Finance Ireland will give mortgages customers with a credit blip.

Brendan Burgess

Brendan Burgess

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If you haven't a perfect credit record, most lenders will decline you.

Finance Ireland has set out their criteria for near prime customers

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And this is the impact on rates:

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It's an interesting way of doing it.

I wouldn't give out a loan of more than 70% LTV to anyone without a perfect credit record.

Although I suppose they get 3.9% for 90% LTV vs. 3.1% for 50% LTV, so maybe that does compensate.

Brendan
 
Was listening to this on the radio this morning Brendan quite interesting for myself as we are currently getting mortgage approval from a number of institutions.

Will they be following the same rules in relation to % of exemptions do you know?
 
From the lender's perspective, since it's so hard to secure possession of collateral in any case, the marginal impact on expected loss of having a poor credit history is probably not all that big.

You can see that baked into the rates.
 
NoRegretsCoyote said:
since it's so hard to secure possession of collateral in any case, the marginal impact on expected loss of having a poor credit history is probably not all that big.
Click to expand...

I would argue the opposite?

If I could repossess houses quickly, I would be less careful about to whom I lent money.
As I can't repossess houses at all, I would not lend over 70% to anyone with a bad credit record.

I would expect that, in general, people who have been in trouble before are far more likely to default when they are next in negative equity.

But there might be an argument that people who got into trouble and fixed themselves are showing a responsible approach.

Brendan
 
Brendan Burgess said:
I would argue the opposite?

If I could repossess houses quickly, I would be less careful about to whom I lent money.
As I can't repossess houses at all, I would not lend over 70% to anyone with a bad credit record.

I would expect that, in general, people who have been in trouble before are far more likely to default when they are next in negative equity.
Click to expand...

Perhaps. My guess is that the banks' models don't give a very strong correlation between borrower credit history and probably of default, although it is undoubtedly positive.

Lots of people with good credit histories default too, and the big cost is legal fees and the provisioning you have to hold against the arrears for a long time.

I am speculating here though.
 
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