Daft Property - Irish Property News

A surge in the number of home repossessions is on the cards after the Central Bank decided to change the rules. Debt-ravaged homeowners will no longer have one year's protection from having their houses repossessed. The 12-month ban on banks taking back properties from homeowners in arrears is being cut to two months. The move and other changes to regulatory rules for how struggling borrowers should be treated by lenders have been condemned by David Hall, of the Irish Mortgage Holders Organisation, as a "banker's charter" that will lead to a spike in repossession. He claimed: "The banking dogs are set to be unleashed on mortgage holders in arrears." The move to change the Central Bank's code of conduct on mortgage arrears – a rule book for how banks are to treat borrowers behind on their payments – is to be radically changed. The revised code is set to come into operation from next Thursday with a number of changes that banks have lobbied ...

Number of mortgages in arrears hits new peak of 14pc... ONE in seven mortgage holders is now in arrears, according to calculations by a leading ratings agency. Large numbers of these homeowners are understood to be avoiding getting into talks with their banks on restructuring their mortgages. Moody's also said house prices would fall another 20pc. The rating agency said its calculations show 14pc of residential mortgage holders are now in arrears, which works out at 107,000 households. This is a new peak, it said. Figures released by the Central Bank last month showed 10.2pc of mortgage holders were three months or more behind on their payments. "The steep decline in house prices since 2007 has placed the majority of borrowers deep into negative equity," it said. "Irish house prices have already fallen by 49.9pc between September 2007 and April 2012, and Moody's expects that house prices will fall a further 20pc from today's levels." Central Bank figu...

No magic bullet for banks' property crisis... It is going to take more than a decade to unwind the excess property assets financed by the banks during the noughties THE BANKS in Ireland, including IBRC and Nama, have more than €30 billion of Irish loans relating to property which they need to unwind over the next five to seven years in order to meet the Basel capital adequacy requirements and also repay the temporary ECB loan support. This unwinding process has started by the sale of overseas assets and loan books but is mainly outstanding in Ireland. Can this deleverage be achieved? What will be the timescale and what will be the nature of the property market during the process? Should the Government provide further help to the industry? These are key questions for all close to the banking and property industries. In a comprehensive discussion note* I have tried to join the dots of the many intertwining factors. I have drawn on two recent studies on the overall European property ...

Nama may be forced to deliver on social housing... THE GOVERNMENT is considering plans to amend legislation that would oblige the National Asset Management Agency (Nama) to deliver more social housing and public amenities. Nama, created to purge banks of toxic property loans, has purchased some €31 billion of loans connected to thousands of residential properties – loans valued at over €72 billion at the height the property bubble. There is frustration in some circles of Government that the agency is not under any formal obligation to provide a “social dividend”. Minister for Housing Willie Penrose is understood to have written to the Attorney General in recent weeks seeking clarity on how Nama’s terms of reference could be changed to give it a broader remit that goes beyond securing the best achievable financial return for the State. Officials fear the agency is too focused on its commercial remit to generate profits and feel the State is at risk of losing out on opportuniti...

Prices could fall by a further 15% if rate of decline continues into next year... ANALYSIS: Oversupply, the lack of mortgage financing and the cost of borrowing are all playing a part as property prices continue to decline THE GOOD news on the property market: July’s monthly fall in homes prices was the second smallest this year. The bad news: a single month is not enough to suggest that the deteriorating trend over the course of 2011 has been arrested. The average monthly fall in prices over the first seven months of this year was 1.4 per cent. The average of the 12 months of 2010 was 0.9 per cent. The accelerating underlying rate of price declines up to the middle of this year is cause for concern. And delving deeper into yesterday’s figures gives no reason to believe any segment of the market has been immune. The chart shows declines in prices from January to July ranged from 6-11 per cent. That has added to the already massive declines registered among every market segmen...

Mortgage rescue deal could cost you up to €50,000... But it is still only option for thousands. STRUGGLING homeowners who make deals with lenders to reduce their mortgage payments face paying tens of thousands of euro in extra interest charges. New figures show that almost 70,000 people have now restructured their mortgages -- mostly by extending the repayment period or switching to 'interest only' payments. The Irish Independent can reveal that those with a typical €200,000 home loan who extend their mortgage term by just five years face paying €34,000 more in interest charges. And borrowers could end up paying more than €50,000 in extra interest for the same €200,000 mortgage. The startling figures have been produced by personal finance expert Brendan Burgess. They reveal the huge long-term costs for families seeking to ease the burden. But the Central Bank, which has been leading the way on policies to ease the mortgage crisis, admitted it had "no figures...

Mortgage forgiveness 'would cost €6bn'... A debt forgiveness scheme to relieve homeowners in mortgage distress would cost “in the region of €5-€6 billion”, UCD professor of economics Morgan Kelly has said. In a keynote address to the Irish Society of New Economists in Dublin yesterday, Prof Kelly delivered what he described as some “good news”. “We are talking sums in the region of €5 billion to €6 billion which would be necessary to spend on mortgage forgiveness, which by our standards are not very large,” he said. “This sum to sort out tens of thousands of people with big problems does not seem enormous.” Prof Kelly, who has been praised for forecasting the property crash, has also provoked sharp criticism from some commentators for his analysis of the recession. “The good news is that if you leave investment mortgages out [of total mortgages owed], which are largely the banks’ problem, and look at mortgages people have on their own houses, there are about €55 bil...

Banks tell families -- no loans for homes... Mortgage approval plummets by 90% as banks hoard bailout cash A RECOVERY in the property market is being stopped dead in its tracks by the banks, which are turning down at least half of all mortgage applications -- mostly from people who are highly creditworthy. With many experts now convinced that the market has gone below bottom, the difficulty in accessing credit for even high-quality applicants has reached crisis point. Banks are continuing to reject applications for credit and 2011 looks like posting the worst mortgage-origination figures in four decades. On Friday AIB, which is to merge with Educational Building Society, won conditional approval from the European Commission for yet another capital injection -- this time of up to €13.1bn. It is part of more than €19bn that was approved after the latest bank stress tests and comes on top of billions in taxpayers' money that has already been pumped into the banking sector bu...

They're all away as we face Greek-style crisis Immediate action needed on debt, but Dail won't cut short holidays... THE Government is to leave the political apparatus of the State on holiday throughout September -- even though there is growing concern that the country could face a Greek-style crisis before the end of the year. Widespread bewilderment was aroused in high finance circles last week by the publication of photographs of the Taoiseach, Brian Cowen, playing golf the day after Ireland's sovereign debt was downgraded again. In what is seen as an example of ill-judged timing, Mr Cowen played golf in Connemara on Wednesday with other seemingly carefree TDs and senators, who still have four weeks of a two-month summer break to go. But while the Oireachtas is in repose, enjoying a longer than usual break, the financial markets are in overdrive and are now evidently training their sights on Ireland with the apparent intention of again testing the resolve of the EU later...

Struggling homeowners turn to SVP... Under-pressure homeowners are using every last cent to pay their mortgage bills, leaving them so short of cash they are turning to the Society of St Vincent de Paul for extra money to buy food and pay utility bills. In the capital, St Vincent de Paul volunteers dealt with a massive 10,000 calls in the first four months of this year -- up 30 per cent on 2009. Now they fear there will be a further raft of people in trouble with their mortgages when redundancy payments given to people who lost their jobs last year run out. According to ratings agency Moody's, the number of Irish people who have fallen behind in their mortgage repayments has come close to doubling in the last 12 months. The rate of delinquency in mortgage repayments -- those with more than 90 days of mortgage arrears -- rose to 3.8 per cent in March up from 2.1 per cent during the same month last year. According to John Monaghan of the St Vincent de Paul Society, more and more peopl...

Being strangled by the monthly mortgage noose... OVER the past number of weeks and months, we have become used to speaking in billions. Seven billion to recapitalise AIB and Bank of Ireland; a €22bn cash injection into Anglo Irish Bank; €81bn worth of developer loans transferred to NAMA -- the list and amounts of money appear to be endless. But for many, the only real amount that matters is the one they need to pay each month to keep a roof over their head. Unfortunately, for tens of thousands of Irish families, this amount is far greater than their income and the mortgage rope around their neck simply gets tighter and tighter each month. According to the Financial Regulator, more than 28,000 homeowners have not been able to repay their mortgage for more than three months. Another 30,000 have been forced to renegotiate their mortgages. I suspect this figure of almost 60,000 is merely the tip of the iceberg and will only increase. Considering that more than 230,000 people have been made...

EU Commission throws cold water on hopes worst of budget crisis over... THE EU Commission yesterday took on the role of the man who blew out the light at the end of the tunnel. Tuesday was a good day in terms of the public finances. The Government, through the National Treasury Management Agency (NTMA), managed to borrow €1bn at the lowest interest rates since December 2008, when compared with equivalent German rates. The head of the NTMA suggested the gap between Irish and German interest rates on government debt could be less than 1pc by the end of the year. Any sane person not still living in bubble land would regard that as an eminently reasonable "spread", given the differences between the two economies. But the commission threw a large bucket of cold water on any flickering hopes that the worst of the budget crisis was over. In its formal report on the public finances of 14 EU states, it warned that the tough Irish budgetary plans, over which so much anger and anguish h...

Mortgage lending at lowest level since records began... MORTGAGE lending plunged last year to the lowest level since records began in 2005, as borrowing by investors and those seeking to trade up plummeted. Just €8.08bn of mortgage loans were issued in 2009, a 65pc drop on the previous year, the Irish Banking Federation said yesterday. The number of loans made fell 58.5pc to 45,818. “The data illustrate how difficult 2009 was for the mortgage market,” Irish Banking Federation boss Pat Farrell said. “The general economic situation, consumer confidence, the unsold housing stock and house-price movements will be among the factors to influence market activity in 2010.” Despite the plunge, first-time buyers and people moving house still only accounted for two-thirds of mortgage lending in the final quarter of 2009. Investors and those seeking socalled top-ups or remortgages accounted for the remainder. The market remains so moribund that there are more people borrowing money to “top up” the...

1,000 a month seek help to pay mortgage... MORE than 1,000 people a month are turning to the Government for help to pay their mortgages. But as many as half of them are being turned down some months. The dramatic rise in the numbers who cannot afford to meet their monthly mortgage repayments has underlined the scale of the crisis affecting a growing number of desperate homeowners. The mortgage interest relief supplement is designed to cover the interest portion of the home loan. Those seeking aid have to show they negotiated to reschedule the mortgage payments with their lender. They also have to be means tested. And both husband and wife must be out of work. The increase in applications comes at a time when mortgage interest rates are at record lows. Expected rises in the next year are likely to push substantially more people to the financial brink. Figures obtained by the Irish Independent reveal that the Government expects to have to spend €60m this year helping homeowners to pay th...

Homeowners handing their houses back to the banks... HOMEOWNERS who can no longer afford to pay the mortgage are voluntarily giving up the keys to their property as they see no other way out of the debt , according to a housing charity. Respond warned that many people in negative equity did not think it was worth trying to sell the house to repay the debt as there was no market for it. These people are simply handing their houses back to the banks, the charity said, with some leaving the country and others moving back home with family. Respond spokeswoman Aoife Walsh said figures for repossessions in the courts did not accurately reflect what is happening on the ground. "Many people are feeling hopeless because of the collapse of the housing market. They are simply handing back the keys of their home to their lender as there is no prospect of selling the home to repay the debt," she said. "These cases are rarely reported and we suspect there may be far more ‘voluntary su...

For God's sake get a move on... THE message from the OECD is clear. Translated into the vernacular, it is: "For God's sake, get a move on, lads" The secretary general of the helpful international body warned that cuts in public spending should begin immediately. In other words, the idea that a restructuring, spread over three to five years, would solve the crisis in the public finances is misguided. Mr Angel Gurria was probably too diplomatic to say as much in public. Instead, he looked Brian Lenihan in the eye and told him: "The problem is that you may not have time, Mr Minister . . . The markets are zeroing in on countries." The "markets" are loaning this country €2bn a month so that the Government's pay cheques for public and civil servants will not bounce, and so that the 160,000 private sector workers who have been thrown out of work in the past year will at least have some euro to buy food for their families. Yesterday's lowering of I...

Is property past its sell-buy date?... 10 questions currently facing wary buyers and shell-shocked vendors... Are the banks really granting mortgages? To whom, what percentage of the property price, and under what conditions? Yes, technically. Loans of up to 92%, valued under €300,000, are being granted mainly to first-time buyers from Bank of Ireland, ICS and AIB. Other lenders are giving up to 80% of the purchase price (see graph). But the qualifying conditions are becoming more stringent, and if the bank doesn't really want to grant you a loan, they'll find a reason. Anecdotal evidence suggests that, after initial approval, stringent creditworthiness checks are carried out. For example, if a would-be borrower is behind with credit card payments, the loan will be turned down. Job security is a huge factor and everyone is under scrutiny now, says Peter Bastable of Simply Mortgages. "Those occupations on the danger list are widening day by day. It's no longer just cons...

Ireland’s choice: €4bn in cuts or IMF... THE Government has raised the spectre of the International Monetary Fund (IMF) coming in to run the country if people don’t accept the savage €4 billion of cuts to be imposed in the December budget. Taoiseach Brian Cowen and his Cabinet colleagues have launched a PR offensive to soften people up for the cutbacks, saying the black hole in the public finances was unsustainable . Mr Cowen said everybody would have to make a contribution to help solve the crisis "according to their means". Finance Minister Brian Lenihan said Ireland would face "ruin" if action wasn’t taken to get the national debt under control . Green Party leader and Environment Minister John Gormley said there was no point misleading people about how difficult the budget would be. And Health Minister Mary Harney warned that if the Government didn’t take the necessary tough decisions, the IMF would do so instead. "We’re currently spending €500m a week more...

Negative equity hits €43,000 as average debt soars to €130,000... Report paints grim picture of economy... THE collapse in the housing market has left the average household sitting on €43,000 of negative equity. A borrowing frenzy during the boom means Irish households are now nursing debt levels which are the fifth highest in the developed world. The average household owes €230,000 on its mortgage alone, excluding credit card, personal loans and other debts. These figures have emerged from calculations based on a new report on the economy from Goodbody Stockbrokers. Goodbody's Dermot O'Leary estimates that the bursting of the housing bubble has sent house prices down by 40pc from their peak in February 2007. This means the average house in the State is now worth around €187,000. There are 640,000 households with a mortgage, and the average household is sitting on negative equity estimated at €43,000, calculations based on the Goodbody report by the Irish Independent show. The ...

What happens if you voluntarily surrender your home? If the sale doesn't cover the mortgage you could be in trouble... One of the unspoken legacies of this recession will be the hundreds of people left paying full-term mortgages on properties they no longer own having been forced to sell at massive losses by the threat of repossession. With the 12-month moratorium on repossessions agreed as part of the government's recapitalisation programme for the Bank of Ireland and AIB and political pressure generally, the prime lenders are reluctant to be seen opting to force people out of their homes. However, it's understood that many are opting to give customers in serious financial difficulty six months to sell their property despite the fact that they are almost certainly going to do so at a significant loss. That this option avoids the repossession process is almost irrelevant to the mortgage holder because the end result is the same – the customer is left with a potentially huge...