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Media Article: Banks not using all their exemptions

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  • 12-06-2019 7:54am
    #1
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭


    Link in today's Indo to an article claiming banks only used just over 17% of the First Time Buyer exemptions when they could have used up to 20%.

    Its an interesting article- and says more in what it doesn't say, than in what it does.

    E.g. what portion of mortgage approvals were issued with exemptions that subsequently were not drawn down (and indeed the reasons that they weren't drawn down).

    Banks disputing the valuations put on properties- seems to be increasingly be the reason for mortgages falling through- just because a developer would like 400k for a 3-4 bed in Lucan- doesn't make it worth 400k..........

    Its a hastily crafted article by Charlie Weston- that doesn't dare delve into the figures too closely- as I strongly suspect the facts would torpedo his actual argument- previous commentary suggested up to 25% of FTB mortgages were being granted exemptions- however, they were not being drawn down...........


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    #2
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,204 Mod ✭✭✭✭godtabh


    Personally, I dont think a bank should use all its exemptions. Then it just becomes the norm.


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    #3
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    godtabh wrote: »
    Personally, I dont think a bank should use all its exemptions. Then it just becomes the norm.

    I agree.
    The current situation is that they are offering exemptions to circa 25% of mortgage applications in the knowledge that a large proportion of mortgage applications don't follow through on their applications (for a variety of reasons- more often than not, they quite simply don't find a property that they want to buy).

    Its a bit of a bullshít article that deliberately doesn't look further than the headline figures- to try and make a shrill story out of a complete non-story.........


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    #4
    previousmass
    Registered Users Posts: 25 ✭previousmass


    Obviously this is going to be frustrating to people but it can only be a good thing if banks are refusing risks they consider too risky.
    20% is a limit not a goal.


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    #5
    Ray Palmer
    Registered Users Posts: 8,352 ✭✭✭Ray Palmer


    Didn't they say at the start of the year they were using them up too quickly and running out?


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    #6
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    Ray Palmer wrote: »
    Didn't they say at the start of the year they were using them up too quickly and running out?

    They're issuing them- it doesn't mean people are actually using them.......
    Once mortgage approval in principle is issued- using an exemption- the exemption is tied to that AIP- until such time as the mortgage is drawn down or the AIP lapses (after typically 6 months).

    That is not the bank's fault.

    Never thought I'd be defending the banks and their actions in this forum!


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    #7
    cruizer101
    Registered Users Posts: 3,205 ✭✭✭cruizer101


    "Thousands of would-be home buyers are being left "angry and frustrated" after jumping through all the hoops to qualify for the exemptions"

    Thousands?? Really?? Struck me as a bit excessive so I dug deeper.

    So from the publication I'm guessing he is talking about, here
    Screenshot of specific table in spreadsheet attached

    No. FTB mortgages issued in 2018: 19,173 Value: 4,281
    No. over LTI Limit: 2,465 Value: 748
    No. over LTV Limit: 21 Value: 5

    The 17% issued he mentions is (748 + 5)/4281 (actually closer to 18 at 17.58)

    So lets say 3%(actually its probably lower as its 20% of loan book and exemptions are by their nature larger loans and so make up more of the loan book) more of the loans issued could have been issued under exemptions that's 575 potential FTB mortgages that could have been issued exemptions, yet somehow there are thousands of FTB's being left angry because they were denied getting one when the bank could have issued one.

    Shoddy journalism, and also a gripe of mine, why was there no link to the publication, I'd to go searching for it, good journalism cites sources.


    As for this nugget from a broker.
    "Exemptions are needed but when people are qualifying for them and not getting them it means there is a lot of scope for banks to lend more."

    The whole point of the central bank rules is to restrict lending, if we offer exemptions to everyone it makes them pointless, even offer them to a significant number and it pushes house prices up more and makes it even harder on those who can't get them again pointless.


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    #8
    Saudades
    Registered Users Posts: 378 ✭✭Saudades


    Charlie Weston was also on Newstalk's The Pat Kenny show this morning.

    You can find the show on the Newstalk website; the interview starts at the 1 hour and 9 minute mark.


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    #9
    jimmycrackcorm
    Registered Users Posts: 14,329 ✭✭✭✭jimmycrackcorm


    cruizer101 wrote: »

    Shoddy journalism, and also a gripe of mine, why was there no link to the publication, I'd to go searching for it, good journalism cites sources.

    I'm sheets amused to read newspaper headlines like this about how people are angry about X,y,z. When the first people hear about it is reading it in the news.

    Journalists, practicing real life which can't first, chicken or egg.


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