Are Banks Lending?

Chin_Up

Hi,

Just applied for a Mortgage today and we apparently look ok on paper. But obv waiting until underwriters get their hands on our application for decision. Have heard mixed reviews lately about banks actually lending. i wonder are they, or are they claiming to but not....

Any ideas?

Ritchi

Chin_Up wrote: »

Hi,

Just applied for a Mortgage today and we apparently look ok on paper. But obv waiting until underwriters get their hands on our application for decision. Have heard mixed reviews lately about banks actually lending. i wonder are they, or are they claiming to but not....

Any ideas?

They definitely are. Just not to everybody...

The_Conductor

Ritchi wrote: »

They definitely are. Just not to everybody...

100% definitely.
The only caveat- is they are applying normal underwriting criteria- which were abandoned during the boom times- aka 'normal' income multiples, dual incomes are at 3 or 4 times income 1 and 0.6 times income 2 (in houses where both are lucky enough to have jobs). Etc.

Also- maximum lending ratios have been refined- this is just an example-

Up to 90% lending for residential freehold housing in an suburban area.
Up to 80% lending for residential leasehold units (normally apartments) in an suburban area.
Up to 75% for residential freehold units outside of the main cities
Apartments outside of the Dublin area- don't even bother.

Most lenders are lending- if you are a good underwriting risk.

Dortilolma

They are lending but they're criteria is pretty strict and you have to pretty much slot in it perfectly.

When we applied we pretty much fit the criteria bar one thing and we were refused by two lenders. In the end we found one - so even if you are refused just keep at it.

If you do fit the criteria, theoretically, you should be fine.

Chin_Up

Thanks - we 'look good' on paper however Husband is Self Employed so that may be a negative. Our solicitor mentioned he hasnt seen many mortgages come through from Ulster Bank (Up to 90% lending). I also noticed EBS claims to lend up to 92% so we'll keep them in our back pocket. We should know within a week

roro2

Chin_Up wrote: »

Thanks - we 'look good' on paper however Husband is Self Employed so that may be a negative. Our solicitor mentioned he hasnt seen many mortgages come through from Ulster Bank (Up to 90% lending). I also noticed EBS claims to lend up to 92% so we'll keep them in our back pocket. We should know within a week

Most mortgage lending is coming from BOI and AIB at the moment. EBS is a subsidiary of AIB but still uses the EBS brand. Ulster Bank only loaned about €80m in Q1 this year across all of its retail lending portfolios in both ROI and NI, compared with €4bn+ per year in 2005-2007, so it doesn't have much lending appetite at the minute. PTSB was also close to being closed for new lending last year but it's at least talking about increasing mortgage lending this year (I don't know whether it actually is lending much more this year).

On the amounts being loaned, I'm not sure if any lenders actually use income multiples any more. AIB certainly don't, and if repayment capacity and other factors are ok, it can work out as being up to 4+ times both incomes - it's not a case of just a portion of the second income being counted for example.

ghosty1

Hi There
I am in the same boat as chin up, we are getting our mortgage (hopefully) through ptsb. We were told about the 15 minute AIP, we were approved for 259k and were told once we can provide proof of all figures we gave them at the time of full application there would be no problem...also it says this on there website, and I was told I wouldn't need to make a full application or go back to the branch until we had a deposit down, I thought this was a bit odd.
anyway about a month later we found our house its 300 k we have almost 30k savings and are getting a gift of 20k from family, went in yesterday made our full application and to be honest i wasn't inspired with confidence when leaving. the guy we were dealing with was very cautious to say whether or not he thought this would be ok even though we are only looking for 86% LTV and we meet all their criteria and are within policy. his last words were even though it is within policy they could still turn it down as it is at the higher end of the scale and also because of my partners length of service (full time since oct on contact 5 months prior to that with same company). really panicked now as we have engeged a solicitor and the vendors are screaming for the engineer to go out.
is the ptsb guy just being cautious or am I after being lead up the garden path ?

The_Conductor

They may lend you the money.
At 86% LTV- its very much at the higher end of the lending that they'll allow (or that any financial institution will allow).

The fact that your partner was only made permanent a few months ago- is one thing screaming here. Even for supposedly secure public sector jobs- they don't consider you for a mortgage unless you're there 2 years.

I would seriously suggest talking to an independent mortgage advisor ASAP- as regardless of what you were told before (and it wasn't lies- it was just looking at things in as rosy a fashion as possible)- it is not easy to get a loan these days- even from BOI- never mind one of the state owned institutions.

You need to talk to an independent financial advisor ASAP

ghosty1

thanks very much for the quick reply, he is in cloud computing which we were hoping would look good as that is going from strength to strength and I am a public servant myself the last 7 years, would this make any impact ?

The_Conductor

ghosty1 wrote: »

thanks very much for the quick reply, he is in cloud computing which we were hoping would look good as that is going from strength to strength and I am a public servant myself the last 7 years, would this make any impact ?

What would make a good impact- is looking for a lower LTV mortgage.
You can't view the 90% as a target- its a critical cut-off point, not a target. Having 86%- yes, its lower than 90%- but not much lower.......

You being a public servant for the last 7 years, will look good. The fact that your partner is only a permanent employee for a few months- will not look good.

What income multiple are you looking for? If its under 4 (times the principle and half the secondary)- that would look good. For the sake of this- its probably better to consider your income as the principle income- and his the secondary.

If you genuinely think you have your ducks lined up- go to an independent financial advisor- who will be able to tell you the current lie of the land.

xper

ghosty1 wrote: »

is the ptsb guy just being cautious or am I after being lead up the garden path ?

I wouldn't draw any conclusion, positive or negative, from what the guy across from you in the bank had to say. He's unlikely to have much say in the bank's decision. Its all evaluated centrally these days. Which is precisely why he was ambiguous. To be otherwise would leave himself hostage to fortune.


I'm of the opinion that in post-crash Ireland, AIP is pretty dodgy even it is secured with a full set of paperwork. PTSB's 'chat' AIP is just a gimmick. So, IMHO, you are essentially starting from scratch with the full application. But so does everyone else in effect.

The vendors will just have to sit and wait along with you.

L1011

ghosty1 wrote: »

thanks very much for the quick reply, he is in cloud computing which we were hoping would look good as that is going from strength to strength and I am a public servant myself the last 7 years, would this make any impact ?

He's in IT - "cloud computing" is a buzzword and nothing more. Huge % of IT workers get let go at the end of their probation period, more than any other industry I've worked in and even once permanent, redundancies are not uncommon. If anything this will make the bank more wary, not less.

Bluntly - you don't change jobs if you want to buy a house soon. And AIP obtained from 5 mins on the phone or 30 seconds on a website isn't enough to go bidding on a house.

ghosty1

MYOB, I went to the branch for AIP and also I was dealing with a broker who informed me that the public and IT sectors are preferred by underwriters

Slick50

roro2 wrote: »

On the amounts being loaned, I'm not sure if any lenders actually use income multiples any more. AIB certainly don't, and if repayment capacity and other factors are ok, it can work out as being up to 4+ times both incomes - it's not a case of just a portion of the second income being counted for example.

I have to say firstly, that I am not current with the mortgage market. But I would be absolutely amazed if the banks were effectively lending eight times one income. Isn't that the sort of lending that got the banks, and economy into such dire straits in the first place. Surely if there was anything to be learned from the economic collapse, it is, the banks need to be more responsible, and keep tighter regulation on lending. Shortly before the 'bust', banks were lending ten to eleven times one income, which is how property prices got so far out of kilter, and precipitated their own collapse.

By all accounts, most activity in the housing market at the moment is by cash buyers. Banks are lending minimal ammounts at the moment, just enough to be able to say they are lending.

Villa05

Use killers, services, you will find him on the buying in 2013 thread. Comes highly recommended

Trish56

Banks are lending... AIB will lend up to 92% of the purchase price all others 90%.
They all apply strict criteria but the most important is repayment capacity... for example if the purchase price is 200k and you wish to borrow 92% = 184k with AIB you need to show evidence that you have been saving and/or paying rent equal to the stressed repayments at 6.49% = €1106 over 35 years or €1158 over 30 years. After stressed repayments and any other loans a couple are required to have €2050 net income per month. Single person €1300 and add €250 per child.
You also need to provide evidence that you have 16k plus legal fees circa 2k and stamp duty 2k in savings. All lenders require you be in permanent employment with the same employer for 1 year.

Permanent tsb will lend up to 90% and have only recently amended their credit policy and changed how they assess mortgage applications. They require you to complete a Household Expenses form and approval is granted based on net income and cash flow proving ability to fund the proposed repayment.

They have all more or less moved away from multiples of income.
Hope the above helps

ghosty1

our circumstances have not changed since we applied for AIP, the only difference is that my partner has extra income through bonuses and shift allowances, all of these were marked as either guaranteed or regular so should this in theory not strengthen the application ?
believe the banks are lending, there is no question about that, the ting i am worried about is that they would prefer to give out 10 small mortgages rather than 5/6 bigger ones like what i am looking for. I have shown a great capacity to repay the proposed mortgage and still have a large cushion. I have met all there criteria, kept within all their Figures and stats... and basically I am getting the feeling that if the mortgage is refused it will be because they just don’t want to give it to me.

we have shown proof of our savings and also we are getting a gift so we are only looking for 86%

The_Conductor

Bonuses and allowances- other than core pay- are not allowed, and are not counted. This has always been the case. If they are guaranteed, the argument is- they are, or should be considered to be, core pay. By differentiating between them and core pay- it indicates they are subject to conditions that core pay is not- and by definition, not guaranteed, in the same manner that core pay is.

Having additional allowances and bonuses- is good for you and your partner- insofar as you'll have more disposable income- it doesn't however necessarily translate into any material difference to your mortgage application.

Progression on a salary scale- to the next point on the scale- would be viewed as an increase in salary- and if there is a defined salary scale associated with the post- this will positively affect the manner in which it will be looked at.

It is not that they don't want to give you the mortgage- its that they are applying all the criterion to your application that they should have been doing but papered over, during the boom times. It is not the case that you can wander in off the street, fill out an application, give them your salary slips- and off you go, anymore.

On top of this mortgage approval you're seeking- the bank will also want the property you propose to buy valued by a member of their valuation panel. The loan they give you will be based on what their valuer says the property is worth- not what you have offered to pay for it.........

There are lots of things that you need to take into account.

Villa05

ghosty1 wrote: »

Hi There
I am in the same boat as chin up, we are getting our mortgage (hopefully) through ptsb. We were told about the 15 minute AIP, we were approved for 259k and were told once we can provide proof of all figures we gave them at the time of full application there would be no problem...also it says this on there website, and I was told I wouldn't need to make a full application or go back to the branch until we had a deposit down, I thought this was a bit odd.
anyway about a month later we found our house its 300 k

Could you offer 275 or better 250 for the house? Mortgage lending has been falling for the last 14 consecutive quarters and is currently at an all time low, even lower than the time the banks were on strike for months. Do you think, in general, that house prices will rise or fall in such an environment?

ghosty1

Villa05 wrote: »

Could you offer 275 or better 250 for the house? Mortgage lending has been falling for the last 14 consecutive quarters and is currently at an all time low, even lower than the time the banks were on strike for months. Do you think, in general, that house prices will rise or fall in such an environment?

no we had an offer in and were outbid and then got into a bidding war, to be fair it is a bargain of a house all the same because the owner is under pressure from the banks to get rid asap.

well still and all we should become because we got the AIP based on only core pay, savings, etc so fingers crossed

The_Conductor

ghosty1 wrote: »

to be fair it is a bargain of a house all the same

On what basis are you making this statement?
Do you know the price comparable properties in the area sold for over the last few months?
Did you have a valuation done of the property?

Just because you got into a bidding war on a particular property- means absolutely nothing. The bank will only give you a mortgage based on what their valuer says its worth- not what you bid on it.......... This is something very important that you *need* to keep in mind.

Trish56

ghosty1 - You should have no problem.. so stop worrying !!! Did you complete a Household Expense Form with the perm tsb customer advisor?

ghosty1

my Job is involved heavily with property and also i have research the property price register and got professional opinions from contacts at work. i know that i need to have a valuation done and all that, the above statement was just an an extra thing, i wasn't relating it to the bidding as such, sorry

ghosty1

Trish56 wrote: »

ghosty1 - You should have no problem.. so stop worrying !!! Did you complete a Household Expense Form with the perm tsb customer advisor?

thanks Trish56, yes we filled that out and got him to tweek it with us when we were submitting it.

Lou1984

The banks are def lending. My boyfriend and i applied for a mortgage on a Wednesday and got the call the following Tuesday that we were approved. This was about three months ago and with BOI. We are first time buyers that have been saving for years and have no debt so this would have went in our favour.

Hang in there.

OMD

Villa05 wrote: »

Could you offer 275 or better 250 for the house? Mortgage lending has been falling for the last 14 consecutive quarters and is currently at an all time low, even lower than the time the banks were on strike for months. Do you think, in general, that house prices will rise or fall in such an environment?

Mortgage lending has not fallen for 14 consecutive quarters. Don't believe what you read in independent.
New mortgage lending
Q1 2013 €331m
Q2 2013 €518m
That's a 56% increase between Q1 and Q2.

The_Conductor

14 consecutive quarters, year-on-year. They phrased it arseways.

OMD

The_Conductor wrote: »

14 consecutive quarters, year-on-year. They phrased it arseways.

Still not true though. Mortgage lending in Q3 and Q4 2012 were both well ahead of Q3 and Q4 2011.
Mortgage lending for last year is ahead of the year before.

gurramok

OMD wrote: »

Still not true though. Mortgage lending in Q3 and Q4 2012 were both well ahead of Q3 and Q4 2011.
Mortgage lending for last year is ahead of the year before.

2011 - 2,463m (number 14,273)
2012 - 2,636m (number 15,881)
2013 - Q1 331m (number 2,068) + Q2 518m (number 3,229) = 849m (number 5,297)

There was a 0.1% growth from Q2 2013 on Q2 2012. For the full 2013, it will need to go up substantially in Q3 and Q4 2013 to beat 2012.

Villa05

OMD wrote: »

Mortgage lending has not fallen for 14 consecutive quarters. Don't believe what you read in independent.
New mortgage lending
Q1 2013 €331m
Q2 2013 €518m
That's a 56% increase between Q1 and Q2.

I think it is measured as total outstanding mortgages, rather than just new lending. Agree with your 2nd statement

ghosty1

well got our approval today subject to one or 2 simple things delighted

The_Conductor

Villa05 wrote: »

I think it is measured as total outstanding mortgages, rather than just new lending. Agree with your 2nd statement

Aka- total outstanding mortgage debt has declined every quarter for the past 14-15-16 (however many) quarters.

So- all it means is we're paying back more debt to lending institutions, than they are making in new loans.

Pretty meaningless measure- are they trying to suggest that by retiring the gross amount of debt- that somehow, we are contributing to the stagnation/decline in the economy? Is it consumers fault? Is it the banks fault? How does it affect the bigger picture? Is there any cognisance of non-performing loans in the equation- and if not- how would that change the meaning of all of this?

To many unknowns- and it sounds like they're trying to spin a pretty meaningless figure into something that it quite simply isn't.

Marchbride

ghosty1 wrote: »

well got our approval today subject to one or 2 simple things delighted

That's super news well done and congrats what bank was it and what were the simple things??

Marchbride

Marchbride wrote: »

That's super news well done and congrats what bank was it and what were the simple things??

Sorry ghosty seen your original post that it was PTSB! Great news