time buyers and 999 were people moving to new properties. 441 were people remortgaging and 467 were top up mortgages.

I wonder what the profile of a first time buyer looks like at the moment. Who are the banks actually willing to lend to (i.e. from what industries)?

swampgas

mickeyk wrote: »

[...]

I'm sure banks will eventually lend to private sector workers again, but only ones with good saving records and a large deposit, you sure as hell won't see 100% mortgages for ftb's in the future, they never should have been allowed in the first place but I guess it is easy to be wise after the event.

[...]

The american system may be one we should look at going forward, which places the onus on the bank to ensure the borrower can repay, if they can't then tough on the bank, they get the keys back and it's their problem, obviously some controls would have to be in place to differentiate between those who can't pay and those who can't be arsed to pay. I know this didn't prevent a bubble there but it sound like a better system than the one we have and should ensure the banks are more careful in the future if / when things do get better and they are in a position to lend to people again.

I think a good compromise would be non-recourse mortgages (i.e. the American model) with a minimum deposit of 10% - 25%.

That way if the mortgagee cannot pay, they hand the keys back to the bank, have no further debt, but obviously have lost their deposit and repayments.

thebman

swampgas wrote: »

I think a good compromise would be non-recourse mortgages (i.e. the American model) with a minimum deposit of 10% - 25%.

That way if the mortgagee cannot pay, they hand the keys back to the bank, have no further debt, but obviously have lost their deposit and repayments.

Do you really need that % though? I mean people invest in their houses to make it more like a home to them anyway so you don't usually have to give an incentive for people to stay in their homes.

The hard part is making them leave peacefully if they can't pay.

OMD

The other question is if people aren't buying where are they going. Yes sure many adults are living with their parents but most will be entering or simply not leaving the rental market. Rents are headed one way only

swampgas

thebman wrote: »

Do you really need that % though? I mean people invest in their houses to make it more like a home to them anyway so you don't usually have to give an incentive for people to stay in their homes.

The hard part is making them leave peacefully if they can't pay.

True, 5% would probably be enough to stop the problems that 100% mortgages were causing in terms of price inflation.

A lower deposit would also (hopefully) encourage the banks to lend prudently.

coup1917

We got our mortgage offer 2 weeks ago...
No major issues with it really, just the basic clear your loans so we can force you to borrow more....:eek:

Anyway once we had everything in place for the bank, it was plain sailing..

Waiting on solicitors to getting their paperwork sorted. Not the greatest experience of my life dealing with them...

Take the date they give you and add a few weeks onto it.........:mad:

Nody

swampgas wrote: »

True, 5% would probably be enough to stop the problems that 100% mortgages were causing in terms of price inflation.

A lower deposit would also (hopefully) encourage the banks to lend prudently.

LOL; you'll be happy to find the banks accepting it at 20% let alone 5% deposit. The deposit basically need to be big enough to cover the loss of value on the market that the house takes if it drops to the bottom in a recession.

I'll qoute Sweden as an example since they have come up before regarding dealing with the bank issue. No bank in Sweden is allowed to lend out more then 80% of the house value (current valuation) to a private owner. Anything above that is not allowed to be secured against the property (i.e. someone else has to sign on the dotted line next to you or you have other securities etc. or take a very expensive blanco type loan) due to the risk involved. You're suggesting 5% deposit and allow someone to walk away would be enough with Irish banks? I'd suggest 50% of house value in loan only in Ireland knowing the past history of Irish banks and that's being generous.

swampgas

Nody wrote: »

LOL; you'll be happy to find the banks accepting it at 20% let alone 5% deposit. The deposit basically need to be big enough to cover the loss of value on the market that the house takes if it drops to the bottom in a recession.

I'll qoute Sweden as an example since they have come up before regarding dealing with the bank issue. No bank in Sweden is allowed to lend out more then 80% of the house value (current valuation) to a private owner. Anything above that is not allowed to be secured against the property (i.e. someone else has to sign on the dotted line next to you or you have other securities etc. or take a very expensive blanco type loan) due to the risk involved. You're suggesting 5% deposit and allow someone to walk away would be enough with Irish banks? I'd suggest 50% of house value in loan only in Ireland knowing the past history of Irish banks and that's being generous.

In the Swedish system, are residential mortgages typically non-recourse?

And what are the bankruptcy rules like?

Nody

swampgas wrote: »

In the Swedish system, are residential mortgages typically non-recourse?

And what are the bankruptcy rules like?

Nope and 5 years at minimum income for debt forgiveness (anything you make beyond the basic needs to live is taken, and that is basic needs so no restaurant visit once a month, no vacation etc.) for full debt forgiveness IF the debt is old (i.e. you can't go on a spending spree and then apply for it) and then all your debt is written off.

If you got for a "normal" bankruptcy you'd be facing to have the claims against you for quite a while to pay back the money (see above except you still have to keep on paying for a very long while).