September 2nd, 2010
Mortgage Lending in Ireland is currently constrained due to a number of key factors.Restrictive lending criteria for all categories of borrowers are currently in place, and have become progressively restrictive in the past 2 years (with further material restrictions applied in the last 3-4 months). Lending criteria is particularly restrictive for non-first time buyers (FTBs) where the average loan to value maximum is 80%. First Time Buyers can avail of up to 90% loan to value where they meet other stringent assessments of affordability, credit history, employment security and bank account conduct. Lending criteria has been progressively tightened as lenders have had to ring-fence greater ratios of Tier 1 to satisfy the Financial Regulators requirements for liquidity. Additionally, wholesale borrowing costs for Irish banks continue to rise and present challenges to the profitability of taking on new mortgages to the balance sheet. Thirdly, the Financial Regulator (following sustained criticism of the lack of activity in controlling the growth of mortgage lending credit 1999-2008) has taken a more intrusive and instructive approach to the detail of the Irish lenders credit policies and risk appetites – including making specific, and conservative, directives regarding the appropriate levels of loan to values, repayment capacity ratios and use of other features used in lending assessments (i.e. ending the practice of including room rental allowances towards repayment capacity). Finally, there is some evidence that potential borrowers are reluctant to move to make a purchase whilst there is continued discussion and opinion in the media that house price values still have some way to fall before reaching the bottom, effectively damaging consumer confidence in the transaction.
On the positive side it should be noted that there are signs of improvement and opportunity in the market. The CEO of PTSB has indicated that they will return to more normalised levels of lending towards the end of 2010. House affordability levels are back to those last seen in 1995 (EBS/DMK Survey). The majority of lending being approved currently is to FTBs (with the two main retail banks having committed to lending circa €500m between them in 2010). Estate Agents indicate increased sales activity, whilst noting that the main obstacle to completions is the availability of mortgage finance. Provisioning and impairment levels in some of the banks is now beginning to receed in respective of prime mortgage borrowers.
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August 18th, 2010
The Central Bank and Financial Regulator are set to intervene when concerns exist regarding a lack of safeguards with regards to the underwriting of First Time Buyer mortgages. Measures which are expected to be enforced are:
- Implementation of LTV (Loan to Value) ceiling, as recently announced by the EBS Building Society
- Capping of loan to income multiples
- Limiting the term of mortgages
- Disallowing room rental for qualifying purposes
- Imposing new income verification procedures
With First Time Buyers representing the largest buying group in the 1st half of 2010 this will undoubtedly further reduce the number of mortgages being approved and contribute towards falling house prices.
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August 18th, 2010
Mortgages across the globe for main residences, second homes, works, buy to let and leaseback and equity release at 2.70% fixed for 3 months then Euribor3m + 1.80%. Interest only available. Contact Home Brokers Ireland + 353 (0)818 333 603.
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July 16th, 2010
Haven Mortgages, a subsidiary of the EBS Building Society has increased its variable mortgage rate for existing customers by 0.60% for the second time in the past three months, despite no change in the ECB base rate or increases in rates for new customers. Despite a fleeting interest in retaining mortgage customers during the good times, it appears that existing customers are once again the easy target for profit hungry mortgage lenders. Borrowers might want to consider fee free switcher opportunities that exist in the market…
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July 15th, 2010
It is likely that the Irish Economy has technically emerged from recession. however this will not yet be felt at a consumer level. Read Jim Powers full report http://www.homebrokers.ie/blog/wp-content/uploads/2010/07/Economic%20Outlook%20June%202010.pdf
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July 7th, 2010
Buyers Broker Ltd are hosting a free open evening of information and learning for property buyers where we will look at current market activity, examine current realities and track down real value. Find out where opportunities are to be found and what areas are to be avoided in the short-term. Ultimately, learn how to protect your investment in your new home.
Our mortgage partners, Home Brokers, will give buyers the lowdown on finance. Which banks are actually lending and who are they lending to? Most importantly, they will look beyond media hype and explain the current mortgage situation in a straightforward, accurate and up-to-date way. Every buyer will receive a comprehensive mortgage calculator (quote & qualify) on disk to take away.
There will be an extensive Q&A and we look forward to an interactive evening of learning, we will hear about your house-hunting experiences and share a few of ours. No auctioneers allowed!
Contact info@buyersbroker.ie for further information or to reserve your place.Tel: 01 4428 035
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