tobsey wrote: » The number of civil servants above AP is a tiny proportion of the overall number, and even more tiny compared to the overall workforce. You can’t use that group of people to make a generalisation because they are such a small sample size.
Bob24 wrote: » That’s not really my point. I was just pointing senior civil servants as an exemple category of people who’d be fine during a recession and be able to get a mortgage, which explain why lending figures during the past recension were not as flat as some people believe. There are others, including a good proportion of professional workers (I was mentioning IT as an exemple of industry I personally know where a high ratio of my circle of friends/colleagues in the age of buying a first home did so during the recession). Btw on civil servant wages, here is the salary scale: https://www.forsa.ie/about-forsa/divisions/civil-service/civil-service-pay-scales/
zreba wrote: » Even if they bring them down to near 0%, how much of a price drop can banks sustain before going under water again? The minimum deposits of 20% add a safety zone of 20% for banks, but FTBs only need 10% deposit. A price drop by 30%-40% and nearly no mortgage withdrawn in the last 3-4 years would be safe. Considering the above, in my view, banks wouldn't get into big trouble on house price correction of 20%, but 30%+ could cause trouble and decreased lending (up to a halt).
The_Conductor wrote: » In an environment where they can't foreclose on loans, and personal bankruptcy law is pushing all the risk back on lenders- Irish lending institutions can only hope to keep their margins sufficient to cushion any delinquent borrowers. Our levels of delinquency are far above international norms- which is why despite our remarkably high interest rates- international lenders quite simply can't tolerate the risk associated with operating in Ireland. We need reform of our lending institutions- and the ability to foreclose in a timely manner.
Interested Observer wrote: » If they're not first time buyers then they're not going very far with that deposit, but more to the point how many civil servants are on 75k?
Bob24 wrote: » Let’s say our civil servant is in 75k, has been saving for a few years and had a 50k deposit. Spouse in similar situation. They take their 10% pay cut. Will that get a mortgage? Absolutely yes.
PokeHerKing wrote: » Believe me nothing I've said contradicts general economic knowledge. I didn't even realise it would be a contraversial opinion on here. But I'm happy to discuss it while leaving insults aside. As I've said banks make their profit by lending. It is never going to be a banks policy not to lend. There was plenty of houses bought with lending right through the crash. I myself bought at the tail end of it. Public opinion drives lending. During the mid 00s the Irish public wanted to borrow money and buy property. The banks facilitated it. When the world economy crashed Ireland's inflated property bubble burst and public sentiment along with house prices went through the floor. The drop off in lending is merely a reflection of the drop off in borrowing. It's not as completely black and white as that but it's more that, than anything else.
When a bank creates a new loan, with an associated new deposit, the bank’s balance sheet size increases, and the proportion of the balance sheet that is made up of equity (shareholders’ funds, as opposed to customer deposits, which are debt, not equity) decreases. If the bank lends so much that its equity slice approaches zero – as happened in some banks prior to the financial crisis – even a very small fall in asset prices is enough to render it insolvent. Regulatory capital requirements are intended to ensure that banks never reach such a fragile position.
The_Conductor wrote: » It depends on what happens with their non-performing loans. At the moment they are under EU instruction to bring them down to EU norms (of between 3 and 4%). For example AIB is currently at just under 12%.
zreba wrote: » Worth noting is that small fact that banks didn't run out of capital during the last crash as Irish taxpayer injected money into them (bailed them out). Banks may not get a second bailout though.
Bob24 wrote: » Yes - we were talking senior civil servants (the bar at which you put senior is arguable I guess, and as far as I know 100k or more jobs do exist in the civil service, but I guess at the 75k point you are including quite a bit more people).
PokeHerKing wrote: » Well if we're only drawing down 2/3rds more now than we were at the height of the recession I think it shows we were very far from 'not lending' during the recession.
Bob24 wrote: » I think this is not comparing like for like. For the government to impose significant pay cut to civil servants, we are talking about a bad recession such as the last one, which would have crashed house prices a lot more than 10%. A lighter recession might reduce or freeze pay progression, but not revert it.
JJJackal wrote: » Absolutely they will House price pre recession 575000 House price post recession 517500 (10% reduction in house prices)
Graham wrote: What do current lending figures tell us about availability of mortgage finance during a recession?
Browney7 wrote: » Fast forwarding to 2011 the banks were up sh1t creek of which there's no disputing but there looks to be a figure quoted later showing 10000 loan drawdowns? Again, house prices had dropped sharply in that time so the amounts people needed to borrow fell significantly. There is definitely a gearing effect going on here but it's chicken and egg too - did banks reduce lending because they had no one to lend to or because the people that would have borrowed stayed on the sidelines watching it all crumble?
PokeHerKing wrote: » As the poster above has said a Central Bank report showing that banks are currently lending at a third of the ratio they were lending, at the height
Graham wrote: » Loan demand appeared to remain relatively consistent yet lending fell off a cliff. That doesn't support the hypothesis that banks facilitated much.
Graham wrote: If you have a more authoritative source I'd be interested to see the data.
Bob24 wrote: » No one is saying mortgages values didn’t drop and that it wasn’t harder to get one on average. The simple point is that a good chunk of the population was still able to get one. Again see the central bank report I posted a fees posts back, the number of mortgage drawdowns in 2011 was 10000 vs 30000 in 2017. That is a lot less for sure, but one third is still a chunky amount and shows that the bank’s doors were still very much open for someone with a decent salary and stable job - which was the case of large minority of the population.
PokeHerKing wrote: » How was it put together? What criteria was used? A comparison of Mortgage applications from the mid naughties and the bust years would be a much easier way to measure demand in my opinion.
aloooof wrote: » I could be way off here but would that not be very much on the high side for a civil servants salary?
Graham wrote: » Some interesting statistics on loan demand which to me wouldn't suggest the 90%+ drop in lending was predominantly attributable to a corresponding drop in demand. Changes in Loan Demand (Households - House Purchases) 2005Q1 3.00 2005Q2 3.25 2005Q3 3.25 2005Q4 3.50 2006Q1 3.75 2006Q2 3.50 2006Q3 3.00 2006Q4 2.25 2007Q1 2.00 2007Q2 2.00 2007Q3 2.00 2007Q4 2.00 2008Q1 2.00 2008Q2 1.80 2008Q3 1.80 2008Q4 2.00 2009Q1 2.50 2009Q2 2.25 2009Q3 2.75 2009Q4 2.75 2010Q1 2.50 2010Q2 2.75 2010Q3 2.75 2010Q4 2.75 2011Q1 3.20 2011Q2 3.20 2011Q3 2.80 2011Q4 2.80 1 Decreased Considerably 2 Decreased Somewhat 3 Remained Basically Unchanged 4 Increased Somewhat 5 Increased Considerably
Graham wrote: Central bank statistics.
JJJackal wrote: » In a bad recession a senior civil servant will get a pay cut - last time round I imagine they lost 10-20% of take home pay with USC, pay cut....
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