# Morgan Kelly is worried about 10,000 mortgages over €1m



## Brendan Burgess (8 Aug 2011)

Here is his Kilkenny speech..  at around 31.40 he says the following 



> What worries me is mortgages.  There is a group of mortgages interest only given out to professionals lawyers solicitors and estate agents.  About 10,0000   . €1 – 2m each.
> They put up 20%  of the price
> €11 b in loans to high rollers, Most who could barely buy a cup of coffee now.
> Banks will get back about half on any mortgage  which defaults.


I very much doubt that there were 10,000 loans of €1 million given out. But let’s say that there were. At the peak of the market, these guys were borrowing at between 0.5% and 1% above ECB. 
  So if they are paying 2.5% interest only now, then they have monthly repayments of €2,000 a month.  Some solicitors, especially those in conveyancing, are suffering. But many others still have good incomes.  When the ECB rates rise, these guys will get into further difficulty, but their loans will still be very cheap. 

  Around 7% of borrowers are in arrears. I would say that the figure must be lower for those on interest only mortgages. But even if you say that 10% of these high-rollers will eventually default, it means that around €1 billion of mortgages will default. The bank will lose around 50% on these, so it’s a €500m problem for the banks. A serious problem, but small in relation to the rest of the banks’ problems.  The taxpayer probably owns about 50% of the market, so the taxpayers’ problem is around €250m.  And this has been provided for in full at the last stress test and recapitalisation exercise. 

   A much bigger problem for the banks is that they have tied up €11 billion in cheap tracker mortgages. Default is a small problem by comparison.


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## Delboy (8 Aug 2011)

I read his speech earlier today and have to admit that I was surprised to hear about this group of mortgages. Sounds very high to me also....does anyone here know anyone who got 1 of these mortgages 'cos I certainly don't.
Was there that many houses over €1m around during the mid noughties??? Maybe there was, but was it all young professionals in a few select sectors who were buying them!


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## DerKaiser (8 Aug 2011)

It's certainly an odd group to single out.

I'd say the total mortgage book relating to loans of €500k to €1m would be far more significant and the €200k to €500k group more significant again.

Say there are 50,000 of the new unemployed who had average mortgages of €200k, that would also be a €5bn loss assuming the banks have a 50% writedown.....but sure it's more fun to talk about solicitors and estate agents who can't afford coffee.


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## Bronte (9 Aug 2011)

About a year or two ago, a builder relation of mine told me of going to do a big job on a massive house owned by a consultant in Dublin and the consultant had over stretched and couldn't afford to put on the heating.  

I know of another doctor, GP, who paid a fortune for a site, built the 'dream' home and now has to leave her child behind while she goes to the furthest corner of Ireland to do locum work (not sure what type exactly) to make ends meet.  

I'm guessing these are the type of people Kelly is talking about.  There was an article in the last couple of weeks about the fact that some judges had over borrowed to speculate.


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## DerKaiser (14 Aug 2011)

http://www.independent.ie/national-news/anecdotes-led-to-morgan-kelly-claim-2847961.html

Anecdotes!!  Looks like he'll use any old hearsay he can to be as negative as possible. Frankly when someone is digging this deep to find something negative to say you have to question his agenda.  Things will turn for the better at some point, I think we should be closely monitoring the ability of the the prophets of doom to foresee when this will happen.


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## Calico (17 Aug 2011)

DerKaiser said:


> http://www.independent.ie/national-news/anecdotes-led-to-morgan-kelly-claim-2847961.html
> 
> Anecdotes!!  Looks like he'll use any old hearsay he can to be as negative as possible. Frankly when someone is digging this deep to find something negative to say you have to question his agenda.  Things will turn for the better at some point, I think we should be closely monitoring the ability of the the prophets of doom to foresee when this will happen.



Another opinion on MK's figures....

http://namawinelake.wordpress.com/2...n-kelly-gotcha-right-back-sunday-independent/


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