I agree. This is a speculative market its important to remember that. Many people bought because prices were going up when prices stop going up many people will stop buying, the market will revert to fundamentals. But the fundamentals will be altered by the fact that the housing market has panned, and a US slowdown will be underway.
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I agree. This is a speculative market its important to remember that. Many people bought because prices were going up when prices stop going up many people will stop buying, the market will revert to fundamentals. But the fundamentals will be altered by the fact that the housing market has panned, and a US slowdown will be underway.
CelloPoint
Registered User
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Ok, shake reciprocated. We'll put the branding irons away for another day, that is, for when the blame game starts.
mmm, this is something they did in Japan back at the hight of it in the early-mid nineties (maybe they still do)..... a multi-generation mortgage: you buy the house, and your kids inherit your debt, and repay the remaining 20 or 30 years, or whatever it was originally set at
Exactly my sentiment. I just don't think recent purchasers can have grasped the enormity of their commitment - it's one thing if rents were on a similar footing and there was therefore little choice - but what were/are they hoping for ? A soft landing, an interest rate plateau and everything ticks on as the Celtic Tiger pads through the next 30+ years ?
Now if I were a lender, I wouldn't make a big deal of pointing this out to them... Nevertheless I can already imagine a scenario of compensation in the future, either from the banks or the taxes of those who DIDN'T take on such a monumentally irresponsible gamble.
Well if they bought today...
345K @ 5.23% for 30 years.
Paid off loan.
€15,445.85
Interest paid (money rental fee
):€52,984.03
the banks must love these guys.
http://www.jeacle.ie/mortgage/
exactly, I was looking for a wikipedia reference for it but no joy!
Absolutely but who doesn't make a stupid investment mistake every now again? I bought Eircom shares for god sake - and a house! Even W2DW gets it wrong on occasion. I just hate when posters on this thread seem to gloat over what will be unbearable misery for many people. Okay, the bears have had to put up with unbelievable smugness from many quarters but lets not lose the run of ourselves.
liteweight
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The general opinion on this thread seem to be that it's all about capital appreciation. It's not. For the next 3 years, that couple have someplace to call home, where they have the freedom to do as they wish, within limits imposed by society. There are not subject to a landlord's whims for a start. I don't know why more renters here aren't worried about where they are going to live, given that all of us investors are supposed to be selling up fortwith!
Cellopoint, you might yet find yourself living in Clondalkin ( I believe that area was the target of your last disparaging remarks on AAM). If there is no capital appreciation to be expected, and IR rising, landlords will raise rents to cover themselves. You can huff and puff all you like but they are entitled to do this and will do it.
Granted, that couple will not have made much of a dent in the mortgage after three years, but renters will have stood still. A little gain is better than nothing. After 5 years, they are in a better position all round. If they fall on hard times, they have a 2 bed which they can take advantage of by renting one room via the rent a room scheme and pay no tax. I'm not saying I agree with their purchase....but they do have options which most renters don't.
M
MadPad
Guest
Not sure I agree with this....
If theres a serious crash, (and thats not a certainty btw) the houses won't disappear, they will still be there, probably owned by the banks who will have to offload them, what about the empty houses discovered during the census?
Its really all down to interest rates and where values go. If prices stay much the same (drop 10%, yeah a few years renting will have meant no negative equity) If they drop 40%, well thats another story, it'll be like a neutron bomb, the houses will stay but the owners will be hit.. they will probably end up as tenants of the bank. And if they stay the same, the mortgage holder is the winner...
Time to get out the popcorn and sit back....
P
plaudit
Guest
Assuming prices keep rising surely?
If the price stays the same they will have about 80K behind them by saving 10K per year in mortgage repayments and further savings in insurance, furnishings, maintenance fees etc.
A price drop does not bear thinking about.
I agree that some people around here seem to rate every home purchase as if it were an investment, it isn't. Having said that, these guys are pushing the boundaries of what they can comfortably handle, and that ain't smart.
Ah yes, you'll be selling up forthwith, but who'll be buying? Not to mention that Joe Soap, the amateur investor, will be eaten alive when the big boys in construction pull the plug on all their immigrant tenants.
Landlords don't set the rent, the markets do. No point asking for 1500 a month when the apartment next door is up for 1200. Unless landlords form their own cartel, the landlords who bought 5-10 years ago can and will undercut those who bought in the last 5 years. You can ask for whatever rent you want, doesn't mean the market's gonna cough up for it.
interesting tangent .... Foreclosure. Its something which banks in ireland VERY rarely do, which is great. The number of foreclosures has been in single figures for years.
In the UK the banks foreclose much much easier and quicker.
It will be interesting to see the Irish banks reaction to any inability of FTB's on already over-stretched mortgages to repay. Surely it will (unfortunately) be more evident in the coming years.
W
walk2dewater
Guest
If a lot of empty “investments” come on the market, then rents are going to get v soft indeed. If these properties don’t get sold, then the holders may decide to rent at any price rather than leaving empty. I.e. “No more capital appreciation so best get €400/mth for that idle 1-bed apartment in Cork street”. This would trigger a game of undercutting existing landlords.
Excellent, maybe I can negotiate even cheaper rent next year J
CelloPoint
Registered User
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Isn't a 100 year mortgage better than an interest only mortgage?
An interest-only mortgage is an infinite term mortgage - the ultimate in inter-generational mortgage lending (even worse than Japan).
W
walk2dewater
Guest
An infinite interest-only PPR mortgage is RENT, plain and simple. The bank buy the house on your behalf and rent it to you. You'll never own a single brick of it.
P
plaudit
Guest
Matt Cooper has just mentioned that the housing market appears to have taken a sudden dive and will be discussing it on the last word soon.
Going back to the title of the thread, whether or not a crash actually develops, SENTIMENT is on the move......
B
bren2002
Guest
I wouldn't have thought that the Last Word was main stream. Wait until Adrian Kennedy starts talking about it!!
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plaudit
Guest
Not quite. Suppose the house costs 300K and you pay interest only, in 10 years time the outstanding debt will still be 300K regardless of market conditions in 10 years.
Eventually, maybe after 30 years, you should be able to buy the house for a weeks wages, inflation and all that.
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