Negative Equity Mortgages approved by CBI

With today's announcement that Negative equity mortgages will be available in certain circumstances to customers of BOI and PTSB who wish to carry over a portion of their debt and trade up to a larger property, irish homeowners will effectively be crystallizing 100% of their property losses at or near the lowest point of the housing market and carrying forward a debt of up to 125% of the value of their new home, while banks still refuse to consider write-downs on their reckless lending during the boom.

At this point in the property market, is this move a lifeline for families who want to move home in order to have a family or secure employment, or is is simply a repeat of the disastrous 100% mortgage schemes of a few years ago which drove people into yet more debt than they could handle?

Are we banking on the future being too rosy yet again?

Irish Independent Article

RichardAnd

Isn't this just a re-hash of the idea that debt can be escaped through the medium of more debt? Forgive me if I misunderstand this . . .

Dannyboy83

I cannot imagine it being allowed in a situation where someone is in arrears.
If someone is in negative equity, but not in arrears, then it's probably a progressive step imo.
I'd imagine the criteria will be very strict.

Welease

RichardAnd wrote: »

Isn't this just a re-hash of the idea that debt can be escaped through the medium of more debt? Forgive me if I misunderstand this . . .

This is not about escaping debt, and would be unlikely to be offered to those who were unable to service their current mortgages..

At present they can't sell their current house, as they are unable to pay the negative equity sum in a single payment, so are locked into that house. This allows people who can afford their current mortgages, to sell the property and purchase another property moving the negative equity across..
Very useful for those who want to trade up (or possibly down) or those who want to move to secure new/different employment.

Morrisseeee

Not very usefull if you are on a Tracker !!

Why can't the NAMA principle be applied here, ie. write off the negative equity & pay me €20k per year to.....ahem.........'manage' my mortgage :rolleyes:
I jest of course, but you can see my point !

Welease

Welease wrote: »

This is not about escaping debt, and would be unlikely to be offered to those who were unable to service their current mortgages...

What I can't figure out is who this move is supposed to help. Most people I know who would avail of it are stuck in apartments they bought at or near the peak of the boom, which have dropped in value by 40-60%. The kind of negative equity that those properties have built up will be well in excess of the 25% carry-over limit of the value of any mortgage that they could realistically afford on a new home.

It seems to me that the people hit hardest in the boom, who most need this kind of help, will be least likely to be able to avail of it unless banks are forced to write down some of their loans.

Welease

Deleted User wrote: »

What I can't figure out is who this move is supposed to help. Most people I know who would avail of it are stuck in apartments they bought at or near the peak of the boom, which have dropped in value by 40-60%. The kind of negative equity that those properties have built up will be well in excess of the 25% carry-over limit of the value of any mortgage that they could realistically afford on a new home.

It seems to me that the people hit hardest in the boom, who most need this kind of help, will be least likely to be able to avail of it unless banks are forced to write down some of their loans.

I don't see this as being implemented to help those who need help the most.. There will have to be other instruments put in place for that if that what the banks/government choose to do..

This (to my mind) is to help kick start a sector of the housing market where people can afford and want to move house, but are limited by the current process which means that have to pay off the negative equity before being able to sell their current house (which they can't afford to do)..

There are people (i know at least 2) who had purchased a house in a location suitable to their previous jobs. They are now in new jobs, but cannot sell those houses because they would need to fund about €100K of negative equity before being allowed to sell the house. With the new process, they can move to a more convenient locations, and carry the negative equity with them.. A much more flexible solution.. There are those who are looking for work who would be in a similar positions and are currently tied to a location where no jobs are to be found.

I have no idea of the size of this sector, but each sale or move could be classed as useful to the economy, as services are required to sell, move and DIY the new house, so the benefit is wider than just the house sell..

I personally think it's a good change, and at least provides an option to those who would find it useful..

For your example, there are many smaller 3 bed houses which have also drastically dropped in price, and depending on the maths might become affordable (especially if they can save up a deposit of the difference).. Again, it isn't designed to help those who are in financial difficult, but one of your friends with a 1 bed appartment who now has kids might have an option to get a house further out with a garden etc.. Previously they would have had no option...

GSF

So
1) you'd lose your tracker rate
2) the banks would now have a better security in case they want to reposess- swapping say an apartment for a semi d house for example

i wonder who is getting the better bargain here?

Welease

GSF wrote: »

So
1) you'd lose your tracker rate
2) the banks would now have a better security in case they want to reposess- swapping say an apartment for a semi d house for example

i wonder who is getting the better bargain here?

I'm not here to defend banks.. but in fairness i think your complaints are somwhat irrelevant..

If the customer was in positive equity and wanted to move 1) & 2) would apply anyway irrespective of this change.. This change merely allows those who would not have had the option to consider if it meets their requirements..

Would people prefer everyone to be locked into their negative equity properties for the remainder of their 25-30 year terms?

johnnyskeleton

If you can carry over your NE, presumably you will not have to stump up a deposit either. Logically therefore it is a 100-125% loan.

So why would a bank give 125% to someone with a proven record of making bad purchases, but are unwilling to give 90% loan to someone with no baggage.

GSF

Welease wrote: »

Would people prefer everyone to be locked into their negative equity properties for the remainder of their 25-30 year terms?

well i take your point in so far as you can move to another property and tranfer the negative equity to that property, assuming you can find a buyer for your current property of course. But the debt stays with you. It just has a new home. And a higher interest rate to repay at. So the interest on the negative equity goes up, possibly by quite a lot over those 25-30 years.

GSF

GSF wrote: »

i wonder who is getting the better bargain here?

it's the banks. As far as I can see in this country, it will always be the banks. They have consistently shown that they are always a step ahead of the policy makers and politicians, and are cleverer, and more agile in how they do business than those who regulate them.

I haven't seen any sign of that changing so far, just a lot of talk and political posturing, so why assume they'll suddenly start treating their customers with respect?

Welease

GSF wrote: »

well i take your point in so far as you can move to another property and tranfer the negative equity to that property, assuming you can find a buyer for your current property of course. But the debt stays with you. It just has a new home. And a higher interest rate to repay at. So the interest on the negative equity goes up, possibly by quite a lot over those 25-30 years.

Agreed.. I'd imagine it only makes sense to those who have no issue paying their mortgages and can absorb the increased rate.. It likely won't suit the majority of mortgage related issues in this country, but it's not designed to.. It does however, put a viable option on the table for those who currently have no option available..

For example, as friend who is now seperated from his wife is living in their house almost 2 hours from work.. He can easily afford increases in costs, but it currently locked into the house and a rediculous commute because he cannot pay off the current negative equity to liquidate the house.. This allows them to sell and move on with their lives.. and more importantly doesn't burden the state and taxpayer any further..

Welease

johnnyskeleton wrote: »

If you can carry over your NE, presumably you will not have to stump up a deposit either. Logically therefore it is a 100-125% loan.

So why would a bank give 125% to someone with a proven record of making bad purchases, but are unwilling to give 90% loan to someone with no baggage.

This is not carte blanche to everyone who has a neg equity mortgage that suddenly they can extend to 125%.. If you meet their criteria then they are allowed to extend that facility to you (the facility did not previously exist).. They may of course decide you do not meet their criteria and decline..

Same as they do have a facility to offer 90% loans.. But they may decide you don't meet their criteria and decline..

lmimmfn

trade up to a larger mortgage? WTF!!!!

sarumite

lmimmfn wrote: »

trade up to a larger mortgage? WTF!!!!

My sister bought a house in '08 in dublin. The house is now 40% in NE. Back then she was young, free and single. Fastforward 4 years and she is in a committed relationship and I would imgine that soon she may even think of starting a family. However her current house while suitable for a person in their mid 20's is too small for someone approaching 30 and thinking of having a child. She can afford a mortgage, she can even afford more than her mortgage, but she cannot afford to sell the house at the moment because of the NE. Allowing her to move the NE to a bigger house suitable for a family makes perfect sense in my opinion...as long as she can make her mortgage repayments I really don't see what the problem is.

sarumite

sarumite wrote: »

...as long as she can make her mortgage repayments I really don't see what the problem is.

That's exactly what everybody was saying 5 or 6 years ago. "As long as everything keeps going the way it is, everything will be grand", but things can change for the worse very easily. There are external forces beyond our control still at work here, affecting things like interest rates, unemployment rates, bailouts, etc, and despite a lot of hot air, we STILL haven't reached rock bottom and our property prices are still falling.

Again I ask, is it sensible in THIS market to be enticing heavily indebted people to crystalise their "on paper" losses and borrow even more risky money at higher interest rates? Aren't we supposed to be reducing our borrowings to earnings ratio, not increasing it by repeating the same mistakes that got us here in the first place?

lmimmfn

sarumite wrote: »

My sister bought a house in '08 in dublin. The house is now 40% in NE. Back then she was young, free and single. Fastforward 4 years and she is in a committed relationship and I would imgine that soon she may even think of starting a family. However her current house while suitable for a person in their mid 20's is too small for someone approaching 30 and thinking of having a child. She can afford a mortgage, she can even afford more than her mortgage, but she cannot afford to sell the house at the moment because of the NE. Allowing her to move the NE to a bigger house suitable for a family makes perfect sense in my opinion...as long as she can make her mortgage repayments I really don't see what the problem is.

Ok no, i realise there are such cases, no offense but it would have been better if she bought a gaff that would house a family/have flexibility for the future. Im just saying in general they should be allowing people to downsize not the other way around.

Dob74

sarumite wrote: »

My sister bought a house in '08 in dublin. The house is now 40% in NE. Back then she was young, free and single. Fastforward 4 years and she is in a committed relationship and I would imgine that soon she may even think of starting a family. However her current house while suitable for a person in their mid 20's is too small for someone approaching 30 and thinking of having a child. She can afford a mortgage, she can even afford more than her mortgage, but she cannot afford to sell the house at the moment because of the NE. Allowing her to move the NE to a bigger house suitable for a family makes perfect sense in my opinion...as long as she can make her mortgage repayments I really don't see what the problem is.

So rent out the small pad to someone else and rent a suitable house for herself.
Why get tied to another property when there are plenty of decent places to rent?
NE mortgages are just another way to push up property prices.
There are plenty of empty properties in good locations lying idol. If the cute whores at the banks want to hold on to them and gov must push them to rent them our sell them. The taxpayer cant let this wait and see attitude continue. How mch more money are we going have to dump into the banks while the let prime property lie vacant?

sarumite

Dob74 wrote: »

So rent out the small pad to someone else and rent a suitable house for herself.
Why get tied to another property when there are plenty of decent places to rent?
NE mortgages are just another way to push up property prices.
There are plenty of empty properties in good locations lying idol. If the cute whores at the banks want to hold on to them and gov must push them to rent them our sell them. The taxpayer cant let this wait and see attitude continue. How mch more money are we going have to dump into the banks while the let prime property lie vacant?

I can see that as an valid argument. However I can see a few reasons one may not want to rent out their place. The obvious one is that it is your property and you are responsible for the upkeep and payment on said property. When you haven't bought a house with investment as the primary goal, it can be quite daunting to hand over the keys to a stranger. I don't even like loaning my car to a friend, never mind a stranger so I can imagine how someone would feel about property. Since one is relaint on the rent to pay the mortgage, they may be worried about not having a constant income stream from the rental property. Then there is the question of upkeep. If the cooker breaks I can live without it for a few weeks (months perhaps), however as someone who is currently a tenant I know that I would be onto my landlord within 5 minutes of it breaking. I am not saying that this is a good idea for everyone, however I don't see why it is such a big problem myself. Considering the prices of houses at the moment, it might even be financially better off.

Sleepy

For those that are able to afford larger repayments than they're currently making, this could be useful. I can think of a number of scenarios where this could be used sensibly:

Apartment bought during the boom by a single person for 250k. Now worth 125k. Person has since gotten married and the couple have a combined income capable of supporting a mortgage for 350k. The difference between the negative equity and what that couple could afford to service mortgage wise (225k) would buy a 3 bed semi or similar relatively easily in Dublin. Sure, they now have an 155% mortgage but even allowing for a further drop in the value of the house of another 25k, the negative equity of the property is now at 42% rather than the previous 50%. Now, this scenario is only workable if the couple are both in stable jobs with a combined salary of over 100k but there are still plenty of people in that category.

Sleepy

Sleepy wrote: »

The difference between the negative equity and what that couple could afford to service mortgage wise (225k) would buy a 3 bed semi or similar relatively easily in Dublin. Sure, they now have an 155% mortgage...

Except that the maximum allowable under the scheme is a 125% mortgage, which can be affordably repaid without breaching mortgage guidelines. This means that the couple in your example carrying over €125k Negative equity would need to be able to afford repayments on a mortgage of €625k (€500k for their new house, plus their carried over €125k). This is well outside the cost of a reasonably average family home in any county in Ireland at the moment.

Add to that the higher risk that these 125% loans would carry for banks because the security for the loan-ie:the house-won't cover the full cost of the funds advanced if it ever needs to be repossessed) and your couple will be likely to be repaying a very high loan value at an interest rate that's probably a half to one point or so over the market rate.

Now take that high monthly repayment and apply the financial regulator's lending rules that say you are not supposed to have a mortgage where your repayments exceed 35% of your total income (a crucial rule tht was broken routinely in the boom, resulting in people getting on the property ladder when the shouldn't have, but that is being followed much more closely now) and you'll see that the amount of people out there who will actually be able to avail of this type of scheme will be in the vast minority. High earners, typically well into the six figure combined salary territory, who really don't need a solution like this as they realistically can probably afford to fund all or most of their NE out of their own pocket, NOT the thousands of average earning first time buyer young families stuck in apartments the length and breadth of the country.

Once again, I return to my main point. Who is this scheme designed to help, and is it really what the market needs right now?

Dob74 wrote: »

So rent out the small pad to someone else and rent a suitable house for herself. Why get tied to another property when there are plenty of decent places to rent?

It's not as simple as that, if it was there wouldn't be any crisis at the moment. The current rental yield on a property like a 1 or 2 bedroom apartment bought at the peak of the boom is only about 70% of the cost of servicing the morgage based on the figures that were signed up to by a buyer back then. In simple terms, if you have a mortgage repayment of €1000 per month on a 5 or 6 year old apartment you'll be lucky to see €700 a month come in from renting it, so before you make a move you're down €300 a month.

Add to that the cost of upkeep and maintenance, annual management fees, and lost rental income while replacing your tenants etc, and you could be looking at another €2000 or more per year, or as much as a couple of hundred euros per month out of your own pocket. So your apartment is costing you €500 euros a month from your own pocket to rent out. You've now also got to think about all of the various mortgage rate hikes the bank will charge you (your apartment is now an "investment property" rather than your principal residence, and so is liable for business interest rates), government levvies and taxes like the Non principal private residence levy, the Private resedential tenancies board fees, and various other sneaky extra costs like water rates and household charges that will be creeping in over the next few years.

Add to all of this the extra expense of renting and running a bigger, more suitable house for yourself, and the increased cost of starting a family (kids are expensive), and you can see how much extra cost is involved in the simply "renting it out and moving" option. You could effectively be doubling your spend on accommodation before any other living costs are even factored in.

That just isn't financially do-able for a lot of people at the moment, and that's completely apart from the hit your morale would take after scrimping and saving for years to own your own place, and ending up stuck in a rental paying someone else's mortgage in order to have something as basic a human right as raising a family.

RichardAnd

lmimmfn wrote: »

trade up to a larger mortgage? WTF!!!!

That sums up my qualms about this scheme, though you express it in a far more succinct manner. To me, someone availing of this scheme would be leaving a negative equity house to purchase a larger house which is just as likely to drop in value thus, the said individual would just be incurring more debt. Is that correct?

Tsad

can't agree more. as far as i can work out it appeals either to those in the highest house price brackets moving from large house to an even larger one or those who bought a starter home very early in the boom (when the prices were lower) and have a whack load of their mortgage paid off. The third option (and proabably what the banks are very interested in) are those who are willing to put additional savings in to bring down the negative equity at this stage so that they can qualify.

How come they can't also offer a product based on the second mortgage (plus the negative equity carried over) not exceeding the cost of the first mortgage as it stands? Family homes in the counties around Dublin are now well below what 1 and 2 beds cost in the height of the boom.

Deleted User wrote: »

Except that the maximum allowable under the scheme is a 125% mortgage, which can be affordably repaid without breaching mortgage guidelines. This means that the couple in your example carrying over €125k Negative equity would need to be able to afford repayments on a mortgage of €625k (€500k for their new house, plus their carried over €125k). This is well outside the cost of a reasonably average family home in any county in Ireland at the moment.

Add to that the higher risk that these 125% loans would carry for banks because the security for the loan-ie:the house-won't cover the full cost of the funds advanced if it ever needs to be repossessed) and your couple will be likely to be repaying a very high loan value at an interest rate that's probably a half to one point or so over the market rate.

Now take that high monthly repayment and apply the financial regulator's lending rules that say you are not supposed to have a mortgage where your repayments exceed 35% of your total income (a crucial rule tht was broken routinely in the boom, resulting in people getting on the property ladder when the shouldn't have, but that is being followed much more closely now) and you'll see that the amount of people out there who will actually be able to avail of this type of scheme will be in the vast minority. High earners, typically well into the six figure combined salary territory, who really don't need a solution like this as they realistically can probably afford to fund all or most of their NE out of their own pocket, NOT the thousands of average earning first time buyer young families stuck in apartments the length and breadth of the country.

Once again, I return to my main point. Who is this scheme designed to help, and is it really what the market needs right now?

Sleepy

Deleted User wrote: »

Except that the maximum allowable under the scheme is a 125% mortgage, which can be affordably repaid without breaching mortgage guidelines. This means that the couple in your example carrying over €125k Negative equity would need to be able to afford repayments on a mortgage of €625k (€500k for their new house, plus their carried over €125k). This is well outside the cost of a reasonably average family home in any county in Ireland at the moment.

As you might have guessed, I plucked figures from the air to demonstrate where it could be of value.

Add to that the higher risk that these 125% loans would carry for banks because the security for the loan-ie:the house-won't cover the full cost of the funds advanced if it ever needs to be repossessed) and your couple will be likely to be repaying a very high loan value at an interest rate that's probably a half to one point or so over the market rate.

The loans are pro-rata less risky for the bank since the new house's value would cover a higher percentage of the new mortgage than the apartment did on the old mortgage. Also, as 3 bed houses tend to be suffering less than apartments in price drops, the new asset upon which the mortgage is based is also safer collateral: it's likely to depreciate less than the original asset.

Now take that high monthly repayment and apply the financial regulator's lending rules that say you are not supposed to have a mortgage where your repayments exceed 35% of your total income (a crucial rule tht was broken routinely in the boom, resulting in people getting on the property ladder when the shouldn't have, but that is being followed much more closely now) and you'll see that the amount of people out there who will actually be able to avail of this type of scheme will be in the vast minority. High earners, typically well into the six figure combined salary territory, who really don't need a solution like this as they realistically can probably afford to fund all or most of their NE out of their own pocket, NOT the thousands of average earning first time buyer young families stuck in apartments the length and breadth of the country.

Once again, I return to my main point. Who is this scheme designed to help, and is it really what the market needs right now?

How many people, even high-earners with a joint income of 100k or so, can pay off more than a year's salary at a stroke: very, very few. A joint income of 100k or so is hardly unusual for a professional couple either btw.

The scheme allows those who can afford it to move house whilst in negative equity. In doing so it provides the banks (which we the taxpayer own a large chunk of) with better security than they previously held.

It's not the debt forgiveness scheme that many are hoping for (and many more of us are appalled at being asked to fund) but I'd contend that it's not supposed to be: it's addressing a very specific concern for those in fairly specific scenarios that have the capacity to repay a slightly larger mortgage than they currently have (or even one of lesser or equal size if they're moving to similar or cheaper accommodation). The other benefit for many here is mobility: at present if you're stuck in negative equity on your home in Dublin you're not able to transfer it to a home in Galway or Cork should a career option open up there for you.

Sleepy

RichardAnd wrote: »

That sums up my qualms about this scheme, though you express it in a far more succinct manner. To me, someone availing of this scheme would be leaving a negative equity house to purchase a larger house which is just as likely to drop in value thus, the said individual would just be incurring more debt. Is that correct?

That assumes that price drops are equal across all categories of property when they're not. Apartments, "starter" homes and Celtic Tiger mansionettes in the middle of nowhere have all fallen far more in value than 3/4 bedroom houses in mature residential suburbs for example.

Sleepy

Sleepy wrote: »

As you might have guessed, I plucked figures from the air to demonstrate where it could be of value.

Yes, but the values you plucked are pretty accurate and are indicative of the situations a lot of people are in at the moment, so i based my calculations on them. €125k is a fair representation of the negative equity that an average small house or particularly an apartment buyer from the last few years of the boom might currently find themselves in. Average, not a high earner, or someone who is particularly comfortable. For a lot of very ordinary homeowners at the moment being in €125k negative equity is all too likely, while being wealthy enough to be able to afford making the repayments on a €625k mortgage is definitely not.

Sleepy wrote: »

The loans are pro-rata less risky for the bank since the new house's value would cover a higher percentage of the new mortgage than the apartment did on the old mortgage.

Yes, exactly, so the bank's outlook improves, while the already heavily indebted homeowner crystalises their assumed "on paper" losses by effectively "cashing out" at the bottom of the market, and refinancing their losses into an even higher debt in just as unstable a market, effectively foregoing any chance of regaining any of the lost value in their original property through any recovery which might happen over the next few years. This is a far better option for a bank, and a worse situation for the customer who avails of it.

Once again i ask, who is this scheme really designed to help?

Sleepy wrote: »

How many people, even high-earners with a joint income of 100k or so, can pay off more than a year's salary at a stroke: very, very few. A joint income of 100k or so is hardly unusual for a professional couple either btw.

I don't mean to be pedantic, but if you read back over my post, it's clear that i was referring to higher earners well into the six figure earning bracket, not an average middle income professional couple touching 100k PA. I was referring to combined incomes of 200, 300, and 400k or upwards, which I'm sure you would agree do not represent average middle income earnings in Ireland at the moment.

My main point was that this scheme would seem to only be of use to the higher end of the earning spectrum, to a cohort of people where the problems associated with negative equity, socially speaking, tend not to be as serious, or tend not to impact on their major life choices so gravely.

The vast majority of people trapped in a negative equity nightmare and who need help urgently are ireland's low and middle income young families, the first time buyers from 5-10 years ago who were sold a pup by the banks, developers, and Fianna Fail, and are now locked into expensive mortgages on unsuitable properties and struggling to make ends meet. These people are facing the reality of being logistically tied to a small town where all available employment has dried up, or are having to decide to have one child versus two, or no child versus one, etc because they don't have the space to raise the family they always dreamed of having.

Those who really need help will not be helped by this scheme, as it is financially unattainable for them in it's current form. Meanwhile their lives are being hugely affected by the current administration's inaction on this issue.

Sleepy

Deleted User wrote: »

Yes, exactly, so the bank's outlook improves, while the already heavily indebted homeowner crystalises their assumed "on paper" losses by effectively "cashing out" at the bottom of the market, and refinancing their losses into an even higher debt in just as unstable a market, effectively foregoing any chance of regaining any of the lost value in their original property through any recovery which might happen over the next few years. This is a far better option for a bank, and a worse situation for the customer who avails of it.

The two bolded items above are important: we are not at the bottom of the market and any recovery in house prices is both (a) undesirable and (b)decades away.

Once again i ask, who is this scheme really designed to help?

The banks and those in negative equity who require the mobility to re-locate, downsize or up-size dependent on their financial ability to do so.

I don't see it being touted as a solution to the negative equity that many people are suffering from. Though, that said, I don't believe we need a solution to that negative equity that involves debt-forgiveness. If the mortgage holder can service their mortgage, that's the contract they willingly signed and have to live with. if they can't service their mortgage there's a new,more lenient, personal bankruptcy process they can go through to get a new start.

I don't mean to be pedantic, but if you read back over my post, it's clear that i was referring to higher earners well into the six figure earning bracket, not an average middle income professional couple touching 100k PA. I was referring to combined incomes of 200, 300, and 400k or upwards, which I'm sure you would agree do not represent average middle income earnings in Ireland at the moment.

My main point was that this scheme would seem to only be of use to the higher end of the earning spectrum, to a cohort of people where the problems associated with negative equity, socially speaking, tend not to be as serious, or tend not to impact on their major life choices so gravely.

The vast majority of people trapped in a negative equity nightmare and who need help urgently are ireland's low and middle income young families, the first time buyers from 5-10 years ago who were sold a pup by the banks, developers, and Fianna Fail, and are now locked into expensive mortgages on unsuitable properties and struggling to make ends meet. These people are facing the reality of being logistically tied to a small town where all available employment has dried up, or are having to decide to have one child versus two, or no child versus one, etc because they don't have the space to raise the family they always dreamed of having.

Those who really need help will not be helped by this scheme, as it is financially unattainable for them in it's current form. Meanwhile their lives are being hugely affected by the current administration's inaction on this issue.

Those people signed on for the circumstances they find themselves and would have been a large part of Fianna Fail's vote during the boom. Speaking personally, as someone who never voted FF in my life, I took on more personal debt than I should have during the boom on the incorrect assumption that my ever-rising salary wouldn't be affected by the housing bubble bursting. So, while I'm fortunate enough not to be saddled with huge negative (because I was smart enough to see the insanity of the situation) I'm paying for my mistakes and expect others to pay for theirs. (before you make the argument "but the bankers...", yes, I agree that it's a disgrace that we socialized private losses but one miscarriage of justice does not call for another).

checkcheek

Sleepy wrote: »

The two bolded items above are important: we are not at the bottom of the market and any recovery in house prices is both (a) undesirable and (b)decades away.

How do you know were not at the bottom of the market, i keep saying this but this could be the bottom, nowadays everybody has the same mind set as a few years ago, people always seem to think that house prices can go only one way, years ago it was believed that they would only go up, not its believed they can only go down!

GSF

checkcheek wrote: »

How do you know were not at the bottom of the market, i keep saying this but this could be the bottom, nowadays everybody has the same mind set as a few years ago, people always seem to think that house prices can go only one way, years ago it was believed that they would only go up, not its believed they can only go down!

The link to incomes would suggest that they will continue to fall since the next 3-4 budgets will continue to reduce the amount of disposable income buyers have available to either afford a mortgage or build a deposit on a house.

Sleepy

Sleepy wrote: »

...lots of harsh truths...

While i don't share your rather cold, dispassionate view of the situation, i can't argue with much of what you say. A lot of people dug their own hole during the boom, it's true, and fundamentally i do agree that it is ultimately people's responsibility to deal with the consequences of their decisions. As far as socialization of losses go biffo and lenihan were stupid enough to socialise the bank losses, and unfortunately, two wrongs don't make a right.

It does seem to me though that while people do have to bear responsibility for their decisions, the state institutions who encouraged those decisions, and failed to legislate against all the reckless behaviour and who failed to properly regulate borrowing, as well as the banks who facilitated it all at great profit and in dubious circumstances (albeit both under different leaderships) are now standing back and washing their hands of it all, and singing the same song you are:

"You made your own bed, now lie in it"