Return of mortgage interest at c. 12%+: likely?

gaiscioch

I was speaking with an 80-year-old man last night who had a 40-year banking career and he was claiming that we are in historically low interest rates and that they will rise. He said he was paying @ 18% interest on his mortgage for a time in the 1980s, something I found hard to fathom, but which this US article seems to confirm happened: Why Mortgage Rates Once Reached a Sky-high 18.5%.

This Central Bank report says interest rates reached 16% in the 1980s and 12% in the 1990s.

In a nutshell, how likely is it that interest rates will rise to such levels again, and if they do will this essentially lead to a reduction in house prices as people will be deterred from buying with rates so high? What are the consequences of a rise in interest rates to this magnitude?

mickman

gaiscioch wrote: »

I was speaking with an 80-year-old man last night who had a 40-year banking career and he was claiming that we are in historically low interest rates and that they will rise. He said he was paying @ 18% interest on his mortgage for a time in the 1980s, something I found hard to fathom, but which this US article seems to confirm happened: Why Mortgage Rates Once Reached a Sky-high 18.5%.

This Central Bank report says interest rates reached 16% in the 1980s and 12% in the 1990s.

In a nutshell, how likely is it that interest rates will rise to such levels again, and if they do will this essentially lead to a reduction in house prices as people will be deterred from buying with rates so high? What are the consequences of a rise in interest rates to this magnitude?

Consequences would be well over half of mortgages would default and there would be global financial ruin

Won't happen

on_my_oe

It definitely happened, I remember my parents paying it and it tipped them over.

My OH thinks I'm paranoid but I just have a good memory

Del2005

If it happens it'll be many years from now. Europe is in the doldrums and only now started printing money, the US and UK started years ago and they are still at low interest rates with a small increase due. Interest that high is to try to reduce inflation and the vast majority of the EU is in deflation.

Eric Cartman

were in a state of quantative easing at the moment which prompts inflation , this will be like talking about buying a house for £20,000 in the 80's , the inflation will exceed the interest rates making 18% seem large on paper , but when its 18% on 200k outstanding and inflation has put your wage to 80-90k itll be easy to erode the principal.

jon1981

if they think things are bad now, wait and see the carnage that would ensue if they were to raise the rates that high!

murphaph

It certainly happened. I was clearing out paperwork after my father passed away a few years ago and I found a statement from Irish Nationwide @ 17%. No wonder their original 3k mortgage taken out in 1970 wasn't paid off until the 90s with all that compound interest adding to it. Painful.

Will it happen again in our lifetimes? I suspect Ireland would need to leave the Euro or for the core nations to have left and formed a Euro II for Ireland to see 17% again. If it ever happens it won't be just mortgage holders in the smelly stuff.

jon1981

Eric Cartman wrote: »

were in a state of quantative easing at the moment which prompts inflation , this will be like talking about buying a house for £20,000 in the 80's , the inflation will exceed the interest rates making 18% seem large on paper , but when its 18% on 200k outstanding and inflation has put your wage to 80-90k itll be easy to erode the principal.

Do you mean when inflation has driven average wage to 80-90k?

Eric Cartman

jon1981 wrote: »

Do you mean when inflation has driven average wage to 80-90k?

thats what im getting at yes.

quadrifoglio verde

murphaph wrote: »

It certainly happened. I was clearing out paperwork after my father passed away a few years ago and I found a statement from Irish Nationwide @ 17%. No wonder their original 3k mortgage taken out in 1970 wasn't paid off until the 90s with all that compound interest adding to it. Painful.

Will it happen again in our lifetimes? I suspect Ireland would need to leave the Euro or for the core nations to have left and formed a Euro II for Ireland to see 17% again. If it ever happens it won't be just mortgage holders in the smelly stuff.

My mam found a water charges Bill recently from 92 when we sold our house, the water charges were 200 odd pounds. Makes today's sound cheap.

While I can't see rates going massively high I can see an increase of 2-3% in the next 3-5 years. Let's face it they ain't going any lower, and won't stay at current rates for an eternity.

loyatemu

its unlikely - we had a volatile minor currency in those days; the punt was devalued on a number of occasions. The Euro, despite it's problems is unlikely see interests that high... (I hope).

ABajaninCork

Oh yes. It happened all right...

I was paying 17% in the UK, in the late 80's. Scary, scary times. So many of my friends just handed in their keys. I can remember paying £700 mortgage from my £900 salary. Couldn't even buy a pair of tights! I had to take a second job working in retail weekends, just to make ends meet. At one point I was working 7 days.

Had some laughs too. Used to take it in turns to phone a mate who was in the same position as me. If we went to each other's houses, we used to buy a pack of 10 fags. 5 for me, 5 for her!

Woshy

My Dad also remembers it well, paying crazy interest in the eighties, he also says he was taxed to the hilt as well. He has spreadsheets dating back years with his monthly budget in them and he can't believe how much of his income went on the mortgage. They just tightened their belts and got through it though, and are very comfortable these days.

God only knows what would happen if interest rates got that high again!

mickman

Japan has had low interest rates for the past 20 plus years - we won't see them high in our lifetime

The_Conductor

It was immediately before our break with sterling in the 1980s.
Our economic policies (notably the election that the 1979 government bought- alongside subsequent government interventions) destroyed the value of the Irish pound- and the 18% interest rate was necessary to preserve the link with sterling. Only after we formally abandoned the ruinous link with sterling did interest rates normalise (still at 7-8-9%- levels which we then considered to be 'normal').

Unfortunately our history of government interventions in the economy has been particularly awful in an Irish context- many of which will most probably never be publicly released- but are common knowledge among civil servants even today.

L'prof

They're high enough now as it is at 4-4.5% with trackers at a paltry 1%

The_Conductor

L'prof wrote: »

They're high enough now as it is at 4-4.5% with trackers at a paltry 1%

'Normalisation' of interest rates- would infer an ECB overnight rate of 4-4.5%- with mortgage interest rates of 1.5-2% above this (depending on LTVs etc). Obviously rates like these are ludicrous in the current context. It could be a decade- or even longer- before we get to 'normalisation'........

Current Irish variable rates- are among the highest rates in the EU.
We need to fundamentally reassess how mortgages are structured in this country- in comparison to the rest of the EU- notably the manner in which it is normal throughout most of the EU to fix rates for the entire term of the mortgage- and to securitise the loans, so there is still a reasonable margin for the lending institute.

The Irish market- regardless of what the Central Bank, the Regulator or anyone else says- is still the 'wild west'- and the interests of the lenders are foremost addressed- and those of consumers, are at the back of the queue. This attitude needs a fundamental sea change.

murphaph

There are other "mechanical" differences in the way the debt is secured. We have an appointment next week with the notary to order a lien to be added to our site in favour of the bank. This is not a mortgage. The lien does not decrease as the home loan is repaid. At the end of the 20 years or whatever the lien still stands at the initial amount. You then request the lien to be extinguished and the bank obliges (in fact many people just leave the lien in place, in case they want to get a loan again based on their equity, only extinguishing the lien in the event of a sale of the property)

This mechanism (a Grundschuld) is the preferred way of doing things in Germany since the 70's. Before then it was the typical mortgage, which is legally a much more complex instrument and therefore costs more to arrange. The other advantage of the "new" way is that you can easily top up your loan without needing to involve a notary/solicitor, because the bank already has a lien that covers the amount.

We need app. 270k but we will order a lien of 300k, just in case we have some unexpected costs during the build (we're building a cellar in an area of high groundwater, so this could cost 10k extra, worst case scenario).

AFAIK this is very much a German thing and elsewhere in continental Europe the traditional mortgage is still typical.

Geuze

gaiscioch wrote: »

I was speaking with an 80-year-old man last night who had a 40-year banking career and he was claiming that we are in historically low interest rates and that they will rise. He said he was paying @ 18% interest on his mortgage for a time in the 1980s, something I found hard to fathom, but which this US article seems to confirm happened: Why Mortgage Rates Once Reached a Sky-high 18.5%.

This Central Bank report says interest rates reached 16% in the 1980s and 12% in the 1990s.

In a nutshell, how likely is it that interest rates will rise to such levels again, and if they do will this essentially lead to a reduction in house prices as people will be deterred from buying with rates so high? What are the consequences of a rise in interest rates to this magnitude?

As central banks won't allow inflation to return to the 10%+ rates of the 1970s-80s, then nominal interest rates will not rise to 10%-15% or anything like it.

Interest rates will rise, to maybe 3-5%.

jmayo

gaiscioch wrote: »

I was speaking with an 80-year-old man last night who had a 40-year banking career and he was claiming that we are in historically low interest rates and that they will rise. He said he was paying @ 18% interest on his mortgage for a time in the 1980s, something I found hard to fathom, but which this US article seems to confirm happened: Why Mortgage Rates Once Reached a Sky-high 18.5%.

Can I ask why you doubted him so much you had to look up articles to prove his point ?
Is it because he is old ?
Sorry to be having a go, but the phrasing of this part of your post appears to me as damm condescending to the old gentleman.

gaiscioch wrote: »

In a nutshell, how likely is it that interest rates will rise to such levels again, and if they do will this essentially lead to a reduction in house prices as people will be deterred from buying with rates so high? What are the consequences of a rise in interest rates to this magnitude?

And yes he is right interest rates are at low rates.
They will probably rise, but probably due to fact we are now in Euroland we shouldn't see such high rates as those we had in the 70s/80s.

The_Conductor wrote: »

It was immediately before our break with sterling in the 1980s.
Our economic policies (notably the election that the 1979 government bought- alongside subsequent government interventions) destroyed the value of the Irish pound- and the 18% interest rate was necessary to preserve the link with sterling. Only after we formally abandoned the ruinous link with sterling did interest rates normalise (still at 7-8-9%- levels which we then considered to be 'normal').

I presume you mean lynch's 77 election auction.
We broke with Sterling in 79, but interest rates stayed up around 12% or more until 93/94.
I think some of that had something to do with fact the country was actually finally growing for once and GDP had bene expanding at over 5 % per annum for 5/6 years.

The_Conductor wrote: »

Unfortunately our history of government interventions in the economy has been particularly awful in an Irish context- many of which will most probably never be publicly released- but are common knowledge among civil servants even today.

We should be thankful we have outside overview at the moment.
Even then the governments are often doing their best to make a pigs ear out of it.

mickman

jmayo wrote: »

Can I ask why you doubted him so much you had to look up articles to prove his point ?
Is it because he is old ?
Sorry to be having a go, but the phrasing of this part of your post appears to me as damm condescending to the old gentleman.

There was no reference to that at all, how can you read into something so ridiculously

jmayo

mickman wrote: »

jmayo wrote: »

Can I ask why you doubted him so much you had to look up articles to prove his point ?
Is it because he is old ?
Sorry to be having a go, but the phrasing of this part of your post appears to me as damm condescending to the old gentleman.

There was no reference to that at all, how can you read into something so ridiculously

Just my take on it, but the poster admitted they found it hard to fathom.
They then highlight link to US article that in theior own words "seems to confirm happened".

Basically the poster appears to have doubted it happened until they found corroborating evidence on the web.
IMHO it reads as if they thought the old guy was deluded or some such.

Maybe it is youth not realising things happened, some good and a lot bad, before they ever were heard of or before they began an interest in something.

Maybe it is me being getting old and cranky and not liking people who think anything from the 80s is a golden oldie.

Carawaystick

I can remember radio ads for "10 and a half percent" interest on deposit, and Im under 40. I imagine loan rates were easily higher

Barely Hedged

Geuze wrote: »

As central banks won't allow inflation to return to the 10%+ rates of the 1970s-80s, then nominal interest rates will not rise to 10%-15% or anything like it.

Interest rates will rise, to maybe 3-5%.

Who would have thunk that negative interest rates would have been a possibility 6/7 years ago. Options on rates as low as -2% to -2.5% are being requested and quoted on. I wouldnt be so sure with that comment

the groutch

ABajaninCork wrote: »

Oh yes. It happened all right...

I was paying 17% in the UK, in the late 80's. Scary, scary times. So many of my friends just handed in their keys. I can remember paying £700 mortgage from my £900 salary. Couldn't even buy a pair of tights! I had to take a second job working in retail weekends, just to make ends meet. At one point I was working 7 days.

Had some laughs too. Used to take it in turns to phone a mate who was in the same position as me. If we went to each other's houses, we used to buy a pack of 10 fags. 5 for me, 5 for her!

yeah, you definitely had your priorities straight back then.

One_Of_Shanks

the groutch wrote: »

yeah, you definitely had your priorities straight back then.

Why the snide comment? Quite enjoyed the post you're having a go at, personally.

ABajaninCork

the groutch wrote: »

yeah, you definitely had your priorities straight back then.

Yup. That's why I held on to my property, and others lost theirs if you bothered to read and understand what I wrote.

Now go away and find something else to do...

The_Conductor

Guys- attack the post- and not the poster. Your one and only warning.......

Villa05

jmayo wrote:

Can I ask why you doubted him so much you had to look up articles to prove his point ? Is it because he is old ? Sorry to be having a go, but the phrasing of this part of your post appears to me as damm condescending to the old gentleman.

Not aimed personally at any poster, but many people seem to have forgotten that we had a property bubble quiet recently and how much of a disaster that was for the country.

Maybe if people studied what happened in the past we would be less likely to repeat the same mistakes over and over again.

gaius c

Does anyone remember WHY interest rates went to that level?

Stagflation: inflation but with no growth caused by a previous loading up on debt that couldn't be serviced.

Does the underlined bit sound familiar?

jmayo

gaius c wrote: »

Does anyone remember WHY interest rates went to that level?

Stagflation: inflation but with no growth caused by a previous loading up on debt that couldn't be serviced.

Does the underlined bit sound familiar?

Some of the late 70s/early 80s recession and stagflation had to do with the 73 oil crisis and in the US's case, the 79 energy shock in the US.
And guess what both of those were down to Middle East conflicts.
Sound familar ?

Added to that the likes of the UK had terrible industrial unrest for decades and it had lost it's once massive industrial base.

People should also note how the likes of reagan and thatcher came to power due to the economics of the time.

Then some of their policies set the seeds for the boom busts that were to follow.
In fact some people (Nigel Lawson being one) attribute things like the 1986 LSE Big Bang to contributing to the financial meltdown in 2007/2008.

skallywag

I think rates will most likely certainly rise at some stage within the span of our mortgages, though it's very difficult to predict the extent. It's something which I was conscious of some years back when I took my own mortgage hence I went for an offer which capped the interest at max 6% with the lower bound being 3%.

mickman

skallywag wrote: »

I think rates will most likely certainly rise at some stage within the span of our mortgages, though it's very difficult to predict the extent. It's something which I was conscious of some years back when I took my own mortgage hence I went for an offer which capped the interest at max 6% with the lower bound being 3%.

capped the interest ? i dont think that kind of product exists

skallywag

mickman wrote: »

capped the interest ? i dont think that kind of product exists

Perhaps not it Ireland? I'm living in central Europe.

hfallada

There is zero chance of mortgages getting into double digit rates. Banks fix rates with the belief they will beat inflation and charge more interest in excess of what they give depositors. In Germany, they are giving around 1% for 15 years fixed. So German banks arent expending rates to be greater than 1% for the 15 years.

The ECB are hinting the Eurozone Economy will be pretty weak for the next 5 years. Rate increases will only kill growth. So I dont think we can expect interest rate increases for a long time.

Plus the markets are so full of savings. Germans are still saving at 0.05% interest on savings. Rates are low in Germany and they still cant get Germans to borrow. Dont expect rate increases for a while.

Rates used to be so high due to inflation, due to oil shocks and constant wage increases. Economies are no longer effected so much due to oil prices. eg in 2008 oil was around $140-150 a barrel and growth was still strong. There is no longer massive wage increases in west Economies are Central banks are effective at controlling inflation eg Germany with the bundesbank and now the ECB

quadrifoglio verde

hfallada wrote: »

There is zero chance of mortgages getting into double digit rates. Banks fix rates with the belief they will beat inflation and charge more interest in excess of what they give depositors. In Germany, they are giving around 1% for 15 years fixed. So German banks arent expending rates to be greater than 1% for the 15 years.

The ECB are hinting the Eurozone Economy will be pretty weak for the next 5 years. Rate increases will only kill growth. So I dont think we can expect interest rate increases for a long time.

Plus the markets are so full of savings. Germans are still saving at 0.05% interest on savings. Rates are low in Germany and they still cant get Germans to borrow. Dont expect rate increases for a while.

Rates used to be so high due to inflation, due to oil shocks and constant wage increases. Economies are no longer effected so much due to oil prices. eg in 2008 oil was around $140-150 a barrel and growth was still strong. There is no longer massive wage increases in west Economies are Central banks are effective at controlling inflation eg Germany with the bundesbank and now the ECB

I'll throw a spanner in the works....Ireland. who in 2012 other than Michael hasenstab thought the interest rates on Irish bonds would be at their lowest rate in history three years later? Very few and I doubt he did either.

Who in 2012 thought that Dublin house prices, would increase by 25% between June 2013 and June 2014? Very few.

God knows what could happen in a month, let alone in a year,when it comes to the economy.
Predictions are just that, predictions, nothing is certain, except that low interest rates won't be here forever, because economic growth won't stay stagnant forever...we're fubarred if it does, but it won't, it never has and never will.

I'd hazard a guess that during the depths of the great depression many in America thought that they'd never see growth again.

househero

Although inflation is the Wests only way out of its debt and that means guaranteed high interest rates. Deflation is Europe's risk. Not inflation & double digit interest rates.

The problem is, people in general are not intelligent enough to see this is a much worse problem.... If you told somebody everything would be cheaper next month, they would probably be happy about it.

Europe's problem is what Japan has already gone through. 30 years of falling house prices, falling wages and a perpetual expected drop in quality of life.

Japan house prices in the 80s were higher than the next 30 years. BUT wages fell! That meant families that signed a mortgage in the 80s on 80s wages found they got paid less in the 90s abd could NEVER realistically pay it off. Their children and grandchildren were forced to take on the debt.

jmayo

househero wrote: »

...
Europe's problem is what Japan has already gone through. 30 years of falling house prices, falling wages and a perpetual expected drop in quality of life.

Japan house prices in the 80s were higher than the next 30 years. BUT wages fell! That meant families that signed a mortgage in the 80s on 80s wages found they got paid less in the 90s abd could NEVER realistically pay it off. Their children and grandchildren were forced to take on the debt.

That can't happen here.
Our government and all the vested interests, all those new organisations fighting for mortgage welchers mortgage holders simply will not allow it to happen.
Property has to increase in value to make everyone (except those actually paying for it and those trying to buy for first time) feel better.

And of course as said during the bubble Ireland is different.
I used to think that was a joke until I now see the number of mortgages in default for years, yet the mortgagors still holding the property.

The_Conductor

The big difference in an Irish context is that the government own AIB and Irish Permanent (and they still own over 15% of BOI). Any action that will impact on the share price of these entities is to be discouraged. The politicians will make all sorts of noise to placate potential voters- but until such time as they have divested themselves of shares in these entities- that is all they will make- noise........ The government need to get shot of their shareholdings in these entities and then quit meddling in the market.

gaiscioch

househero wrote: »

Europe's problem is what Japan has already gone through. 30 years of falling house prices, falling wages and a perpetual expected drop in quality of life.

Japan house prices in the 80s were higher than the next 30 years. BUT wages fell! That meant families that signed a mortgage in the 80s on 80s wages found they got paid less in the 90s abd could NEVER realistically pay it off. Their children and grandchildren were forced to take on the debt.

jmayo wrote: »

That can't happen here.
Our government and all the vested interests, all those new organisations fighting for mortgage welchers mortgage holders simply will not allow it to happen. Property has to increase in value to make everyone (except those actually paying for it and those trying to buy for first time) feel better.

And of course as said during the bubble Ireland is different.
I used to think that was a joke until I now see the number of mortgages in default for years, yet the mortgagors still holding the property.

Excellent discussion here. Thanks to all. However, just on the highlighted part. Mortgage holders seem to be having little choice; somebody close to me has just got permission to sell their Celtic Bubble house which they bought with somebody else, and the bank is giving nothing off. In fact, as the mortgage was held jointly and severally liable, the bank isn't willing to even separate the debts and thus the expected loss of €120k will tie the two people together for years to come thus impeding their abilities to get on with their lives (they now have young families, and that debt is impeding the ability of two families to start new lives. It doesn't matter in the slightest to the bank.).

If this case is indicative of what's going on, mortgage holders will just continue to take it on the chin without any respite - despite the now routine utterances from politicians about how unfair the variable rate is, etc. As the poster above put it: the state's finances depend upon the success of state-owned banks to get as much of its loans back. There is a massive conflict of interest, whereby helping people in Celtic Bubble mortgages will impose too huge a cost on the rest of society so they will have to work out their debts privately with their bank.

gaiscioch

jmayo wrote: »

I used to think that was a joke until I now see the number of mortgages in default for years, yet the mortgagors still holding the property.

I tend to agree with you that the eviction repossession process is going very slowly but that has probably much more to do with prices being so much lower than they were when the mortgage was taken out and if the property were sold even now the bank would have to write off more money.

It should also be noted that many people view it as very unfair that people are allowed stay in houses which they cannot afford while the have to work hard to pay their mortgages/rent. Repossession, for me anyway, does not generally carry some 19th century Irish connotation of battering ram and bailiff (the so-called New Land League being a very comical case in point) - although the cases of banks bullying mortgage holders should of course be highlighted.

househero

jmayo wrote: »

That can't happen here. mortgage holders simply will not allow it to happen.

And of course as said during the bubble Ireland is different.

Of course Japan did not want it to happen either. They literally tried every monetary policy to reverse it. Obenomics had some positive effects a few years ago and house prices exceeded 1980s levels just recently. All it would take here is the gov giving the banks the go ahead to rope children in to parents debt.

Macroeconomics can not be controlled by mortgage holders or a tiny little country Ireland/japan

The west (and Japan) thinks higher taxes are the solution. They squeezed us after the crash. It made things worse, obviously. Are you paying attention #Noonan

johnp001

jmayo wrote: »

That can't happen here.
Our government and all the vested interests, all those new organisations fighting for mortgage welchers mortgage holders simply will not allow it to happen.
Property has to increase in value to make everyone (except those actually paying for it and those trying to buy for first time) feel better.

And of course as said during the bubble Ireland is different.
I used to think that was a joke until I now see the number of mortgages in default for years, yet the mortgagors still holding the property.

I don't have your faith that our government is so omnipotent as to be able to stave off the aftermath of a property price bubble coupled with deflation in a way that the Japanese (the world's 3rd largest economy around that time) were not.

The current state of the Dublin property market, where supply is increasing sharply, prices have stalled and reversed and sentiment has turned negative shows that even with infinite determination to give that can one last kick down the road the government cannot postpone the inevitable second dip until after the next general election.

The Irish property market has been artificially levitated in a futile effort to save the banks' balance sheets but gravity always wins.

househero

johnp001 wrote: »

I don't have your faith that our government is so omnipotent as to be able to stave off the aftermath of a property price bubble coupled with deflation in a way that the Japanese (the world's 3rd largest economy around that time) were not.

The current state of the Dublin property market, where supply is increasing sharply, prices have stalled and reversed and sentiment has turned negative shows that even with infinite determination to give that can one last kick down the road the government cannot postpone the inevitable second dip until after the next general election.

The Irish property market has been artificially levitated in a futile effort to save the banks' balance sheets but gravity always wins.

True but prices ARE growing. We are in economic deflation. This is something people really struggle to get their heads around. A sale at £200,000 today is an increase on a £200,000 sale the same time last year! (Usually money devalues)

Every asset class has been inflated but don't think it's the Irish gov that has done it. US QE has increased stocks WAY beyond their value, id be far more worried about a correction in stocks and bonds rather than brick & motar. EU QE will continue the trend fir at least another 3 yrs.


The gov has done LOADS to kill any price rises (and succeeded)
No more mortgage relief
New Water tax
New Property tax
Stamp duty introduced for first time buyers
Reduced public sector pay
Reduced social welfare
(Ignored and unregulated) high interest rates despite record low interbank and EU lending rates
Tougher lending criteria
New deposit rules
No more 129% mortgages haha haha hahaha

Its way more expensive and harder to buy now

There is not much more they could do to murder property price rises. IMO they have gone WAY too far. Prices rose fast as they fell far too far.

gaiscioch

johnp001 wrote: »

The current state of the Dublin property market, where supply is increasing sharply, prices have stalled and reversed and sentiment has turned negative shows that even with infinite determination to give that can one last kick down the road the government cannot postpone the inevitable second dip until after the next general election.

I'm not seeing this sharp supply increase, John, although my own anecdotal experience driving around and looking at websites is that very many houses are not selling a long time after they were originally put up. Where are you getting your info regarding supply?

johnp001

gaiscioch wrote: »

I'm not seeing this sharp supply increase, John, although my own anecdotal experience driving around and looking at websites is that very many houses are not selling a long time after they were originally put up. Where are you getting your info regarding supply?

I got the supply figure from a post on another forum (this includes MyHome and Daft figures)
http://www.thepropertypin.com/viewtopic.php?p=820487#p820487

The inflow figure I got from Daft listings only.
To remove the factor of seasonal trends I made a table of new property listings on Daft in the first 6 weeks of 2015 against the same period in 2014.


And also, large increase in Dublin supply is mentioned in the last Daft sales report:

Daft Q4 2014 report wrote:

More than 3,500 properties were listed for sale in Dublin on December 1, a third more than on the same date a year previously.

See page 9 of:
http://c0.dmstatic.com/619/report/Daft-Sale-Report-Q4-2014.pdf

hfallada

johnp001 wrote: »

I got the supply figure from a post on another forum (this includes MyHome and Daft figures)
http://www.thepropertypin.com/viewtopic.php?p=820487#p820487

The inflow figure I got from Daft listings only.
To remove the factor of seasonal trends I made a table of new property listings on Daft in the first 6 weeks of 2015 against the same period in 2014.

But stats are useless if starting from a small base, which you are. 1.6K properties for Dublin is tiny considering 1.3 million people in Dublin

Mongfinder General

gaiscioch wrote: »

Excellent discussion here. Thanks to all. However, just on the highlighted part. Mortgage holders seem to be having little choice; somebody close to me has just got permission to sell their Celtic Bubble house which they bought with somebody else, and the bank is giving nothing off. In fact, as the mortgage was held jointly and severally liable, the bank isn't willing to even separate the debts and thus the expected loss of €120k will tie the two people together for years to come thus impeding their abilities to get on with their lives (they now have young families, and that debt is impeding the ability of two families to start new lives. It doesn't matter in the slightest to the bank.).

If this case is indicative of what's going on, mortgage holders will just continue to take it on the chin without any respite - despite the now routine utterances from politicians about how unfair the variable rate is, etc. As the poster above put it: the state's finances depend upon the success of state-owned banks to get as much of its loans back. There is a massive conflict of interest, whereby helping people in Celtic Bubble mortgages will impose too huge a cost on the rest of society so they will have to work out their debts privately with their bank.

All of the can't pay/won't pay borrowers who could not meet mortgage repayments are caught between a rock and a hard place. They face having to capitalise arrears or having to pay gift tax to the Revenue if a bank writes off part of the debt in order for them to stay in the game. Not pleasant.

quadrifoglio verde

Mongfinder General wrote: »

All of the can't pay/won't pay borrowers who could not meet mortgage repayments are caught between a rock and a hard place. They face having to capitalise arrears or having to pay gift tax to the Revenue if a bank writes off part of the debt in order for them to stay in the game. Not pleasant.

Sorry if a bank renegotiated a debt which leads to a writedown, revenue can charge you gift tax on it?
Do you have a link for this?

Mongfinder General

quadrifoglio verde wrote: »

Sorry if a bank renegotiated a debt which leads to a writedown, revenue can charge you gift tax on it?
Do you have a link for this?

I don't have precise information right now for you. It will be Tuesday before I see the tax guy at work. I discussed this with him last week.

Here is some basic information. www.knowyourtax.ie/tax-consultancy/gift-inheritance-tax/formation.

househero

Mongfinder General wrote: »

I don't have precise information right now for you. It will be Tuesday before I see the tax guy at work. I discussed this with him last week.

Here is some basic information. www.knowyourtax.ie/tax-consultancy/gift-inheritance-tax/formation.

I'd be really interested to hear what you find out, will you cone back to post up what you find for us please???

(That link is dead)