We need to get a march going...

So we inflate property prices so that the banks losses aren't as great....but on the other side of that equation, people have to take out higher loans/use more cash reserves to buy/rent accommodation. Thereby they have less money to spend on a weekly basis in the real economy.
It's simply nuts whats happened here in the past 4 or 5 years. Another shambes

BoI weren't state owned and yet their repossession rates mirror the state banks. They'd have to deal with all the populism in the Dail/media/etc if they did make a move on long term arrears....I'd even imagine Noonan having to 'call them in' for a chat if they did proceed. Joke
 
The 'shambles' was created by several inter-related phenomena: pro-cyclical economic measures during the boom (pouring petrol onto the fire e.g. 100% mortgages when prices were already rapidly appreciating in value), bank bonuses for senior management being tied to quantity as opposed to quality of loans during the boom, 'lax' (permissive) regulation at the time, historically low interest rates etc.

I'm not so sure if what has happened since could be described as a 'shambles' - more like damage limitation.

I'm not sure if house prices are being artificially inflated or if they are returning to 'actual' levels. Besides, the CB's oft criticised policy re. 20% deposit seems to be working, as house price inflation appears to have stabilised for now.

I'm not so sure if all of the money that would have been spent from the 'cash reserves' you mention would have necessarily found its way into what you term the 'real economy'. After all, you've described yourself as being prudent 'no holiday, old car, saving etc'. The paradox is that overly prudent people aren't any use to an economy that is struggling to re-start itself after a crash.
 
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epicaricacy said:
The link between lack of enforcement / fewer respossessions and high SVRs is overly simplistic. It reminds me of the other flawed hypothesis - that if every defaulter was thrown out, that it would magically free up the market for first time buyers / people trading up.
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Surely the link between policies that are designed to discourage or delay enforcement and high SVRs relates to the fact that these policies encourage others to default (moral hazard) and discourage new entrants to the lending market leading to an artificial constraint on competition?

Also, from a societal perspective does it really matter who buys a repossessed property as long as the accommodation remains available?
 
Sarenco

Who are these international banks (putative competitors) that would magically jump in, if our arrears / repossession issues were settled in the morning? I believe it's a flawed assumption to heavily link the lack of competition from foreign banks to the arrears / repossession crisis. I'm sure it doesn't help, but I imagine other factors are more important, such as: lack of residential construction activity, their own balance sheet problems, cost of entry to the Irish market, the fact that we had one of the worst - if not the worst - housing crash in modern times etc.

Re. 'Societal perspective' and 'accommodation remains available' - where are those that can't (as opposed to the minority that 'won't') afford their mortages going to live? We have a serious homeless crisis that is already out of control. 10 year waiting lists for social housing. 1% of Dublin landlords accept the 'rent supplement' - if you don't believe the figure, go on to Daft.ie or MyHome.ie and try and find a single property in Cork or Dublin that accepts 'rent supplement'. Joan Burton announced recently that she had decided against raising the rent supplement ceiling as she believed that it would lead to a rise in rents for eveybody - even though 99% of Dublin landlords won't accept rent supplement.
 
It's also illegal to break a red light or to drive above the speed limit - doesn't seem to deter people.
 
I have a friend who has not paid a cent in the last 6 years on his home or on 4 Investment properties. One of the investment properties has just recently been sold. The receiver has taken possession of the other 3 in the last 4 months. He feels hard done by and in the next 6 months or so the banks will be getting a court order to take possession of his house. There is over a €1 million in negative equity. Ok he cannot afford any repayments now but when he could afford some he did not pay either. He was able to frustrate the banks himself and he is not overly intelligent. I consider this ridiculous. The "Gorse Hill squatters" are heroes of his now.
This has cost the bank a fortune in fees and lost interest which in turn is being passed on to past and future holders of variable rate mortgage holders. There is no excuse for this type of bulls..t thinking. The country is full of this type of thinking and it is time we woke up for the sake of those who are currently paying/those who could manage if their variable rates were even 1 and half % lower and future mortgage holders. Maybe if repossession was easier to enforce it would also wake up the strategic defaulters.
You can campaign all you like but to exist banks have to make a profit and while a lot of people are clamouring for political "interference" in setting interest we have to be careful about this. Politicians are populist and coming up to an election they will be more so.
I agree that all political parties are against repossessions as it is populist. It is difficult to get it across to people that the lack of repossessions and the cost and length of time to enforce same is a big factor (not the only one) in the higher mortgage rates. Do'nt wait for any politician to explain this even the ones who know this.
There are more people suffering because of the populist thinking of "no repossessions" than are benefiting from the current method so maybe there should be a bit of clamouring for a two pronged approach. Easier repossession for lower interest rates.
Why is there not a foreign Bank coming in to the country and setting up an office here if it so profitable. Answer. The repossession problem.
 
epicaricacy said:
Sarenco

Who are these international banks (putative competitors) that would magically jump in, if our arrears / repossession issues were settled in the morning? I believe it's a flawed assumption to heavily link the lack of competition from foreign banks to the arrears / repossession crisis. I'm sure it doesn't help, but I imagine other factors are more important, such as: lack of residential construction activity, their own balance sheet problems, cost of entry to the Irish market, the fact that we had one of the worst - if not the worst - housing crash in modern times etc.

Re. 'Societal perspective' and 'accommodation remains available' - where are those that can't (as opposed to the minority that 'won't') afford their mortages going to live? We have a serious homeless crisis that is already out of control. 10 year waiting lists for social housing. 1% of Dublin landlords accept the 'rent supplement' - if you don't believe the figure, go on to Daft.ie or MyHome.ie and try and find a single property in Cork or Dublin that accepts 'rent supplement'. Joan Burton announced recently that she had decided against raising the rent supplement ceiling as she believed that it would lead to a rise in rents for eveybody - even though 99% of Dublin landlords won't accept rent supplement.
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Hi epicaricay

It is certainly true that there are other barriers to entry but it is surprising that we have not seen any new entrants to the mortgage market given the juicy rates on offer.

I don't understand the argument that links loan enforcement with homelessness. A property doesn't vanish because it is repossessed by a lender - it simply becomes occupied by somebody who can afford it. The previous occupants will have move to somewhere they can afford. There is no net change to the available accommodation that existed prior to the repossession - people simply change positions.
 
Sarenco said:
Hi epicaricay

It is certainly true that there are other barriers to entry but it is surprising that we have not seen any new entrants to the mortgage market given the juicy rates on offer.

I don't understand the argument that links loan enforcement with homelessness. A property doesn't vanish because it is repossessed by a lender - it simply becomes occupied by somebody who can afford it. The previous occupants will have move to somewhere they can afford. There is no net change to the available accommodation that existed prior to the repossession - people simply change positions.
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I don't believe it's surprising at all. In addition to some of the barriers to entry I mentioned above - it's important to remember that the juicy rates which yield such 'profits' are only possible once the ECB continues to supply cheap credit to our banks. Once the European situation normalises, the banks won't be able to make 'hay' any longer, as the cost of credit to the banks will increase. No major European bank - many of which are already limping from boom mistakes - would choose to enter a market under such uncertain conditions.

Re. the link between the arrears crisis and homelessness and the idea that 'people simply change postions' - the reality is that this can't happen for many people. Let's take an example of a family of 4 who face losing their home by repossession in Dublin or Cork, due to unemployment. They are in receipt 372 euros per week. The parents look at Daft.ie and Myhome.ie every day, using the rent allowance filter and find that there are no properties available. Suitable accomodation costs at least a 1000 euros in Cork and significantly more in Dublin. How can these 'people simply change positions' - when landlords refuse to accept rent supplement and even if they do, the Dept of Social Protection will not sanction rent supplement as the (market) rent is above their cut off limit. Their distress is compounded by their community welfare officer informing them that there is a 10 year waiting list for social housing. Rather than 'simply change postions' the family will 'simply' become homeless. When faced with such a terrifying vista, I'm not surprised that so many families are choosing 'dig in'.
 
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You won't get many on a march about SVR because unlike the water march, a lot of people do not have mortgages
 
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There are more people suffering because of the populist thinking of "no repossessions" than are benefiting from the current method so maybe there should be a bit of clamouring for a two pronged approach. Easier repossession for lower interest rates.
Why is there not a foreign Bank coming in to the country and setting up an office here if it so profitable. Answer. The repossession problem.[/QUOTE]

How can you be so sure that 'there are more people suffering because of populist thinking of no respossession than are benefiting'. I don't believe this to be case. Throwing many thousands of families onto the street when the social housing infrastructure isn't there to cater for them and where rent supplements aren't high enough to afford alternate accommodation would cause significantly more hardship than the stress involved for people paying an extra 1.8% SVR.

BTW, in normal circumstances an SVR of 4% would be the norm anyway. One must remember that the ECB base rate was 3.5% a few years ago. If the high SVR is forcing people into arrears - the awful reality is that, ceteris paribus, these people will not be able afford to stay in their homes when the ECB inevitably starts to raise its base rate. The corollary of the argument is that the people that are being pushed into arrears by the 'relatively' high SVRs can only afford their homes in times of historically / articifially (temporary) low base ECB rates.

There are several barriers to entry as I've already explained. The idea that 'the repossession problem' is the only reason detering foreign banks from entering the Irish market is quite simply not true and is just another example of the 'populist' thinking that you apparently abhor.
 
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Delboy said:
I'm not sure what to say to that!!!
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The point I was making is that due to the severity of the crash, the supply shortages in large urban centres and the over supply in rural areas, it is very difficult to establish if houses are currently underpriced or overpriced. It's quite simple really.
 
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epicaricacy said:
Throwing many thousands of families onto the street when the social housing infrastructure isn't there to cater for them and where rent supplements aren't high enough to afford alternate accommodation would cause significantly more hardship than the stress involved for people paying an extra 1.8% SVR.
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Just because there is a repossession, it doesn't automatically translate as a need for social housing. Unemployment is now down to less than 10%, prob much lower in urban areas. A lot of folk could afford rents in commutable areas as opposed to unmanageable Tiger era mortgages in leafier suburbs.
 
Delboy

What have you to say about the other points I've made re. the other more significant barriers to entry to the Irish market, how prudent people are often a drag on economic recovery, the fact that the central bank's policy is actually working by depressing property inflation, the fact that a 4% SVR was the European norm prior to the current crisis and will be the norm once again when the current European crisis abates, the fact that just 8% of the Irish housing stock is social housing, the problem with rent supplements etc.

Re. your 'opinion' linking unemployment figures with the availability of affordable housing in the commuter belt, what evidence are you providing to support your claim?

I take the current unemployment figures with a pinch of salt. After all, the following are excluded from this figure:
People who go back to college under a BTEA or VTOS scheme, people on the Back to Enterprise Allowance (in receipt of full SW for first year, 75% in second year), people in part-time positions, people on low / zero hours contracts, people partaking in Community Employment Schemes etc. If all of these were included - the percentage of people in direct receipt of state aid and consequently struggling to survive is much higher than 10%.

Furthermore, your point re. defaulters residing in the 'leafier suburbs' is just another example of an emotive statement that conveniently ignores reality.
 
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I'm afraid there are so many 'emotive' points made above and in other topics around this subject by yourself, that i don't see any point in responding in detail. Plus it was such a nice day, I don't want to get myself into a bad mood :p
 
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