Irish Property Market 2020 Part 2

landofthetree wrote: »

100,000 mortgages with BOI are on a Covid break till Sep.

Not many will be able to resume payments in Sep.

Humm...you don't know this though.

Anecdotally many people took the break regardless of whether they needed it or not. I considered it myself but decided against it.

SozBbz wrote: »

Humm...you don't know this though.

Anecdotally many people took the break regardless of whether they needed it or not. I considered it myself but decided against it.

I know a few people that considered it thinking that it was free money.

Cuddlesworth wrote: »

I know a few people that considered it thinking that it was free money.

no such thing as free money for us lesser people, unfortunately, only if your a bank

Cuddlesworth wrote: »

I know a few people that considered it thinking that it was free money.

Its not free money (although Im also aware of people who thought that), but there can be a value in having moeny to use now and paying for it later - which is the basic premise of borrowing money - lots of people don't care about an extra bit of interest 20 years down the line if it gives them thousands in cash freed up today. Some people doing home improvements took it that I know of.

fliball123 wrote: »

Well if you weighing that option up to defer with the lefty leaning in this country the worst that will happen is you lose you job you stop paying the mortgage and get to live in the house for anywhere up to 10+ years (rent free) if you have lost a job and cant pay the mortgage your really not going to give a flying phuck if you owe 10/20k more at the end of the day.. This is a major chink in the armor of people looking for prices to drop due to people getting into trouble as they will not be turfed out, no government will do this as they will get crucified ergo supply will not be effected by mortgage problems or job losses not at a scale that people should expect in a recession.

ah shur, housing is a mess, im still wondering when we ll grow up, and become bigger boys and girls, and accept, the market alone isnt actually capable or providing us with all of our needs, particularly housing

brisan wrote: »

I would imagine they will cherry pick the low hanging fruit

Well it will be a great option for a lot of people but what it will do is it will put pressure on the existing lenders to bring their rates down

fliball123 wrote: »

which is why we have the highest interest rates in Europe

i think the higher interest rates are due to more worrying issues, are the banks actually losing confidence that they can withstand a significant economic shock!

fliball123 wrote: »

Well it will be a great option for a lot of people but what it will do is it will put pressure on the existing lenders to bring their rates down

https://www.irishtimes.com/business/financial-services/bank-of-ireland-to-cut-over-1-400-jobs-as-covid-19-drives-937m-loans-charge-1.4322469?mode=amp

I am not sure existing lenders are in any position to do that .
Especially as they find it extremely difficult to repossess houses

fliball123 wrote: »

No we are the highest in Europe due to the fact that banks cannot directly take a house off a mortgage holder without jumping through years and years of litigation. I mean aren't the rest of Europe experiencing the same difficulties Ireland is we are all in a recession and Covid is there too. so the premium being paid is for this fact.

maybe both are true, i smell trouble ahead for our banks

;)

schmittel wrote: »

This is totally misleading, and needs to be understood in the context of inflation and interest rates. In all three recessions house prices fell in real terms and mortgage holders got thumped by interest rates.

1973-1976 - Inflation at about 25%, interest rates around 15%.

1980-81 - Inflation and interest rates were running at about 18%

1990-92 - "In the housing crash of the early 1990s house prices fell 20 per cent between 1989 and 1993." - The Times

This happened against a backdrop of inflation and interest rates that rose as high as 15% - "average prices fell by an inflation-adjusted 35 percent from their peak in 1989, according to data from property services firm CB Richard Ellis" - Reuters

Not even in boom/bust Ireland, could a 20% nominal, 35% real drop in house prices be considered a "small price decrease".

No doubt there will be some on here who would be happy to see rampant inflation, because they could flatter themselves that their 3 bed semi is still worth half a million.

But to quote Bass Reeves, they should be careful what they wish for.

Owning property is one of the best safe guards against inflation. Through the 70's and 80's inflation was always running at 3-5% minimum and often a 10%+. There was times of hyper inflation such as what you have highlighted above. But a home owner was better off even is paying higher interest than someone that was renting and waiting to buy. The home owner might be at the pin of his collar for a year or two but at the end he was way better off. As well during these time mortgage rates were 6-10%+ most of the time anyway. In general banks were mostly lending money that was on deposit so mortgage rates to borrowers seldom exceed 12% and above it was a kind of emergency rate. As well most house lending was from building societies not banks. Attached are a break down of interest rates from a google search it from building society association in the UK.

https://www.bsa.org.uk/BSA/files/5c/5c180498-5e52-4a41-b022-5821c25f3cbd.pdf


However as house prices were increasing the house owner was better off in real terms. Wages inflated as well so a house loan that was 30K on a house worth 35K after 5 years of inflation averaging 12% the house was worth 5%K+ wages would not match inflation but were maybe up 8%/year so were 40% higher. House owner if they managed repayments were heading towards a situation where there mortgage was only 50% of there house value.

But you still needed somewhere to live

Iceman29 wrote: »

HaHaHa this is more of it. A fairy tale answer for everything. Where is you're evidence that will prove that it'll mostly be taken by people heading out the door anyway.

Any healthy place I've worked never offered "Voluntary redundancies " but a few unhealthy places I've working in have.....then, unfortunately they weren't voluntary and people let go.

But you must be right this time, I'm sure they were going to get rid of 1400 people just randomly.....haha

Up to the early 80's the banks recruited straight from schools after there leaving cert what was called a bank clerk. They entered with guaranteed conditions, payscale and pension plan. Bank clerks were the foundation level staff employment and you could rise to any level in the bank. Pay scale in today terms were about 25K to 80K approximetly. However social change caught the banks. Up until the early 80's women who married left on having children. Bank staff were regularly transferred between branches every 3-5 years and having to move 50+ mile was the geneall rule not the exception.

However from the mid 80's there was social change women no longer left on marriage and expecting employees to move was considered unfair work practice and tantamount to unfair dissmissal. Around taht time as well technology changed and banks needs less staff.

They reconfigured there cost base, gave the first VL deals to staff, started putting the older type clerks into area's like loan management branch managment etc and started to recruit lower paid staff for counter work. This has continued over the last 20 years along with branch closure's etc. However there is a core of about 10 years of these older bank clerks still around who can continue to work now virtually into there 70's.

The bank will pay well to get them out but it will be happy to pay them.

Bass Reeves wrote: »

Up to the early 80's the banks recruited straight from schools after there leaving cert what was called a bank clerk. They entered with guaranteed conditions, payscale and pension plan. Bank clerks were the foundation level staff employment and you could rise to any level in the bank. Pay scale in today terms were about 25K to 80K approximetly. However social change caught the banks. Up until the early 80's women who married left on having children. Bank staff were regularly transferred between branches every 3-5 years and having to move 50+ mile was the geneall rule not the exception.

However from the mid 80's there was social change women no longer left on marriage and expecting employees to move was considered unfair work practice and tantamount to unfair dissmissal. Around taht time as well technology changed and banks needs less staff.

They reconfigured there cost base, gave the first VL deals to staff, started putting the older type clerks into area's like loan management branch managment etc and started to recruit lower paid staff for counter work. This has continued over the last 20 years along with branch closure's etc. However there is a core of about 10 years of these older bank clerks still around who can continue to work now virtually into there 70's.

The bank will pay well to get them out but it will be happy to pay them.

Indeed

and Francesca McDonagh didnt take the CEO role at 2nd tier bank not to make a wave, so she will be pushing through consolidation, cost rationalisation, systems changes etc in the hope her work gets her a crack at CEO in a larger institution in europe.

landofthetree wrote: »

100,000 mortgages with BOI are on a Covid break till Sep.

Not many will be able to resume payments in Sep.

But if you have lost your job ate you not very unlikely to sell your house, knowing the bank won't give you another even smaller mortgage? Will people not just not pay and stay put?