# Why are those who borrowed 100% LTV complaining?



## feltox

100%LTV said:


> I am one of the unfortunate first time buyers who applied for a mortgage in mid 2006. Like most first time buyers, I took the amount on offer to me from my bank to get my 1st foot on the property ladder.
> This was over 7 times my base salary and a 100% loan to value mortgage.
> I was not aware at the time I took my mortgage, but banks historically lent around 3.5 times base salary, at a maximum of 80% loan to value (LTV).
> Around 3 years later, I now find myself also with €300k negative equity.
> 
> I am interested to hear from those out there who;
> - Were give a 100% loan to value owner occupier mortgage during the boom.
> - If your mortgage represented over 6 times you base salary at the time when drawn down.
> 
> Did you read the recent article in the _Sunday Times _Business by Damian Kiberd, 10-07-10 or some of the recent calls from IMF on debt forgiveness, negative equity, and 100% LTV possible negligent bank mortgage lending?
> 
> If you meet the LTV & mortgage salary multiple above and are interested in exploring what legal avenues might be open to us please email me outlining your position.
> 
> Regards
> 
> Stuart
> 
> stuart@letterboxes.org


 
Just to clarify for others to comment

What was your base Salary in 2006?
What was purchase price of House?

What is your base salary in 2010?
What is value of house now?

€300k seems a lot of neg equity.


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## musicfan

OP, presumably you are an adult who agreed to take out a 100% mortgage and took what was offered rather than what you needed? You signed a legal contract to this effect??

The same old story but the banks did not make you take out the loan with a gun to your head - as an adult you had a choice.

What avenues do you want opened to you? Do you want the banks to write off the debt and let the other taxpayers pay for your loan??

Is the problem now that you can't afford to pay back your mortage due to redundancy for example, or the fact you don't want to pay it back?


And yes, I am in Negative Equity myself but will do my very best to continue to pay back the loan as agreed in my contract that I signed.


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## Shelleyb

Oh yes here we go again the pro-choice argument, the you signed a legal contract argument, no-one forced you argument.....blah, blah...

Why didn't you just pay most of your monthly salary to rent out a pokey little room from a property developer instead of wanting to you pay towards home???  

We've all been shafted!

Good grief............


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## feltox

Please note *100%ltv* is the opening poster here and not me.(Admin moved a reply I made and set it up as first one on this forum)

Personally I agree with last two comments made.

100%ltv please explain more of how you feel you were misled/missold a product


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## ontour

Going forward (!) we should learn from the mistakes:
     - rules about income multiples / disposable income
     - non recourse mortgages
but that does not help the people in current difficulty so we should:
     -make bankruptcy an option for individuals in extreme difficulty
     -NAMA for the people. restructure debt for individuals payable to a state bank, maybe use Anglo operation.  This would be a restructure not a write off.

It is very important that banks, businesses and individuals that took excessive risk during the boom feel the pain of their wreckless decisions so that a more cautious approach to credit returns and the importance of individuals understanding and managing their finances is reinforced.

When ignorance becomes a defense or a reason to bail out people, we make education a liability.


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## peno

While I do feel and sympatise with those people on 100% mortgages in negative equity I do think they should look at the choices they made themselves.

I bought my current house in 2005 - I could of bought a more expensive house or added an extension to the house I bought - But I thought about it and said no that despite the money being available from the bank I did not feel comfortable making the repayments and that they would be consumming too much of my income.

just because the money was offered did not mean people had to accept.

I think its wrong to blame the banks as society at large was to blame. Everybody wanted biger houses, new cars 2 holidays a year etc etc.

I myself feel into this trap and had significant CC debt - thankfully mostly repaid.

People who bought recently not only bought a house but also ahd to insist on furnishing it to a high standard sofas, kitchen tablesa spare rooms decorated etc. Very few of these people took a step back to think realisticaly how they would pay for all this, what will happen if we have kids etc

15-20 years ago people bought a house and then saved and scraped to decorate it over the next few years.

Taking legal action against the banks for giving you a mortage - come on. If anyone took out a mortgage 7 times their salary did they not stop to think how they could afford to repay it??


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## musicfan

Shelleyb said:


> Oh yes here we go again the pro-choice argument, the you signed a legal contract argument, no-one forced you argument.....blah, blah...
> 
> Why didn't you just pay most of your monthly salary to rent out a pokey little room from a property developer instead of wanting to you pay towards home???
> 
> We've all been shafted!
> 
> Good grief............


 
My point is that the banks did not MAKE you take out a 100% mortage for 10 times your salary.  You could have taken out a mortgage for a more reasonable amount....

I rented myself for years, got sick of this so took out a mortgage, I did not take what was offered to me but took what I needed for where I wanted to buy.

I'm in NE as I said in my previous post but it was my decision to move away from renting to paying my own mortage - the banks did not force me to make this decision!

People should be responsible for their own actions and not just blame the banks - they should take some of the responsibility themselves.


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## canicemcavoy

So, as an adult, you didn't think taking out a 100% mortgage at 7 times your salary was a bad idea?

For the most important purchase in your life, you didn't do a bit of reading up on it to find out basic information such as historical ratios? 

And now that your investment has gone bad, you want me and others like me to pay for it? 

Do you take cheque or credit card?


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## Howitzer

Threads about scenarios like this are why I don't post on AAM so much any more. What can you say?


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## Billo

peno said:


> society at large was to blame. Everybody wanted biger houses, new cars 2 holidays a year etc etc.



Not true.

Most people that I know lived within their means, and still do.


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## truthseeker

peno said:


> I think its wrong to blame the banks as society at large was to blame. Everybody wanted biger houses, new cars 2 holidays a year etc etc.


 
I dont agree with this. Most people I know in NE (including myself) are in small 'starter' homes, 2 bed apartments etc... I personally dont know anyone who took out a crazy mortgage just to have a bigger house or two cars etc..

For a lot of 30 somethings, they bought within their means at the time, but their means have come down and the value of their property has also come down.


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## Complainer

musicfan said:


> The same old story but the banks did not make you take out the loan with a gun to your head - as an adult you had a choice.


True - there was no gun to his head.

But do have a close look at the actions of the bank. They explicitly fuelled the property bubble by increasing their lending limits. Simple economics 101 rules of supply and demand will tell you that if you allow people to borrow more, prices will increase. They foolishly gambled that the bubble will never burst.

Most property buyers (particularly first-time buyers) could see no other option than to pay the market price at the time.

I'm not avoiding personal responsibility for buyers, but it is important to remember the context. I'm not sure where this leaves us. The banks are effectively defunct, so any attempt to hold them responsible will simply land a bill to taxpayers.


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## TLC

I do feel sorry for people - many of them inexperienced in buying property - being "conned" into jumping on the property market bandwagon.  Personally I couldn't believe the prices that people would pay for property over the last few years & refrained from buying myself, but that is easy for me to say, seeing as we bought our 3 bed-semi 25 years ago & have no mortgage.  We were considering "trading up" but didn't & I'm glad of that. (the main reason was that we hated to take on another mort after just having cleared it off - we were considered quite "sad" by some friends at the time).  I'm not being smug, far from it, I just think that there is no point in berating those who fell into the "trap" & it was a "trap" - aided & abetted by the government, banks & estate agents.  Looking back we can all see that it couldn't continue, but people where really being put under pressure to buy before they were priced out of the market.  Some and I do stress "some" of the current media commentators  were pushing property abroad up until very recently but they seem to have forgotten that - as have the newspapers who carried these ads & editorials praising them  So lets have a bit of understanding for people who now feel trapped & find themselves in difficulties please.


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## Nige

canicemcavoy said:


> For the most important purchase in your life, you didn't do a bit of reading up on it to find out basic information such as historical ratios?
> 
> And now that your investment has gone bad, you want me and others like me to pay for it?


 
well we are paying for the developers and the banks,


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## PaddyW

It's a vicious circle. Everybody has their part of the blame to accept. Maybe some, more than others.


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## Mpsox

I have sympathy for some people in this position, but not everyone.

Firstly anyone who took out 100% LTV for investment properties was not an "investor", but were instead speculators and they should be made deal with the consquences of their own actions. 

I also have sympathy for people who were buying homes, rather then properties to "get on the ladder". (a phrase I hate). 

However a lot of people were very foolish. Why did people ever think that they could buy an unproductive asset, do nothing with it and that it would magically increase in value over a few years and they could sell at a profit, with no risk. ? Nobody forced them to buy.

Having said that, and whilst we all know the bank's lending policies played a large part in fueling the boom, on an individual case, I do wonder if there were cases of banks/mortgage advisers engaging in mis-selling. For example, if an mortgage advisor told an applicant to put false earning figures on the application, does the mortgage holder now have a case against the broker? Not sure what the answer to that one is. I can't help thinking of the endownment mortgage mis-selling fiasco in the UK in the 90s and wonder if there are elements of similer bad practices here


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## Robin Banks

PaddyW said:


> Everybody has their part of the blame to accept.


 
Ah gwan what a load of crap.

Everything is someone else's fault.

Where is my box of tissues.


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## Chris

canicemcavoy said:


> So, as an adult, you didn't think taking out a 100% mortgage at 7 times your salary was a bad idea?
> 
> For the most important purchase in your life, you didn't do a bit of reading up on it to find out basic information such as historical ratios?
> 
> And now that your investment has gone bad, you want me and others like me to pay for it?
> 
> Do you take cheque or credit card?


Well said. It is very common human behaviour, when it comes to investments, that people take responisibility for their good investments, but blame someone else for bad investments.



peno said:


> Very few of these people took a step back to think realisticaly how they would pay for all this, what will happen if we have kids etc


I think this is what it all comes down to. Inadequate planning for adverse conditions in the future.



Complainer said:


> But do have a close look at the actions of the bank. They explicitly fuelled the property bubble by increasing their lending limits. Simple economics 101 rules of supply and demand will tell you that if you allow people to borrow more, prices will increase. They foolishly gambled that the bubble will never burst.


You are right, but that is what banks do, lend out money at a level of risk they choose. What is ignored by ALL politicians and pretty much all of the media is the question of "Where did the banks get the money from?"
If you want to pinpoint blame then you have to point to government and the central bank. The ECB significantly increased the money supply (created inflation) and lowered interest rates; then banks used that money to lend it out cheaply in a fractional reserve system that allows for up to 50:1 leverage. The ultimate fault lies with government and ECB for their inflationary monetary policy (not some lack of mystical regulation).
Banks also didn't gamble that the bubble wouldn't burst. They knew/gambled that the risks associated to a burst would be covered by governments through interventions/bailouts.



truthseeker said:


> For a lot of 30 somethings, they bought within their means at the time, but their means have come down and the value of their property has also come down.


But very, very few made any provisions for the rainy day. If you took on a mortgage that was realistically within your means and you didn't take out a credit union loan to pay for the deposit and furnishing, AND you took into account what would happen if you became un/under-employed, then you wouldn't have much to worry about. But this what people in general did not do.



musicfan said:


> And yes, I am in Negative Equity myself but will do my very best to continue to pay back the loan as agreed in my contract that I signed.



This is the only way to solve the problem.


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## canicemcavoy

Nige said:


> well we are paying for the developers and the banks,


 
Two wrongs don't make a right. I'm against that too.


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## canicemcavoy

PaddyW said:


> It's a vicious circle. Everybody has their part of the blame to accept. Maybe some, more than others.


 
I don't. I didn't buy an over-priced house and I spent a considerable amount of time and some expense trying to warn others of the dangers. For my effort, I was told that I was talking down the property, being unpatriotic, etc. After the bubble burst, I was then told I was merely lucky. Now, seemingly, it's all my fault too. I have absolutely no intention of the Fianna Fail scam that "since everyone's to blame, noone is to blame".


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## Complainer

Chris said:


> You are right, but that is what banks do, lend out money at a level of risk they choose. What is ignored by ALL politicians and pretty much all of the media is the question of "Where did the banks get the money from?"
> If you want to pinpoint blame then you have to point to government and the central bank. The ECB significantly increased the money supply (created inflation) and lowered interest rates; then banks used that money to lend it out cheaply in a fractional reserve system that allows for up to 50:1 leverage. The ultimate fault lies with government and ECB for their inflationary monetary policy (not some lack of mystical regulation).
> Banks also didn't gamble that the bubble wouldn't burst. They knew/gambled that the risks associated to a burst would be covered by governments through interventions/bailouts.


Thanks for the clarification, though I'm now even more scared than I was. 

Has anything changed now? Can the banks still gamble and still rely on being covered by the Govt?


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## truthseeker

Chris said:


> But very, very few made any provisions for the rainy day. If you took on a mortgage that was realistically within your means and you didn't take out a credit union loan to pay for the deposit and furnishing, AND you took into account what would happen if you became un/under-employed, then you wouldn't have much to worry about. But this what people in general did not do.


 
Im not sure I completely agree with this. People may have had rainy day provisions made, but few would have thought it would rain so hard for so long. I have friends who have been unable to find work in their profession for well over a year - would you expect that first time buyers have over a year of mortgage repayments saved? I just dont think that thats a realistic expectation of a first time buyer.


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## Lou34

to be fair (and having worked in property for 15 years in Ireland), I think a lot of people feared that if they did not buy then they would never get a foot on the property ladder and to a large extent these fear tactics were essentially fuelled by developers and the government in close cahoots with the banks.  Whilst I don't agree with the excessive spending habits of some people during the boom, there are a huge number of first time buyers living in small starter homes that will never be able to get out of the negative equity trap due to the outrageous overvaluing of property at the peak.  I think its all too easy to accuse them of overborrowing when those not in the same situation sit in their own ivory tower handing down judgement.  I bought a house in 2004 for 224K my neighbour bought the very same house in 2006 for 370K, do I delight in her misfortune?  No.  I think a lot of people did what they had to do at the period in time and maybe those more fortunate should just back off.


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## PaddyW

Robin Banks said:


> Ah gwan what a load of crap.
> 
> Everything is someone else's fault.
> 
> Where is my box of tissues.





canicemcavoy said:


> I don't. I didn't buy an over-priced house and I spent a considerable amount of time and some expense trying to warn others of the dangers. For my effort, I was told that I was talking down the property, being unpatriotic, etc. After the bubble burst, I was then told I was merely lucky. Now, seemingly, it's all my fault too. I have absolutely no intention of the Fianna Fail scam that "since everyone's to blame, noone is to blame".



Jaysus lads, calm down. Perhaps I should have tidied it up a bit and made it clearer. I too also borrowed wisely so no complaints coming from me and I don't want to accept being at fault when it's not down to people like me or you that borrowed wisely. And Robin, my statement was more directed towards the people that are complaining that they got the 100% mortgages. They had a part to play and the banks had a part to play in it. Therefore, within their own individual circumstances, everyone was to blame.


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## Chris

canicemcavoy said:


> I don't. I didn't buy an over-priced house and I spent a considerable amount of time and some expense trying to warn others of the dangers. For my effort, I was told that I was talking down the property, being unpatriotic, etc. After the bubble burst, I was then told I was merely lucky.


I can speak of similar experiences. While I did buy a house in 2004 I sold it again in early 2008. The house I bought was WELL within my affordability, which I was told by friends and colleagues at the time was a monumentally stupid thing to do. When we decided to sell the house people told us we were only fueling the decline in house prices, and the best thing we could do is rent it out and maybe buy another one!?!?!?! Now I have been renting for 2 1/2 years and I'm told I was soooo lucky to have sold my house, but do I not think that paying rent is dead money? There is nothing lucky about making conscious choices and then coming out on top.



Complainer said:


> Thanks for the clarification, though I'm now even more scared than I was.
> 
> Has anything changed now? Can the banks still gamble and still rely on being covered by the Govt?


No, the ECB has not changed its minimum reserve requirements. It has made unlimited funds available to banks and is actively buying bonds even of junk status. At the moment banks are just sitting on these extra funds, because they can borrow at 1% and buy government bonds that pay 2.5% or more. When they decide to lend out the extra funds then you better be prepared for some price increases. 
I have spent quite some time searching for financial and banking crises in the past 100 years, and haven't found one, where governemnts didn't intervene. This is the moral hazard that exists now, and the only way I can see this changing is if constitutional amendments are made that restrict government interventions. Because just saying that it won't happen again is not going to make a difference.



truthseeker said:


> Im not sure I completely agree with this. People may have had rainy day provisions made, but few would have thought it would rain so hard for so long. I have friends who have been unable to find work in their profession for well over a year - would you expect that first time buyers have over a year of mortgage repayments saved? I just dont think that thats a realistic expectation of a first time buyer.


The reason that they didn't have rainy day funds large enough was because they took on too large mortgages. I recently overheard a conversation where in first time buyer couple had monthly repayments of €1750 for 3 bed duplex somewhere in Dublin. Of course most young people will not have an extra €21000 to cover 12 months repayments. But they should have taken that into account and bought cheaper, or, even better, realised that they could not afford at current price levels.



Lou34 said:


> to be fair (and having worked in property for 15 years in Ireland), I think a lot of people feared that if they did not buy then they would never get a foot on the property ladder and to a large extent these fear tactics were essentially fuelled by developers and the government in close cahoots with the banks.  Whilst I don't agree with the excessive spending habits of some people during the boom, there are a huge number of first time buyers living in small starter homes that will never be able to get out of the negative equity trap due to the outrageous overvaluing of property at the peak.  I think its all too easy to accuse them of overborrowing when those not in the same situation sit in their own ivory tower handing down judgement.  I bought a house in 2004 for 224K my neighbour bought the very same house in 2006 for 370K, do I delight in her misfortune?  No.  I think a lot of people did what they had to do at the period in time and maybe those more fortunate should just back off.


House prices didn't go up because lenders and estate agents overvalued them. They may have put some advertising price on the house, but it is supply and demand that affects sale prices, nothing else. General euphoria and PR from various corners of society may have made people believe that they would end up "being priced out of the market". But guess what happens when enough people are unable to buy above a certain price? Prices stabalise and come down again. Instead of letting this happen, government introduced and modified policies that increased demand even further. There was only ONE way this was going to end.


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## Maynooth

Lou34 said:


> huge number of first time buyers living in small starter homes that will never be able to get out of the negative equity trap due to the outrageous overvaluing of property at the peak.QUOTE]
> 
> But they are the ones who decided the value of the property. House prices were crazy because there were people willing to spend huge sums of money on poor housing and plenty more willing to accept.


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## truthseeker

Chris said:


> Of course most young people will not have an extra €21000 to cover 12 months repayments. But they should have taken that into account and bought cheaper, or, even better, realised that they could not afford at current price levels.


 
In many cases of my own peer group they simply didnt have the option to 'buy cheaper' - they bought the cheapest they could at the time.


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## dereko1969

truthseeker said:


> In many cases of my own peer group they simply didnt have the option to 'buy cheaper' - they bought the cheapest they could at the time.


 
but they didn't *have to* buy, they chose to.


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## truthseeker

dereko1969 said:


> but they didn't *have to* buy, they chose to.


 
Yes I agree absolutely, but you have to look at the context. Im talking about 30 somethings, who were saving for a few years, hoping to buy their own home, trying to rent and save a deposit at the same time is hard work and they were constantly in fear of the fact that the prices kept going up and up, they were at the stage of life of starting a family, and banks were offering people silly money.

Its easy to say 'well people could have rented longer' but in the context of the situation, people did not know that the bubble was going to burst so spectacularly (and no matter how often it is said on here that what was coming was obvious etc...it clearly wasnt that obvious to a huge number of ordinary people or we wouldnt have the situation we have now with thousands in trouble with negative equity or mortgage trouble). And Im not talking about greed either, Im talking about young people in small apartments or small houses that just wanted to buy their own place.


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## Maynooth

C'ést la vie. 

When you take a loan of a few hundred K you have to deal with any of the consequences.


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## marshmallow

truthseeker said:


> yes i agree absolutely, but you have to look at the context. Im talking about 30 somethings, who were saving for a few years, hoping to buy their own home, trying to rent and save a deposit at the same time is hard work and they were constantly in fear of the fact that the prices kept going up and up, they were at the stage of life of starting a family, and banks were offering people silly money.
> 
> Its easy to say 'well people could have rented longer' but in the context of the situation, people did not know that the bubble was going to burst so spectacularly (and no matter how often it is said on here that what was coming was obvious etc...it clearly wasnt that obvious to a huge number of ordinary people or we wouldnt have the situation we have now with thousands in trouble with negative equity or mortgage trouble). And im not talking about greed either, im talking about young people in small apartments or small houses that just wanted to buy their own place.


 
+ 1


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## peelaaa

dereko1969 said:


> but they didn't *have to* buy, they chose to.


 
It is easy to say that now.
Can you really see into the future...


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## Chris

truthseeker said:


> Yes I agree absolutely, but you have to look at the context. Im talking about 30 somethings, who were saving for a few years, hoping to buy their own home, trying to rent and save a deposit at the same time is hard work and they were constantly in fear of the fact that the prices kept going up and up, they were at the stage of life of starting a family, and banks were offering people silly money.
> 
> Its easy to say 'well people could have rented longer' but in the context of the situation, people did not know that the bubble was going to burst so spectacularly (and no matter how often it is said on here that what was coming was obvious etc...it clearly wasnt that obvious to a huge number of ordinary people or we wouldnt have the situation we have now with thousands in trouble with negative equity or mortgage trouble). And Im not talking about greed either, Im talking about young people in small apartments or small houses that just wanted to buy their own place.



I agree that it was not common belief that the bubble would burst spectacularly, or burst at all for that matter. But the unorthodox opinion that was warning of it did exist at the time. So people took on the extra risk, i.e. higher mortgages, that they could only afford at the time, but with no regard for a situation in which their income changed. 
If they were not aware of the risk then they were either ignorant or they chose not to pay attention to warnings. This all comes down to the obsession of home ownership. Yes owning your own home is a nice thing if you can truly and honestly afford it. But it has risks and ongoing costs, that have been, and still are being, constantly ignored by the general public.



peelaaa said:


> It is easy to say that now.
> Can you really see into the future...



You do not have to try and see into the future to realise that you cannot afford a mortgage above a certain amount!


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## truthseeker

Chris said:


> This all comes down to the obsession of home ownership.


 
It does. But the culture of this country is that owning your own home is the way to do things. We do not have an adult renting culture similar to other european countries. Renting is seen as the domain of the young, those on the move or a stop gap. I dont think I know any older adults (I mean over 40s) who rent - its just not the done thing in this country. 

Of course the other thing is that at the height of the boom renting was very expensive. If you were trying to save a deposit to buy at the same time it was really difficult. I moved from renting a tiny 1 bed granny flat to paying a mortgage on a spacious 2 bed apartment (by comparison) and suddenly had an extra 500 quid a month to play with. It made sense to be paying the mortgage rather than paying rent and saving - and I had a bigger place to live that I could decorate the way I wanted into the bargain.


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## grackal

truthseeker said:


> Its easy to say 'well people could have rented longer' but in the context of the situation, people did not know that the bubble was going to burst so spectacularly (and no matter how often it is said on here that what was coming was obvious etc...it clearly wasnt that obvious to a huge number of ordinary people or we wouldnt have the situation we have now with thousands in trouble with negative equity or mortgage trouble). And Im not talking about greed either, Im talking about young people in small apartments or small houses that just wanted to buy their own place.



Ok taking the point that people in general did not think the bubble was going to burst so spectacularly, would it be fair to say that they might have suspected that prices simply could not continue to go up at the rate they had done for a decade (or else a 1 bed in santry would now cost 500k)?

With that in mind, surely they should have asked themselves if prices don't go up and they do not gain any equity in the short term, can they live in the place they are buying for a good while and be happy?

I cannot claim to know what everyone was actually thinking, but I suspect the answer is NO. They could not see themselves there for any length of time and they did not simply want to "buy their own place", they wanted to get on board the gravy train/property ladder and let it speedily elevate them into the 3 bed semi in south dublin that they actually saw themselves in.


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## wheeler

Above is a link that may shed light on this subject. 
There are a lot of 'should haves', 'could haves', 'should do in the future' and "why it won't be done in the future"


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## Shawady

carpin taxt said:


> "rent - its just not the done thing in this country"
> 
> woohoo, let's go buy overpriced houses, renting is not the done thing!


 
The problem was that every year it looked like houses were overpriced until the next year when they went up again.I remember one of my friends paying 250K about 5 years ago and I thought they were off their head. Then they sold it 2 years later for 381K.

I am lucky that I am not in negative equity and when getting a mortgage have always borrowed an amount that I would be able to afford on one wage in case myself or partner was not working.
There were obviously people that were foolish with money but there were also people that wanted to just get their own home and bought into the attitude that there was something wrong with you if you did not own home. Personal responsibility has to come in to it but I can understand how someone would feel under pressure to get on the property ladder.


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## truthseeker

carpin taxt said:


> i suppose you have a point, because there had never been a housing bubble anywhere in the entire world before that we could study and learn from, and history never repeats itself.


 
Its easy to say that now, but there are an enormous amount of people out there for whom the words 'study' and 'learn' meant something they did for the Leaving Cert or earlier and never again afterwards. Just ordinary Joe Soaps who believed, as many did, that if they bank told them they could borrow X amount, then it was ok for them to do so. I know plenty of people who couldnt hear me when I told them they were over borrowing, because the bank said it was ok, and if a financial institution was telling them it was ok then that must mean its ok. It may be a strange idea to someone who is financially savvy, but its true.


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## Shawady

I suppose people just hoped they would not be buying right at the top of it. Remember all the experts talking about a soft landing. (Has there ever been one?)
As I said , when my friend borrowed 250K I thought it was crazy but year after year the price went up.
I also had a family member that bought an investment property 7 years ago for 230K. I thought they were taking a huge risk but it was worth as high as 400K at the peak. 
I don't think there should be a NAMA for home owners but I can understand how people got sucked in.


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## Chris

Shawady said:


> I am lucky that I am not in negative equity and when getting a mortgage have always borrowed an amount that I would be able to afford on one wage in case myself or partner was not working.
> There were obviously people that were foolish with money but there were also people that wanted to just get their own home and bought into the attitude that there was something wrong with you if you did not own home. Personal responsibility has to come in to it but I can understand how someone would feel under pressure to get on the property ladder.


No, you are not lucky, it sounds more like you made wise decisions as to the amount you borrowed, deposit, and possible lack of earnings in the future. That is not luck, that is financial prudence. 



truthseeker said:


> Its easy to say that now, but there are an enormous amount of people out there for whom the words 'study' and 'learn' meant something they did for the Leaving Cert or earlier and never again afterwards. Just ordinary Joe Soaps who believed, as many did, that if they bank told them they could borrow X amount, then it was ok for them to do so. I know plenty of people who couldnt hear me when I told them they were over borrowing, because the bank said it was ok, and if a financial institution was telling them it was ok then that must mean its ok. It may be a strange idea to someone who is financially savvy, but its true.


I agree that the education system does not pay enough attention on personal finance and economics. While financial ignorance explains why so many people are in difficulty, it does not excuse it. Unfortunately the financial "punishment" is the result of making financial mistakes, but it is also of utmost importance to avoid the same mistakes being repeated. Shame that the same wasn't/isn't done with banks.


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## Robin Banks

PaddyW said:


> my statement was more directed towards the people that are complaining that they got the 100% mortgages. They had a part to play and the banks had a part to play in it. Therefore, within their own individual circumstances, everyone was to blame.


 
Or, to translate your tortured BertieSpeak, everyone was not to blame.


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## PaddyW

BertieSpeak? What are you on about? Never been a fan of Bertie. Just trying to let them know, that I didn't mean everyone in the entire country, just those who were complaining about being given 100% mortgages. Themselves and those involved their mortgages were the ones to blame.


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## buddysmiley

Lou34 said:


> to be fair (and having worked in property for 15 years in Ireland), I think a lot of people feared that if they did not buy then they would never get a foot on the property ladder and to a large extent these fear tactics were essentially fuelled by developers and the government in close cahoots with the banks.  Whilst I don't agree with the excessive spending habits of some people during the boom, there are a huge number of first time buyers living in small starter homes that will never be able to get out of the negative equity trap due to the outrageous overvaluing of property at the peak.  I think its all too easy to accuse them of overborrowing when those not in the same situation sit in their own ivory tower handing down judgement.  I bought a house in 2004 for 224K my neighbour bought the very same house in 2006 for 370K, do I delight in her misfortune?  No.  I think a lot of people did what they had to do at the period in time and maybe those more fortunate should just back off.





I think this is a very fair post, as you said there are people here passing judgments and using fancy economic terms.  Every one fed into this false conscious world and they bought into it because it was the thing to do in this moment in time in society.  Some people were lucky and other's were not, i wonder the individuals who are passing opinion.  I really wonder how they would feel if they were in the same predicament.  200 k in negative equity.  P


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## staunton

Some people did buy within their means.
One person I know was sensible ( relatively)about what she could spend and that got her a one bedroom grannyflat in the back of beyonds for c.250K that she has very little chance of selling now.
Her friends spent big (c.370K) and are also in negative equity but at least are in their family home now.
While the sensible one kicks her heels living where tbh she never wanted to live but couldnt afford anywhere else.

No matter how sensible you were everyone had to pay market price at the time and the bubble lasted so long many people had never seen a dip/recession in their working lives.
We all had heard words of warning but they had been wrong every year for so many years and most thirtysomethings only knew of price rises.
People at that age could only wait so long before they had to bite the bullet and get a home while the banks would still give them the money.
This meant that a lot of the sensible people who waited, saved and watched their friends homes increase ridiculously in value got badly stung when they felt they had no choice but to follow suit.

Bad advice from perceived experts didnt help ranging from Govt to Banks and the high brow newspapers all those highly educated people who turned out to be clueless.
Who were people to trust.

I don't think you can fully blame Joe Soap for doing what everyone with a national voice was advising them to do.


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## W200

The term “*The property ladder* “is one of those awful new fangled flashy expressions which came into being about ten years ago. Before that people simply “bought a house ". With "The property ladder" came the idea supported by lending institutions , auctioneers and other vested interests that you buy today , sell one or two years later when your " property" has doubled in value and "trade up” until within a few years you own that big house on the hill having made a fortune in the process.
We have witnessed the folly of this greed driven philosophy and yet all those same vested interests including government are talking up prices and predicting the bottom of the market in an attempt to re start the whole sorry merry go round.
Until we grow up and see a house as a place to live and not a "cash cow, investment or property" then we are simply waiting to repeat the mistakes of the past


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## Chris

staunton said:


> People at that age could only wait so long before they had to bite the bullet and get a home while the banks would still give them the money.


No, that's the point they did NOT have to bite the bullet. What they should have done is wait until they could afford something that they were planning on staying in longer term, or that would have been somewhat suitable for any family planning they had.



staunton said:


> This meant that a lot of the sensible people who waited, saved and watched their friends homes increase ridiculously in value got badly stung when they felt they had no choice but to follow suit.


And if those sensible people had waited longer, they would have watched their friends homes decrease in value. Nobody was faced with just one choice, there was always the option of not buying!!!! You would now be much better off.



staunton said:


> I don't think you can fully blame Joe Soap for doing what everyone with a national voice was advising them to do.


Of course Joe Soap is fully to blame for his decisions, if he decided to jump on the property train because everyone else was doing it. You cannot excuse bad decisions by saying that everyone else was doing it too.



W200 said:


> The term “*The property ladder* “is one of those awful new fangled flashy expressions which came into being about ten years ago. Before that people simply “bought a house ". With "The property ladder" came the idea supported by lending institutions , auctioneers and other vested interests that you buy today , sell one or two years later when your " property" has doubled in value and "trade up” until within a few years you own that big house on the hill having made a fortune in the process.
> We have witnessed the folly of this greed driven philosophy and yet all those same vested interests including government are talking up prices and predicting the bottom of the market in an attempt to re start the whole sorry merry go round.
> Until we grow up and see a house as a place to live and not a "cash cow, investment or property" then we are simply waiting to repeat the mistakes of the past



Very well said!!!


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## Pat Bateman

The attitude of certain contributors to the thread is despicable.  We have a culture of home ownership in this country.  People had a choice - Buy a home at a certain point in time or continue to see that home becoming less and less affordable as the years (or even months) passed by. The 'holier than thou' sycophants should be ashamed of themselves. Those who claim they knew what was coming are liars. They didn't. Families are now living in poverty. Parents can't afford to pay the mortgage on a home that's worth half the amount of the outstanding mortgage. The State and society as a whole have a duty to assist. As for the 'holier than thou' merchants, they should be made contribute more for their antisocial outlook on life. "I didn't borrow recklessly".  Bulls..t. You just got lucky in that you bought at the right time/inherited money/haven't lost your job etc.


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## canicemcavoy

Pat Bateman said:


> The attitude of certain contributors to the thread is despicable. We have a culture of home ownership in this country. People had a choice - Buy a home at a certain point in time or continue to see that home becoming less and less affordable as the years (or even months) passed by. The 'holier than thou' sycophants should be ashamed of themselves. Those who claim they knew what was coming are liars.


 
 It was perfectly obvious to anyone who had either half a brain or wasn't a vested interest than when average house prices are many multiples of the average salaries and we have building societies with TV ads guilt-tripping parents into funding their children's house, that we're in a property bubble. If you want to follow what you think is the national "culture", then fine. 

We also have a culture of drinking heavily; does this mean when alcoholics lose their homes, I should bail them out too?


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## Chris

Pat Bateman said:


> The attitude of certain contributors to the thread is despicable.  We have a culture of home ownership in this country.  People had a choice - Buy a home at a certain point in time or continue to see that home becoming less and less affordable as the years (or even months) passed by. The 'holier than thou' sycophants should be ashamed of themselves. Those who claim they knew what was coming are liars. They didn't. Families are now living in poverty. Parents can't afford to pay the mortgage on a home that's worth half the amount of the outstanding mortgage. The State and society as a whole have a duty to assist. As for the 'holier than thou' merchants, they should be made contribute more for their antisocial outlook on life. "I didn't borrow recklessly".  Bulls..t. You just got lucky in that you bought at the right time/inherited money/haven't lost your job etc.


Are you serious!?!?! I cannot believe how many people excuse the bad decisions of people by saying it was what everyone was doing! As I said before, if those same people that bought because they saw a house becoming less affordable, had sat back and said, I realistically cannot afford this, they would now be seeing houses becoming ever MORE affordable.

How is someone who said back in 2005/6 that there was going to be a huge bust in property a liar? They were absolutely correct! I agree that there are probably quite a few people now that claim they saw it coming, but never said anything. However there were plenty that said so publicly.

I didn't anticipate prices dropping this much in 2008, but I still sold my house by undercutting every other house for sale in the estate. There was absolutely nothing lucky about this decision, and for you to say so, insults my intelligence.




canicemcavoy said:


> It was perfectly obvious to anyone who had either half a brain or wasn't a vested interest than when average house prices are many multiples of the average salaries and we have building societies with TV ads guilt-tripping parents into funding their children's house, that we're in a property bubble. If you want to follow what you think is the national "culture", then fine.



Some excellent examples of what gave it away.


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## canicemcavoy

Chris said:


> Are you serious!?!?! I cannot believe how many people excuse the bad decisions of people by saying it was what everyone was doing!


 
I remember when I was 10 years old, my aunt who raised me had a saying for me: would you jump off a cliff just because everyone else was doing it? 

It's a pity many adults in Ireland didn't listen to advice meant for 10-year-olds.



> Some excellent examples of what gave it away. Some excellent examples of what gave it away.


 
Another example is the fact that we did - and still - have an "affordable housing scheme" which is aimed at people earning *twice* the national average salary! These are well off people - in any other country, they would be considered wealthy.


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## Pat Bateman

canicemcavoy said:


> It was perfectly obvious to anyone who had either half a brain or wasn't a vested interest than when average house prices are many multiples of the average salaries and we have building societies with TV ads guilt-tripping parents into funding their children's house, that we're in a property bubble. If you want to follow what you think is the national "culture", then fine.
> 
> We also have a culture of drinking heavily; does this mean when alcoholics lose their homes, I should bail them out too?


 


Chris said:


> Are you serious!?!?! I cannot believe how many people excuse the bad decisions of people by saying it was what everyone was doing! As I said before, if those same people that bought because they saw a house becoming less affordable, had sat back and said, I realistically cannot afford this, they would now be seeing houses becoming ever MORE affordable.
> 
> How is someone who said back in 2005/6 that there was going to be a huge bust in property a liar? They were absolutely correct! I agree that there are probably quite a few people now that claim they saw it coming, but never said anything. However there were plenty that said so publicly.
> 
> I didn't anticipate prices dropping this much in 2008, but I still sold my house by undercutting every other house for sale in the estate. There was absolutely nothing lucky about this decision, and for you to say so, insults my intelligence.
> 
> 
> 
> 
> Some excellent examples of what gave it away.


 


canicemcavoy said:


> I remember when I was 10 years old, my aunt who raised me had a saying for me: would you jump off a cliff just because everyone else was doing it?
> 
> It's a pity many adults in Ireland didn't listen to advice meant for 10-year-olds.


 
Aren't you all great?  Were you all short on the Irish property market or are you just wise after the fact?

Most problems in relation to mortgages are income related (i.e. they've nothing to do with what's happened to the property market).  Salaries have been decimated and many people have been let go.  We as a society have a duty to help these people out.

Chris, selling your property during 2008 was complete luck, and for you to claim otherwise is an insult to our intelligence.

A national culture of owning one's own home...what a terrible concept.

The self satisfied tone of some of the posts above is frankly disgusting.


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## gearoid

Pat Bateman said:


> The 'holier than thou' sycophants should be ashamed of themselves. Those who claim they knew what was coming are liars. They didn't.



Hi Pat,

There's obviously a lot of anger in your posts, but I think it is misdirected. Aim it at the banks in part for offering massive multiples but there is an element of personal responsibility required. 

I stuck to a multiple of less than four times salary based on standard and widely publicised international suggested credit limits. I was being well outbid on properties by people overstating income and taking mortgages far larger than was prudent. I saved for over twelve years, saving large proportions of my salary but didn't feel I was in a position to buy. I also anticipated to an extent what was to follow (see posts below). I sacrificed on housing as I felt I was not in a position to afford. How can anyone now tell me I must fund those who overextended? To an extent I will be prepared to do it through taxation but I find your anger a little hard to take, and your choice of words over-emotive and aggressive. To call people who chose to stay away from the markets and who to an extent "called" the boom, or not to buy a house, "sycophants" is more a sign of your anger than anything else. Yes I am in a good position now to buy a house, but I have saved from my 20's to my 40's to do so. Why begrudge me for doing so?

My views on housing were outlined in several threads including the infamous house price discussion thread from which so many were banned and thrown out of askaboutmoney. 

http://www.askaboutmoney.com/showthread.php?t=8219&mode=linear Posts 5 & 12

http://www.askaboutmoney.com/showpost.php?p=176826&postcount=381

http://www.askaboutmoney.com/showpost.php?p=176826&postcount=384


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## canicemcavoy

Pat Bateman said:


> Aren't you all great?


 
Yep, I am indeed.



> Were you all short on the Irish property market or are you just wise after the fact?


 
Ah, the typical smart-This post will be deleted if not edited to remove bad language retort no. 1 - all of us who didn't buy during the boom were just poor bleedin' skangers (or something) and just couldn't afford it at the time. The fact I could now buy a house with cash I think might disprove this fact. 

Oh, wait, no, that's just "luck". ("Smart This post will be deleted if not edited to remove bad language retort no. 2"). I do enjoy the irony that at the same time as insulting us, people like you now think it's supposedly now my patriotic duty as an Irishmen to use that cash to bail out people who, while I was scrimping to save said money, told me I was an eejit not to get on the property market and pick up a couple of investment properties while I was at it, like themselves.



> Most problems in relation to mortgages are income related (i.e. they've nothing to do with what's happened to the property market).
> Salaries have been decimated and many people have been let go. We as a society have a duty to help these people out.


 
Salaries are decimated precisely because there were way too high in the first place. A huge proportion of the population was directly or indirectly involved in the property market - most of these jobs are gone, forever. Viable businesses like Roches Stores and the Berkeley Court Hotel closed because there was no point in continuing when they could just sell the land they were sitting on for vast profits. Rents on Grafton Street were more expensive than Rodeo Drive in Beverly Hills(*) - do you really think this had any rational basis?

(*)http://trifter.com/practical-travel/luxury-travel/world%e2%80%99s-most-expensive-shopping-districts/


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## Chris

Pat Bateman said:


> Aren't you all great?  Were you all short on the Irish property market or are you just wise after the fact?


If you call shorting the property market selling my house, then yes, I was short, as I sold and rented. 



Pat Bateman said:


> Most problems in relation to mortgages are income related (i.e. they've nothing to do with what's happened to the property market).  Salaries have been decimated and many people have been let go.  We as a society have a duty to help these people out.


Yes, and the fact that people put every last penny into a property they realistically couldn't afford, without making provisions for lower income , was a very stupid mistake. And I for one do not want to live in a society where the mistakes of some are paid for by everyone else. It's bad enough that the imbeciles in government have done so for the banks.



Pat Bateman said:


> Chris, selling your property during 2008 was complete luck, and for you to claim otherwise is an insult to our intelligence.


How on earth was it complete luck?!?!?!? By December 2007 the PTSB house price index had been down for 12 straight months. I decided to sell and by March had sold, despite other houses in the estate not selling. There was absolutely NOTHING lucky about this. 
Your feeble attempt of merely saying that I was lucky is completely baseless, and it is truly pitiable that people actually want to punish those that did not buy into all the celtic tiger nonsense and made financially wise decision that happen to have been unorthodox at the time.



Pat Bateman said:


> A national culture of owning one's own home...what a terrible concept.


No, there is nothing wrong with home ownership. But only when people can afford it. Which that last 3 years have proven to not be the case for a huge amount of people. 



Pat Bateman said:


> The self satisfied tone of some of the posts above is frankly disgusting.


Oh yes, I am self satisfied. I made exactly the right decisions, and I am most certainly not going to sit back and not point out where this country went wrong and why so many people are in trouble. People made stupid financial/investment decisions; sometime the truth hurts, but it is the truth nonetheless.


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## Protocol

Yes, I was one of those who continually said that house prices were too high, and that people were mad to borrow 100% over 30+ years.

I totally disagreed with any mortgage over 30 years, even 25 is enough.

I always said: "concrete, glass, steel and timber are not in short supply, so houses should not be this expensive".

It costs 90k to build a basic 3-bed semi, so the price shouldn't be too far away from that.


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## truthseeker

canicemcavoy said:


> It was perfectly obvious to anyone who had either half a brain or wasn't a vested interest than when average house prices are many multiples of the average salaries and we have building societies with TV ads guilt-tripping parents into funding their children's house, that we're in a property bubble.


 
This is hugely patronising. If it was that obvious then why do we have the situation we have now with many thousands of people struggling and unable to sell because of negative equity. Do they all have only half a brain? I know a number of professionals in this position, people with university degrees, are these the people with half a brain?


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## Pat Bateman

truthseeker said:


> This is hugely patronising. If it was that obvious then why do we have the situation we have now with many thousands of people struggling and unable to sell because of negative equity. Do they all have only half a brain? I know a number of professionals in this position, people with university degrees, are these the people with half a brain?


 
Agreed.

An utterly ridiculous comment.

Someone who bought a home for their family and then subsequently lost their job or saw their income decimated is a soft target for 'holier than thou' posters like Chris, Protocol and Canicemcavoy who seem to delight in the misfortune of others.  Well done for being wise after the fact guys. Your lack of compassion for your fellow man makes me sick. You got lucky. Others didn't. Simple as that.


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## canicemcavoy

truthseeker said:


> This is hugely patronising. If it was that obvious then why do we have the situation we have now with many thousands of people struggling and unable to sell because of negative equity. Do they all have only half a brain? I know a number of professionals in this position, people with university degrees, are these the people with half a brain?


 
Lots of people bought simply because everyone else was doing it. Just because you have a degree does not mean you're an expert in every field, or have any financial cop-on. I know plenty of very smart people who pay off the minimum on their credit card every month.

Perhaps the "half a brain" comment was unfair; I was letting my irritation with the utterly hypocritical whinging of people like Pat Bateman who have hogged the airwaves in the past 2 years in an attempt to get people like to pay for their investment mistakes the better of me. We have the comical spectacle of Matt Cooper using his radio show to urge a "NAMA for everyone", and his example of someone deserving of a bailout is a Sunday Independent journalist who, as she cries about the "prison" of her negative equity, boasts a lifestyle far outstripping those she expects to pay for his mistakes, even now spends "Saturday afternoon [...] hitting the high-end boutiques of Clarendon Street to find a new outfit for that night."

We had a situation where plenty of people bought houses at the limit of their financial affordability, getting 100% loans, ignoring the fact that the mythical "soft landing" they were being promised had never happened anywhere else, and that the ratio of average house prices to average salaries was completely out of whack compared to anything from the past 70 years in Western history. None of this was a secret.


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## Brendan Burgess

Folks, I think both sides of the argument have now been well articulated. 

We are descending into insults now, so i am closing the thread.


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