AIB latest report "House price rises can't be sustained - John Beggs"

Re: AIB latest report

gearoidmm said:
The problem with a lot of these suggestions is that they should have been implemented years ago. It's just too late now. If the central bank waded in and insisted that banks stick to a policy of 3-4x salary multiples it would immediately cause an enormous crash which is in nobody's best interest. Given the state of the market, any direct intervention could be disastrous. True, it's possible that it will end in a crash anyway but we all have a vested interest in hoping that won't happen (whether we own property or not) because of the huge part that the construction industry currently plays in our economy.
Click to expand...

The problem is the longer we go without some sort of a price correction, the greater the impact of that correction when it eventually comes about. Yes the Central Bank should have done this four or five years ago but I bet that this same argument would have been made then too.

AIB never had the greatest reputation for owner occupier mortgages - quite a few mortgage brokers I spoke to said it was almost impossible to get a reasonable deal out of them - so I suspect they took a calculated risk that they wouldn't alienate that many potential customers by refusing to offer 100% mortgages.
 
Re: AIB latest report

The whole salary multiple thing is nonsense, largely due to dodgy P60s/Payslips. There is a whole industry around this.
 
Re: AIB latest report

the central banks main tool in ensuring financial stabilty was taken when we joined euro,they are a toothless tiger nowadays although they could have tightened credit through changing margin requirements back in say 99/00 when we were locked into euro and property was booming then and inflation was close to 5%,again another example of no foresight and future planning in this country.
 
Re: AIB latest report

Glenbhoy said:
That indeed may well happen - I would prefer if it did'nt (as I imagine we all would - I don't fancy moving to Krakow to pick mushrooms).
Click to expand...

Agreed. I strive to interpret the facts as I see not as I wish to see them. Just because I hold a particular interpretation of where property market is headed doesnt make me the problem. The problem is the problem. It is caused by external forces (ECB) combined with a political system that focuses on the short-term at the expense of the long-term.

There will be a golden window of opportunity to short AIB et al. and I plan to time it well. Does it make me a bad person if I'm preparing my moment to short the hell out of the Irish banks and make a mint???
 
Re: AIB latest report

With average prices now reaching 11 times the average industrial income you have to wonder how far credulity can be stretched. I know that in many cases the information that the banks use to calculate affordability is fictional construct. The brokers know how the system operates, the banks know the brokers know and the dogs on the street know that they know. The use of one off inflated wage slips provided by employers, fictional bonuses, rent a room borrowed deposits etc. In the short term it serves no ones interest to blow the whistle on widespread fraud because we are all compliant and we all benefit, through a booming economy. If it were possible it would be in the national interest to maintain this debt driven fantasy. But needless to say some ‘unforeseen’ external catalyst will materialise to deliver a sobering smack down.

Gnashing of teeth and much wailing will have to be endured I’m afraid, some feigned some real.

[broken link removed]


[broken link removed]
 
Re: AIB latest report

dan mc laughlin in todays bank of ireland property review says increases will slow to 3% in 2007 or the same as inflation so we have the bnak of ireland saying property will not increase in real terms next year! why rush to buy now then??
http://www.rte.ie/business/2006/0412/houses.html

central bank warnings of increasing risks of sharp correction in prices and warning about decreasing productivity in economy
http://www.rte.ie/business/2006/0412/centralbank.html

its starting to unwind i think!
 
Re: AIB latest report

walk2dewater said:
There will be a golden window of opportunity to short AIB et al. and I plan to time it well. Does it make me a bad person if I'm preparing my moment to short the hell out of the Irish banks and make a mint???
Click to expand...
Not at all, I did'nt see George Soros shed too many tears back in 1992 - as a keen spread bettor myself, it takes balls to short anything!!
 
Re: AIB latest report

i'd consider a cfd/short sell on irish financial instituitions on the first signs of weakness which i feel could be in next 12 months. watch the markets for indications of slowing housing market.
 
Re: AIB latest report

From that RTE on the Central Bank report.


On housing, the report said the current level of activity was 'beyond what is required' and a contraction would be needed 'at some point'. It described the 11% annual increase in house prices in February as worrying. It said that though a soft landing was the most likely scenario, the acceleration in growth increased the risk of sharp falls in the future
Click to expand...
.

Bertie, get a grip on these doom mongers, they are way off message.:)
 
I think its very telling also that AIB are sellers of property in the current climate.
 
I still think we are not quite at a top.

The vast majority of FTBs will continue to buy at any price until they simply cannot arrange a repayment schedule that fits their income. Price means nothing to most FTBS, it's all about managing the monthly lump. We MAY yet see 50yr mortgages, 125% loans, exotic interest deferability, government intervention, etc. to fuel the bottom of the pyramid.

The vast majority of 'investors' will continue to buy until they see from direct personal experience that capital appreciation is over. That is, a good year or two of PERSONALLY CONFIRMED zero capital appreciation before the penny drops. Landlords are subsidizing tenants, they just dont realise it yet. That point is still a way off.

Prices could go much higher than today before either of these points is reached, and bullish sentiment could continue even with "one engine" working. Remember there is nothing 'rational' about price action in this market, sentiment is still vastly in favour of buying. "Rent is dead money" and "long term capital appreciation" are still by-words, not yet cruel jokes.
 
walk2dewater said:
I still think we are not quite at a top.

The vast majority of FTBs will continue to buy at any price until they simply cannot arrange a repayment schedule that fits their income. Price means nothing to most FTBS, it's all about managing the monthly lump. We MAY yet see 50yr mortgages, 125% loans, exotic interest deferability, government intervention, etc. to fuel the bottom of the pyramid.
Click to expand...
I don't think this will stop them. Unless the banks stop giving the FTB money, house prices will rise. If they cannot meet a repayment schedule, they would consider adding 10 years on to the term, or as you say, use an exotic method of interest repayment. We may even see the return of the Endowment mortgage (where buy one invests capital portion of mortagage into shares and pay interest off as normal)
 
But you won't need a top in house prices for shares of [unmentionables] to top out The stock market is always ahead of macro events.
 
walk2dewater said:
I still think we are not quite at a top.

We MAY yet see 50yr mortgages, 125% loans, exotic interest deferability, government intervention, etc. to fuel the bottom of the pyramid.

W2dw:
50 yr mortgages are unlikely because you would have to be 15 when taking them out. The mortgage has to be repaid by your 65th year.
Although Irish youth are really getting into property I think 15 yr olds still have more important things to do.
Click to expand...
 
walk2dewater said:
I still think we are not quite at a top.
Click to expand...
I'd agree with this as well.

From a survey by IIB/ESRI they've revealed that 75% of people know what they are going to do with their SSIA and of those, 10% are planning on putting it into Irish property. I know that they've got a vested interest in spreading news such as this but the figures aren't that remarkable to be unbelievable.

http://www.finfacts.com/irelandbusinessnews/publish/article_10005489.shtml

Since there are 1.1 million people with SSIAs this would mean that 80,000 people would have a wad of cash burning a hole in their pocket next year and they are already thinking about buying property in Ireland with it. Whichever way you look at it something like that is not going to keep prices down in the short term.

As gearoidmm said it's probably too late now for a lot of the things that could have been done to prevent the current situation. The only option for the banks to ease their way through this without causing large shocks is to change what they're doing internally without too much publicity.

By their nature people buying BTL are a risk to the market since they can turn on a sixpence if their losses mount up and could flood the market with houses. If the banks tightened up lending for that element but still kept the money flowing for owner-occupiers it might be possible to reach the "soft landing" that the banks have been alluding to.

Whether this can actually happen or not is obviously just pure speculation though. Any number of outside factors such as interest rates, property markets bombing in other countries etc. all have there part to play in this complex game.
 
Has anyone else noticed that there a few threads on the property investment section recently from BTL's asking if now's the time to get out? We also have AIB pronouncing that BTL is unlikely to make sense in the immediate future, allied to a helluva lot more negative sentiment in all of the various media outlets recently. Could this be a sign that we are actually going to peak a bit earlier than predicted, maybe the SSIA boost won't be quite the catalyst that everyone assumed (in any case I felt that most buyers in the fast few months had already factored these into their buying power and were possibly trying to beat the 'SSIA boom' that's been so widely predicted). The very fact that such a small rise in interest rates (although in percentage terms it's been a 25% increase) can begin to cause such re-evaluation may indicate that we've peaked?
 
darex said:
walk2dewater said:
I still think we are not quite at a top.

We MAY yet see 50yr mortgages, 125% loans, exotic interest deferability, government intervention, etc. to fuel the bottom of the pyramid.

W2dw:
50 yr mortgages are unlikely because you would have to be 15 when taking them out. The mortgage has to be repaid by your 65th year.
Although Irish youth are really getting into property I think 15 yr olds still have more important things to do.
Click to expand...
yeah you're right. But maybe you could leave it to your kids ;)
[I can see the ads now, "get them on the property ladder before they're even born!"]
I guess what I'm saying is that there are many creative ways left to massage a loan to arrive at an "affordable" monthly lump.
Click to expand...
 
Ah the 100 year mortgage, the holy grail of the banking industry. Why stop at a hundred years?, what about a thousand year mortgage or a mortgage that runs until the day that the Sun turns super nova.

I don’t think that Irish banks would go this far, but if you start reading stuff like this (see below) in the Irish Times property section, be afraid.


100 Year Mortgage Program Lets You Buy a House With No Bank Qualifying!

All the joy of home ownership are yours immediately without; producing bank statements, credit or FICO score requirements, debt ratios, income tax returns or financial statements!

Imagine the pride you will feel announcing to your family, friends and co-workers the great news that you finally bought a house!
See their warm, admiring smiles as you walk them through your new home or investment property. Catch their approving nods and winks!
Click to expand...
:rolleyes:

[broken link removed]
 
You must log in or register to reply here.
Back
Top