Mortgages

Are mortgages unsuitable for a lot of people as way of providing a home.

The amount of mortgages which are not sustainable and are not being paid.

The amount of young people who cant get mortgages anyway.

They distort the economy and banking.

They are unsuitable in the modern world of employment because of casualization and periods of unemployment.

How would you solve this is there another way of providing finance for housing that is sustainable and fair, do people have a right to housing.

kidneyfan

The answer is simple. The state should build houses and rent them to people.

golfwallah

As far as I know, the reality at the moment is that banks are providing very little finance for housing or any form of lending. Reports indicate that the mini housing bubble in Dublin is a result of a relative small volume of transactions, many of which are cash rather than mortgage based.

Whether we are moving closer to a housing rental model more akin to the European model is another matter.

Don't know what the answer is, but my experience is that the local authorities in Dublin at least seem to be moving away from direct ownership of housing and towards encouraging voluntary housing agencies to take up the slack (including directors taking on the personal risk of housing finance loans).

As regards provision of new public housing, Government is working on the policy of reducing the state's level of borrowing, i.e. removing the loan balances from their own balance sheet and getting voluntary bodies to take on the responsibility.

It's a bit early as yet to see how well this policy will work as regards making housing more affordable for the less well off in society - time will tell!

As regards rights to housing, citizens in Ireland have no constitutional or legislative rights. Someone could start a campaign to change the constitution or legislation but with other priorities I can't see how this would meet with a lot of general support. I mean how would this be paid for?

There is also the argument that people have responsibilities as well as rights - not only to house themselves but also to feed, clothe and educate themselves - even if the welfare statists would like to make people think otherwise.

Anyway, this is what Focus Ireland has to say about it (includes a table summarising the situation in other countries): http://www.focusireland.ie/files/publications/Info%20leaflet%20-%20What%20EU%20Countries%20have%20a%20Right%20to%20Housing.pdf

Godge

mariaalice wrote: »

Are mortgages unsuitable for a lot of people as way of providing a home.

The amount of mortgages which are not sustainable and are not being paid.

The amount of young people who cant get mortgages anyway.

They distort the economy and banking.

They are unsuitable in the modern world of employment because of casualization and periods of unemployment.

How would you solve this is there another way of providing finance for housing that is sustainable and fair, do people have a right to housing.

http://www.cso.ie/quicktables/GetQuickTables.aspx?FileName=CNA33.asp&TableName=Number+of+private+households+and+persons+in+private+households+in+each+Province+,+County+and+City&StatisticalProduct=DB_CN


There are 1.65m households in Ireland.


http://www.centralbank.ie/press-area/press-releases/Pages/ResidentialMortgageArrearsandRepossessionsStatisticsQ32013.aspx



By the end of September 2013 banks were in possession of 1,050 properties, that is 0.06%.

They took possession of 209 properties during that quarter, suggesting something like 1,000 repossessions per year. So a yearly repossession rate of 0.06% of households is a reason to change the whole system?

MayoSalmon

Anyone who goes into a bank and ASKS for a debt of 300,000+ for some ****ty 3-bed house that you cannot even swing a cat in, is a loony bin.

Farmer Pudsey

The issue is thst during the boom the banks gave out unsustainable mortgages. The movement from the traditional 20 year mortgage to 40 year was unsustainable in a low inflation envoirment especiall the level of loans given at 2+ time salary for two people. this level of lending fueled property price inflation.

There is nothing wrong with sustainable mortgage's and IMO it is socially desirable that people own a house as they retire and there income drops. A 20 year mortgage also would in theory be paid back in a family situtation as the burden of college education starts. Mortgage's became unsustainable as the repayment lenghtened out to 40 years, this means that you are still paying the loan back while trying to fund college for childern in a family situtation and may mean when you retire you sill have 10 years of a loan to pay back.

Higher lending the same as higher grants only fuels family home inflation. An Irish borrower will always tend to borrow to the max to fund a home. This tie's up disposable income for a period. In a low inflation economy inflation will not reduce the burden over time. A 2% inflation rate means that after 10 years incomes will have risen by 22% in a slightly higher inflation economy 4% incomes will have risen nearly 50%. For ordinary workers on more static wages ( these are workers in lower paid jobs rather than professionals or skilled workers).

The idea that a government should be the provider of all housing is not sustainable. If you look at the depreciation in quality of public housing as opposed to rented and finally private housing which lasts the longest. It is becoming unsustainable for the Government to provide housing due to the poor care residents often(not all) give to such property and the way people who are alloted such property becom pick and choosy where they are housed as well as the expectation that you are entitled to a new house.

Well then mortgage lending will have to be become more narrowly focused and with much tighter regulation, for example banning mortgages over 25 years and much stricter income guidelines. The thing is how do you provide housing for those who will never meet stricter mortgage guidelines. Solving the problem of unsustainable debt on the one hand, but locking signifying amount of people out of home ownership.

Plus life styles are changing people are getting married lather having children late and taking our mortgages later,careers are starting later, lots of my family for example got married and had mortgages before the age of 25 and at the time it was unremarkable lots of people did, today that would be almost un heard of.

Farmer Pudsey

mariaalice wrote: »

Well then mortgage lending will have to be become more narrowly focused and with much tighter regulation, for example banning mortgages over 25 years and much stricter income guidelines. The thing is how do you provide housing for those who will never meet stricter mortgage guidelines. Solving the problem of unsustainable debt on the one hand, but locking signifying amount of people out of home ownership.

Plus life styles are changing people are getting married lather having children late and taking our mortgages later,careers are starting later, lots of my family for example got married and had mortgages before the age of 25 and at the time it was unremarkable lots of people did, today that would be almost un heard of.

And yet when they did the standard if not the max mortgage was 20 years and you had to have 10% of the price of the house and you fitted and furnished it after yourself

Icepick

MayoSalmon wrote: »

Anyone who goes into a bank and ASKS for a debt of 300,000+ for some ****ty 3-bed house that you cannot even swing a cat in, is a loony bin.

Yes, but how do we protect ourselves from paying for their stupid decisions?

Akrasia

Mortgages are secured lending. The loan is guaranteed against the value of the property it is used to buy.

There are two problems with the system in Ireland. Both of which are linked.
1. The banks hold the borrower liable for the outstanding balance of the loan even if the value of the security falls below the value of the loan.

2. It is almost impossible for banks to reposses properties in a timely fashion

If I was to make changes to the mortgage system i would do two things.

1. All mortgages are now non recourse loans. The borrowers liability for the loan is limited to the value of the property the mortgage is secured against.

2. All mortgages that have been in default for a set period should begin re-possession proceedings (Of course the outcome of the proceedings are dependent on the individual circumstances, if the borrowers can show that their circumstances have changed and they are in a position to make the loan repayments, then they can reach agreements to keep their homes)


What are the effects of these changes in policy?

1. People who are in mortgage arrears can get a second chance. Surrender their home but they are no longer faced with a debt hanging over their heads for the rest of their lives. These people are not being made 'homeless' They are becoming renters, not debtors

2. Banks can recover their losses. The banks have already been given sh1t loads of state capital to cover writedowns on mortgages, so even if the houses are sold at a loss, these losses should be covered.

3. Future mortgage lending would be made on a more sustainable basis. The banks will no longer have an incentive to offer 100%+ mortgages, banks would have to be very wary about lending policies that drive property prices back into a bubble scenario as this negative equity means the banks lose out, not the borrowers.

golfwallah

Akrasia wrote: »

Mortgages are secured lending. The loan is guaranteed against the value of the property it is used to buy.

There are two problems with the system in Ireland. Both of which are linked.
1. The banks hold the borrower liable for the outstanding balance of the loan even if the value of the security falls below the value of the loan.

2. It is almost impossible for banks to reposses properties in a timely fashion

If I was to make changes to the mortgage system i would do two things.

1. All mortgages are now non recourse loans. The borrowers liability for the loan is limited to the value of the property the mortgage is secured against.

2. All mortgages that have been in default for a set period should begin re-possession proceedings (Of course the outcome of the proceedings are dependent on the individual circumstances, if the borrowers can show that their circumstances have changed and they are in a position to make the loan repayments, then they can reach agreements to keep their homes)


What are the effects of these changes in policy?

1. People who are in mortgage arrears can get a second chance. Surrender their home but they are no longer faced with a debt hanging over their heads for the rest of their lives. These people are not being made 'homeless' They are becoming renters, not debtors

2. Banks can recover their losses. The banks have already been given sh1t loads of state capital to cover writedowns on mortgages, so even if the houses are sold at a loss, these losses should be covered.

3. Future mortgage lending would be made on a more sustainable basis. The banks will no longer have an incentive to offer 100%+ mortgages, banks would have to be very wary about lending policies that drive property prices back into a bubble scenario as this negative equity means the banks lose out, not the borrowers.

If non-recourse mortgages are such a simple and obvious solution, why are we not hearing more about it and why is nothing happening to move in that direction?

Surely there must be a few more pros and cons to this approach than has been outlined in your post?

Would be good if someone could outline the impact of such a move on the overall economy in a bit more detail.

For example, under fractional reserve banking, where banks simply create money through a multiplier effect secured on the basis of borrowers' undertakings to repay loans, I would think there would be an effect on the overall economy should there be massive write-offs by converting all mortgages from recourse to non-recourse.

Would be great if it could be done without dragging the whole banking system and greater economy down - but is this realistically possible?

Frank Lee Midere

golfwallah wrote: »

If non-recourse mortgages are such a simple and obvious solution, why are we not hearing more about it and why is nothing happening to move in that direction?

Surely there must be a few more pros and cons to this approach than has been outlined in your post?

Would be good if someone could outline the impact of such a move on the overall economy in a bit more detail.

For example, under fractional reserve banking, where banks simply create money through a multiplier effect secured on the basis of borrowers' undertakings to repay loans, I would think there would be an effect on the overall economy should there be massive write-offs by converting all mortgages from recourse to non-recourse.

Would be great if it could be done without dragging the whole banking system and greater economy down - but is this realistically possible?

It's the American system. Theoretically it should stop over borrowing too, the banks are left with the property not the loan, so they should be careful what they loan against.

Farmer Pudsey

golfwallah wrote: »

If non-recourse mortgages are such a simple and obvious solution, why are we not hearing more about it and why is nothing happening to move in that direction?

Surely there must be a few more pros and cons to this approach than has been outlined in your post?

Would be good if someone could outline the impact of such a move on the overall economy in a bit more detail.

For example, under fractional reserve banking, where banks simply create money through a multiplier effect secured on the basis of borrowers' undertakings to repay loans, I would think there would be an effect on the overall economy should there be massive write-offs by converting all mortgages from recourse to non-recourse.

Would be great if it could be done without dragging the whole banking system and greater economy down - but is this realistically possible?

Bank would not want non recourse as it means that they would have to access mortgage's both the property and the borrower. Borrowers would need equity of at least 10% and possible double. It would act as a brake on house prices. banks recklessly lending would get caught with there pants down.

The main disadvantage is that banks would have to rise lending rates bu a half to one% to cover extra risk. However IMO it would be agood thing as the punter can only afford so much.

It also would act as a brake during a boom as if Neg equity happened again punters could walk away.

Godge

Akrasia wrote: »

Mortgages are secured lending. The loan is guaranteed against the value of the property it is used to buy.

There are two problems with the system in Ireland. Both of which are linked.
1. The banks hold the borrower liable for the outstanding balance of the loan even if the value of the security falls below the value of the loan.

2. It is almost impossible for banks to reposses properties in a timely fashion

If I was to make changes to the mortgage system i would do two things.

1. All mortgages are now non recourse loans. The borrowers liability for the loan is limited to the value of the property the mortgage is secured against.

2. All mortgages that have been in default for a set period should begin re-possession proceedings (Of course the outcome of the proceedings are dependent on the individual circumstances, if the borrowers can show that their circumstances have changed and they are in a position to make the loan repayments, then they can reach agreements to keep their homes)


What are the effects of these changes in policy?

1. People who are in mortgage arrears can get a second chance. Surrender their home but they are no longer faced with a debt hanging over their heads for the rest of their lives. These people are not being made 'homeless' They are becoming renters, not debtors

2. Banks can recover their losses. The banks have already been given sh1t loads of state capital to cover writedowns on mortgages, so even if the houses are sold at a loss, these losses should be covered.

3. Future mortgage lending would be made on a more sustainable basis. The banks will no longer have an incentive to offer 100%+ mortgages, banks would have to be very wary about lending policies that drive property prices back into a bubble scenario as this negative equity means the banks lose out, not the borrowers.

The law of unintended consequences would see to this failing.

The number of people getting mortgages would fall as banks would only consider those in secure well-paid employment.

The interest rate on mortgages would rise making them unaffordable for many of those eligible to get a mortgage.

The deposit required would rise to at least 20%.

The construction industry would suffer as margins on new builds would be squeezed, the number of houses built for sale would fall and the price of property would hover just above the cost of rebuilding.

Rents would rise as those who own multiple property would be able to charge what they want for whatever housing is available.

Local authorities would be forced to build housing for those on housing lists and the local charges would rise.

Wealth would remain concentrated in those who have wealth and the ability to acquire wealth in the form of property would be more difficult.

Farmer Pudsey

Godge wrote: »

The law of unintended consequences would see to this failing.

The number of people getting mortgages would fall as banks would only consider those in secure well-paid employment.

The interest rate on mortgages would rise making them unaffordable for many of those eligible to get a mortgage.

The deposit required would rise to at least 20%.

The construction industry would suffer as margins on new builds would be squeezed, the number of houses built for sale would fall and the price of property would hover just above the cost of rebuilding.

Rents would rise as those who own multiple property would be able to charge what they want for whatever housing is available.

Local authorities would be forced to build housing for those on housing lists and the local charges would rise.

Wealth would remain concentrated in those who have wealth and the ability to acquire wealth in the form of property would be more difficult.

It also has advantages Godge.


Banks would have to be more wary of unviable loans

People might tie less money in property and invest more in business that generate export led products,

Building would be cheaper and might well lead to a situtation where less disposable income is tied up in property repayments.

There is a limit to any rental charges in the ability of a renter to pay rent.

While the construction industry might suffer other area's might develop by extra spending in the economy.

Most people in Ireland tend to over spend on property anyway.

Farmer Pudsey

Farmer Pudsey wrote: »

It also has advantages Godge.


Banks would have to be more wary of unviable loans

People might tie less money in property and invest more in business that generate export led products,

Building would be cheaper and might well lead to a situtation where less disposable income is tied up in property repayments.

There is a limit to any rental charges in the ability of a renter to pay rent.

While the construction industry might suffer other area's might develop by extra spending in the economy.


Most people in Ireland tend to over spend on property anyway.

People have to have some sort of home, in what you are proposing the local council's i.e the state( very costly ) would be the ones providing housing for lots of people, instead of the individual by way of borrowing from a commercial bank, so that does not solve the conundrum of how to provide housing with out over burdening the individual or the state.

Something interesting I came across when looking at why there is a retreat form marriage in the western world, the age of household formation fell during the industrial revolution in Britain, because the availability of paid work made it possible to form a household at a younger age, so in other words the cost of forming a household ( providing a home for you and you partner ) has a direct effect on marriage rates in a society.

golfwallah

Frank Lee Midere wrote: »

It's the American system. Theoretically it should stop over borrowing too, the banks are left with the property not the loan, so they should be careful what they loan against.

As far as I know, only 12 US states are "non-recourse". Non-recourse loans are also common in Germany.

We all know the advantages and disadvantages of non-recourse lending in these states - but the real question, when considering a change, is what is the once-off cost of moving all or a high proportion of mortgages from recourse to non-recourse.

There must be a cost for all the losses on "under water" properties that will have to be sold for less that what is owed on them. And this once-off cost would have to be funded from somewhere.

I'm not so sure that the state's rescue of the banks was enough to cover such a once-off cost. They are already strapped for cash before any change to non-recourse loans - so would they come back to the taxpayer for yet more money to pay for this additional change?

Given banks' track record, my guess is they would. So would the taxpayer be prepared to cough up even more taxes to fund it? This would be a big ask for any government to implement!

What about a bank developing two mortgage produces one is a non recourse loan so attracts a higher interest rate ( to cover the increase risk to the bank ) and the other is a NOT a non recourse loan so has a lower interest rate because the risk is shared a between the borrower and the lender, thus giving choice to the borrower.

smcgiff

mariaalice wrote: »

What about a bank developing two mortgage produces one is a non recourse loan so attracts a higher interest rate ( to cover the increase risk to the bank ) and the other is a NOT a non recourse loan so has a lower interest rate because the risk is shared a between the borrower and the lender, thus giving choice to the borrower.

I like this idea. Don't see anything stopping banks offering these products.

Farmer Pudsey

The state cannot move present loans to non-recourse, however it could make all new loans non-recourse. If it is good enough for Germany is it good enough for us?????

We generally follow British modeling rather than looking beyond into europe. In france I think that it is possible to borrow mortgage money at very compeditive rate with virtual longterm fixed rates.( i think I read of it a few years ago)

Our biggest issue is to discourage over commitment of income resources into property. The issue facing the present generation is that as well as paying a mortgage they will allso need to fund children's education, Health insurances anf loacl taxes. The state will push the burden of these costs on to the invidual. We have failed to educate the population to invidual responsbility, and to discourage depandance on the state by a section of the population.

I cannot see the state being able to provide housing to any large extent. As I often try to explain to a few orginisation I am involved in there is a limit to what funding can be raised in any community. It is the same with taxation and it is the same with how much can (or should be allow) to be committed to a mortgage

golfwallah

smcgiff wrote: »

I like this idea. Don't see anything stopping banks offering these products.

I see a start has been made on allowing existing tracker mortgage holders to move their tracker loan to a bigger house - for a 1% increase in interest rates:
http://www.independent.ie/business/personal-finance/bank-boosts-family-home-market-with-new-deal-on-trackers-30046084.html

Will be interesting to see if other banks follow Permanent TSB's lead and, maybe, also introduce a non-recourse product offering.

Godge

Farmer Pudsey wrote: »

It also has advantages Godge.


Banks would have to be more wary of unviable loans

People might tie less money in property and invest more in business that generate export led products,

Building would be cheaper and might well lead to a situtation where less disposable income is tied up in property repayments.

There is a limit to any rental charges in the ability of a renter to pay rent.

While the construction industry might suffer other area's might develop by extra spending in the economy.

Most people in Ireland tend to over spend on property anyway.

Yes but overall activity in the economy will fall, leading to a drag on growth rates.

Farmer Pudsey

Godge wrote: »

Yes but overall activity in the economy will fall, leading to a drag on growth rates.

it is not a drag on the Germany or US economy. It advantage is that it will help prevent a property boom, it forces banks to have a proper lending policy in place, it discourages 100% mortgage's. I consider the way Irish people plough money into property a drag on the economy as people tend not to look at other productive investments.

I see huge advantages in non recourse lending. It would discourage money development land hoarding and encourage people to do up old houses etc and not to have too much money tied into property investment. Banks would be less likly to lend or bankroll hoarders of development land and encourage people that have borrowed for this purpose to develop and turn it over fast

coolshannagh28

Non recourse mortgage lending is a product of free market capitalism I don't think what we have in Ireland fits that description and the chances of Irish banks adopting it is zero . It would only work here if it was retrospective as it would clean out the backlog of bad debt quickly and effectively but the political will to do it does not exist yet and it would run a high chance of busting the banks again .

Geuze

golfwallah wrote: »

I see a start has been made on allowing existing tracker mortgage holders to move their tracker loan to a bigger house - for a 1% increase in interest rates:
http://www.independent.ie/business/personal-finance/bank-boosts-family-home-market-with-new-deal-on-trackers-30046084.html

Will be interesting to see if other banks follow Permanent TSB's lead and, maybe, also introduce a non-recourse product offering.

Please note that some other banks already allow the transfer of tracker mortgages to a new house.

pTSB is the third bank to offer this, I think.

recedite

Making loans non-recourse would have the effect of lowering the amount of money people could borrow. Loan to value ratios (value at the time of the mortgage being signed) would be only 50 - 60%. Other than that, no real difference. So people would not want to be limited by that, they would insist on getting top-up loans elsewhere based on their perceived earning capacity.

The change I would make is more radical; provide the option of a state mortgage to each citizen on reaching a certain age (20-30 ish) at 2% interest.

Beneficial Effects;
1.The money can only trickle into the economy gradually, so no boom/bust scenario.
2. The new householder is not crippled by debt, so can continue to contribute and spend in the real economy.
3. Costs the state nothing, the state bank can use the mortgage deed as collateral and draw the money from ECB in the usual way.
4. No extra risk to the state. We now know that the state and the taxpayer is the guarantor and is ultimately liable for bad loans in private banks anyway, so why not be liable for bad loans in a specialist state mortgage-issuing bank instead?

JustAddWater

mariaalice wrote: »

Are mortgages unsuitable for a lot of people as way of providing a home.

The amount of mortgages which are not sustainable and are not being paid.

The amount of young people who cant get mortgages anyway.

They distort the economy and banking.

They are unsuitable in the modern world of employment because of casualization and periods of unemployment.

How would you solve this is there another way of providing finance for housing that is sustainable and fair, do people have a right to housing.

Apparently there's s 3D printer being designed that will 'print' a house in no time

Long term it could lead to cheaper more affordable houses.... Could lead to more problems also, but who knows?

Quite interesting to see how that pans out

JustAddWater

:

JustAddWater wrote: »

Apparently there's s 3D printer being designed that will 'print' a house in no time

Long term it could lead to cheaper more affordable houses.... Could lead to more problems also, but who knows?

Quite interesting to see how that pans out

In Ireland it is not the cost of the house that is the problem: it is the cost of the land it sits on, that's why there has to be some way to stop land hoarding around major urban areas with out interfering with property rights of the land owner, I am not sure how you would do this except maybe tweaking tax law, planning permission, and inheritance laws.

nesf

mariaalice wrote: »

Are mortgages unsuitable for a lot of people as way of providing a home.

Yes. Most of our problems come from an obsession with owning property partially due to very weak laws protecting tenants and a complete lack of 20 or 30 year leases available to domestic renters. In many countries on the continent renting is the norm by a long way mainly due to people being able to rent a place and have a lease that'll outlast their children living at home with their parents.

Our current situation is a mess.

Farmer Pudsey

nesf wrote: »

Yes. Most of our problems come from an obsession with owning property partially due to very weak laws protecting tenants and a complete lack of 20 or 30 year leases available to domestic renters. In many countries on the continent renting is the norm by a long way mainly due to people being able to rent a place and have a lease that'll outlast their children living at home with their parents.

Our current situation is a mess.

It is not just the tenant that has an issue the landlord has issue as well. Tenants in Ireland tend not top look after rented property (whether houses or farms) So even if we had ways of putting in place longterm leases I would see landlords unwilling to invest.

Look al Local authority maintenance bill for rented property. In Ireland some tenents think that all maintenance should be by landlord. This add huge costs to rented premises. It encourages Landlord to want short term leases so that they can evict unwanted tenants and and carry out maintenance of property.

Accross europe long term leased property's are up to tenant to furnish and maintain I think. This encourages tenant to look after property of owner, in Irelalnd If a bulb is blown loads of tenant expect landlord to replace.

nesf

Farmer Pudsey wrote: »

It is not just the tenant that has an issue the landlord has issue as well. Tenants in Ireland tend not top look after rented property (whether houses or farms) So even if we had ways of putting in place longterm leases I would see landlords unwilling to invest.

Look al Local authority maintenance bill for rented property. In Ireland some tenents think that all maintenance should be by landlord. This add huge costs to rented premises. It encourages Landlord to want short term leases so that they can evict unwanted tenants and and carry out maintenance of property.

Accross europe long term leased property's are up to tenant to furnish and maintain I think. This encourages tenant to look after property of owner, in Irelalnd If a bulb is blown loads of tenant expect landlord to replace.

No argument here with that. Long term leases should be building only for obvious reasons.

wotaccent

There does seem to be some movement towards helping people and the property market stir again. You read of people in negative equity being able to take their loans with them, and people with tracker mortgages have been given the green-light to move up/down taking their trackers with them. No hope for people who are not in negative equity and on variable loans. They cannot afford to move as losses would be substantial and are at the mercy of banks, who know they have them over a barrel. What I would suggest are two options, with these people in mind.

A. That they can likewise take their existing balance with them when buying a new home, i.e. say I have €70k left on my mortgage. I sell my house for €130k and the new property is €100k. I pay the bank the €30k, or what's left after paying stamps/fees/whatever, with the rest remaining as the mortgage, with the same terms as present. Surely it does not matter to the bank what house you live in as long as they get all their money back.

B. Adjust mortgages to all houses bought between, say, 2005 - 2008/9, to today's market value. Any money already paid over and above the present value will not be refunded to borrower. If mortgages were adjusted, surely these homeowners would have some money to stimulate the construction and related industries.

Godge

wotaccent wrote: »

There does seem to be some movement towards helping people and the property market stir again. You read of people in negative equity being able to take their loans with them, and people with tracker mortgages have been given the green-light to move up/down taking their trackers with them. No hope for people who are not in negative equity and on variable loans. They cannot afford to move as losses would be substantial and are at the mercy of banks, who know they have them over a barrel. What I would suggest are two options, with these people in mind.

A. That they can likewise take their existing balance with them when buying a new home, i.e. say I have €70k left on my mortgage. I sell my house for €130k and the new property is €100k. I pay the bank the €30k, or what's left after paying stamps/fees/whatever, with the rest remaining as the mortgage, with the same terms as present. Surely it does not matter to the bank what house you live in as long as they get all their money back.

B. Adjust mortgages to all houses bought between, say, 2005 - 2008/9, to today's market value. Any money already paid over and above the present value will not be refunded to borrower. If mortgages were adjusted, surely these homeowners would have some money to stimulate the construction and related industries.

How are losses substantial?

wotaccent

Godge wrote: »

How are losses substantial?

If someone had to sell a house for, for example, €100,000 less than what they bought it for, I would think that would be a considerable amount. In any case, even if it was 10% of that, it would be substantial for the average employee.

Godge

wotaccent wrote: »

If someone had to sell a house for, for example, €100,000 less than what they bought it for, I would think that would be a considerable amount. In any case, even if it was 10% of that, it would be substantial for the average employee.

That is the perils of buying a property, did you not read the fine print, prices go up and down.

That does not explain how people, who are not in negative equity, who are on variable rates, cannot trade houses because of some unexplained loss.

wotaccent

Actually, Godge, I read more than the banker wanted me to, which is why I insisted on borrowing more than 100k LESS than he was pushing for. As things stand, I'm not too fussed about having to pay around €500/month for the next four years, which is much less than we would pay in rent for our house.

However, I hear and listen when friends and colleagues voice their worries. How their lives are on hold indefinitely. Also, no-one told banks' shareholders that they should have read the fine print, and that their returns could go up or down.

Godge

wotaccent wrote: »

Actually, Godge, I read more than the banker wanted me to, which is why I insisted on borrowing more than 100k LESS than he was pushing for. As things stand, I'm not too fussed about having to pay around €500/month for the next four years, which is much less than we would pay in rent for our house.

However, I hear and listen when friends and colleagues voice their worries. How their lives are on hold indefinitely. Also, no-one told banks' shareholders that they should have read the fine print, and that their returns could go up or down.

The bank's shareholders were wiped out. What have they got to do with anything?

Whenever an economic transaction takes place, there are winners and losers, profits and losses. Without changing the economic system (and nobody has demonstrated another one that works) that is the way it is.

Morrisseeee

What about this (mad) idea !
Joe Blogs is in a 3 bed house, has €140k (tracker) left to pay on it.
He is trying to sell it and move to a 4 bed.
Banks won't let him take the tracker with him.
He has had no offers @ 140k in over 9 months.
What if he now made a deal with the banks to sell his property with the current tracker rate, ie. the new occupants would take on the existing tracker mortgage !!
I'm guessing he'd have a few more people interested with this offer rather than someone trying to borrow 140k @ current rates.

Is it an option the banks would go for, do ye think ? and what would the legal eagles think of it ?!

recedite

Morrisseeee wrote: »

Is it an option the banks would go for, do ye think ? and what would the legal eagles think of it ?!

No problem legally, but what's in it for the banks?
They would rather wait for a buyer to come along who is willing to pay them more interest than the current owner. Even if it takes years to sell the house.

Morrisseeee

recedite wrote: »

No problem legally, but what's in it for the banks?
They would rather wait for a buyer to come along who is willing to pay them more interest than the current owner. Even if it takes years to sell the house.

It might be one initiative (of many) to get the market going again.