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IT’S NOT QUITE a return to the 100 per cent mortgage, but the 90 per cent mortgage is now being offered to potential Irish homeowners.
KBC Bank today began actively promoting 90 per cent mortgages. The lender says the move is being made to meet increasing demand from first time buyers and people trading up.
According to the bank: “For loans up to €750,000 KBC is increasing its offering from an 80% maximum loan to value to a 90% loan to value”.
They are not on their own in offering such loans to certain candidates – other banks currently making the same offer in some circumstances include Bank of Ireland and Ulster Bank.
The willingness of lenders to allow buyers high levels of mortgage credit was one contributory factor leading to the property collapse – some homeowners now burdened with debt took out 100 per cent loans at the peak of the boom. (Remember this ad from Bank of Ireland?)
KBC’s Head of Products Edward Dylan says that that in contrast with similar mortgages offered elsewhere in the past, the bank was placing a major importance on the affordability of the loan for prospective buyers, saying that it would be the “primary metric” they looked at.
Speaking to TheJournal.ie he said bank officials would closely examine the stability of any candidate’s employment situation, along with other factors before signing off on a deal. But he said there would be no “dramatic amendments” to qualifying criteria for buyers seeking a 90 per cent mortgage, as opposed to an 80 per cent one.
Economist Derek Brawn – who published a book predicted the collapse of the property market – says a maximum rate of 85 per cent would be more appropriate. Speaking to TheJournal.ie, he said tougher rules were needed to promote a more reasonable lending climate.
A rate of 90 per cent may make sense in a market like now with depressed prices but we need to get to a situation like Canada where 85 per cent is the maximum. A good rule of thumb you have people saving a 15 per cent deposit.
Brawn says a change to the law requiring a prospective buyer to put up a set proportion of the asking price would lead to more equity in the market, and create greater stability, making conditions more attractive for banks to begin lending.
The latest Residential Property Price Index from the Central Statistics Office showed some positive signs, with housing prices continuing to fall, but at a slower rate than recent years.
There was a 1.2 per cent decrease nationally in the year to April. However sales for the month showed there was an average price increase of 0.8 per cent, compared to a fall of just over 1 per cent in April of last year.
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I suppose the difference now is its 90% of a more realistic house value, compared to the madness of the property bubble we had!
Ha Ha
KBC bank the Artist formerly known as IIB Bank speaks.
Is this a joke??
Almost a 3rd of KBC’s mortgage customers are in arrears
and God only knows how many more are in deep mortgage distress.
How about working out something with your existing distressed customers who are 80-90% in negative equity KBC??
Yes the loyal ones who paid you hundreds of millions if not billions of Euros and Punts over the past 10-15 years KBC??
The ones that you take 80-90% of their income every month, a fact that you choose to ignore KBC??
“KBC’s Head of Products Edward Dylan says that that in contrast with similar mortgages offered ELSWHERE in the past, the bank was placing a major importance on the affordability of the loan for prospective buyers”
ELSEWHERE!!!
ELSEWHERE???
HA HA HA
FROM THE BANK THAT USED TO ADVERTISE ON RTE’S AERTEL
“KBC THE BANK THAT BROUGHT THE INTEREST ONLY MORTGAGE ON THE FAMILY HOME TO IRELAND”
Interest only mortgage on the family home!!!
Talk about throwing dynamite on the fire!!!
Rubbish!!!
What about the families that you currently squeeze the financial life out off every month KBC???
As your boss John Reynolds double jobs as head of The Irish Banking Federation???
http://www.ibf.ie/gns/media-centre/news/12-01-31/New_President_Appointed_at_the_Irish_Banking_Federation.aspx
The Bankers Millionaire Boy’s Club that cares nothing for it’s distressed customers???
The Bankers Millionaire Boy’s Club that choses to ignore it’s distressed customers???
CLEAN UP THE MESS THAT YOU MADE KBC.
CLEAN IT UP BEFORE YOU CREATE A NEW ONE.
CLEAN IT UP WITH SOME DUTY OF CARE AND RESPONSIBILITY TO YOUR LOYAL CUSTOMERS.
TOO MANY FAMILIES HAVE BEEN DESTROYED BY THE LIKES OF YOU KBC.
TOO MANY LIVES HAVE BEEN STYMED AND ENDED PREMATURELY KBC.
HOW ARE 90% MORTGAGES GOING TO HELP THE TENS OF THOUSANDS OF YOUR CUSTOMERS THAT ARE DROWNING IN DEBT????
TELL ME????
What exactly do you want them to do? Repossess?
Simple solution, if the person that borrows the money defaults then the bank can only reclaim the property and do not have any other claim on the individual.
No Conor
I do not want them to repossess.
There are over 150,000 mortgages in arrears in Ireland and God only knows how many more heading there.
KBC and all other banks , should be forced to work out a realistic, long term sustainable solution with each of their financially distressed customers.
Instead of throwing this 90% mortgages available “we are open for business” spin and propaganda out there for “new” virgin “customers”.
For example.
Someone took out a €250,000 30 year mortgage on a €300,000 with KBC 10 years ago and paid them €100,000-€150,000 in mortgage payments over that period, through good times and bad.
Through the recklessness of KBC and other banks, that persons house drops in value to €100,000.
That persons income then has been slashed through taxes to bail out Irish banks, and increased interest rates on their KBC mortgage etc.
So unfortunately after scraping along for 2-3-5 years the person goes into arrears on their KBC mortgage and can only pay a portion of their monthly mortgage payment.
So now KBC want to spend tens of thousands of Euros on legal fees to repossess this customer’s house, evict their family, make them homeless and try to publicly disgrace them.
And then
Turn around and give someone else a 90% mortgage to buy this unfortunate family’s repossessed house for a song.
KBC were more responsible for creating this travesty than their distressed customers were.
KBC should be forced to work something, long term, sustainable and practical out for their 10′s of thousands of distressed customers instead of trying to pretend that they do not exist, whilst funding speculators to buy up these families homes.
Be it debt write-downs or write-offs who cares, bring it on!!!
It’s far better than having to continually watch the disgusting financial and phycological torture that these reckless/corrupt heartless banks (with full government support) are inflicting on distressed families.
Please do not forget that most homeowners in mortgage distress only wanted a basic home to raise a family in.
Please do not forget that most homeowners in mortgage distress want to pay their debts.
They paid what they could when they could, unlike the swinish bankers.
Im guessing you’ve had some misfortune Harry with your mortgage the last few years. Agreed with what you’ve said.
I might sign up for one of these 90% mortgages and snap up a good deal in the distressed property market! Where about’s do you live Harry? Is it a good area? PM me some pics
You do realise Harry that banks borrow money to lend to customers and they will not have money to pay back these debts unless the customer pays it back. If they do massive debt write downs to all customers in arrears, the banks would go bust and will have to be bailed out even more.
KBC is a Belgian bank which has not been bailed out by the tax payer and has no obligation to the Irish government. They are a private business trying to recoup as much of their losses as they can and look for new business in order to sustain it’s operations in this country.
It’s not a charity…..
very true and well put, harry
Unfortunately, Harry’s views on lending, negative equity and debt write-off are all too common and indicative of the general lack of personal responsibility in Ireland.
If you borrow money, expect to have to pay it back. What does the current value of your house have to do with anything? If your house was now worth twice the price you paid, would you expect your mortgage provider to double your mortgage?
Very very many people didn’t borrow every penny they were offered. They didn’t buy 3, 4 or 5 bedroom houses when all they needed was 2, 3 or 4 bedrooms. They didn’t add the price of two new cars to the mortgage. They didn’t pop on an extra 40k for landscaping.
Why do you think the prudent should pay for the reckless?
From a logical business standpoint Conor.
If you were a bank/business Conor.
Would you spend €10-€15 thousand on legal fees evicting a family that paid you €100,000 – €150,000 over the past 5-10 years on a property that was only ever really worth €100,000 at best???
Especially when that family can’t afford to pay the €1500 per month mortgage payment but can still comfortably pay €800-€900 per month???
Why would you fork out money to evict this family, throw them out in the street, make a total pig of yourself in the media, just so that you can give another family a 90% mortgage to collect only €400-€500 per month???
Would you not do a deal with the lad who gave you €100,000 – €150,000 over the years and who is still paying what he can??
Will the new customer be as loyal???
Over the past 25 years I have dealt with 90% of the banks in Ireland
I recently spoke to a KBC regional manager.
The manager said that they had tried this back in 2010 when they pumped a few hundred million in mortgages into the Irish market to try and put a false floor in it, he said the scheme failed miserably and many of these mortgages are in arrears now also.
Like Ulster Bank, First Active, Halifax and Bank Of Scotland Ireland, Due to their own recklessness KBC have been bailed out by their home country’s government
http://www.forbes.com/2008/10/27/kbc-banks-belgium-markets-equity-cx_ll_1027markets12.html
not to mention the bailout that they receive from their Irish customers each month through knee jerk increases to mortgage interest rates.
It looks to me like KBC are putting this propaganda out there, to pretend the everything is “O.K”
and pretend they “don’t have tens of thousands of distressed customers in arrears”.
I’d say their chiefs in Dublin a feeding the bosses in Belgium with a load of BS, that “everything is going well in Ireland”
“sher look we are opening 2 or 3 brand new branches” (generally doing up the old ones)
But just like in the case of Halifax, Bank Of Scotland Ireland, First Active and now Ulster Bank
the Belgium Government will call time on this “lets play shops” with taxpayers money charade.
This 90% KBC mortgage lark is just another load of spin to pretend that they are “here for the long term” if that were indeed the case, then tell me why are they treating their existing loyal customers with such contempt???
@ Robin
“Why do you think the prudent should pay for the reckless”
Maybe you should ask the banks that one.
Were they not the most reckless?
Yes Adam.
Over the past 25 years or so.
I have been dealing with banks, and know many people within our banks.
And always what I have found is that, what they spin in the media is totally contrary to what is going on inside the bank itself.
@ John F
Maybe you should email KBC’s chief John Reynolds at the IBF
info@ibf.ie
his members are apparently planning to repossess 150,000 (and counting)distressed homes.
Harry your problem is that you can’t look at things from a macro perspective. It actually makes no business sense to let some off their mortgages and not others and also do what you advocate and not continue lending in the future.
If some people dont have to pay back what they borrowed, what’s the onus on the rest to do the same?
Also if they dont look for new business, how will they safeguard the present and future livelihoods of those that work there?
Where do you want to see things end for the 150,000 families in mortgage arrears Conor?
What would you like see happen to them?
What is your solution?
You don’t seem to be making your standpoint very clear.
There are a lot of other places where KBC can look for “new” business instead of looking in a housing sector that the helped to destroy.
As I said above they gambled hundreds of billions of Belgian taxpayer’s money in 2010 when they tried to manipulate the Irish housing market.
The primary function of a home is to provide shelter for a family and not a financial instrument to be recklessly traded on the stock exchange.
Maybe it’s time that KBC looked elsewhere for “new” business, before throwing away more taxpayer’s money and making fools of themselves.
Actually Harry I see them getting their homes repossessed, any money made above what they owe being given to them then renting a house that they can actually afford.
I don’t think the debt should follow them in the event of repossession.
Sorry typo
a housing sector that they helped to destroy.
Harry it’s a bank not a charity.
Owning a house is a privilege not a right.
“Any money made above what they owe”
Do you mean net of legal fees, arrears,interest, penalties, etc?
Most of them can afford the house that they live in based on its true value.
If you don’t think the debt should follow them,
and thus they are left with a clean credit report,
then why would their existing bank or another bank not provide them with a new sustainable mortgage on their property,
leave them in their home,
not waste a fortune on legal fees,
and even make a profit?
Why do the banks currently lobby against such a system?
Since you do in fact, see all 150,000 families (and counting) having their homes repossessed.
Can you let me know a few things?
(1)How long do you think it will take to repossess these 150,000 homes?
(2)How much do you think it will cost to repossess these 150,000 homes?
(3)Do you think that the banks (local and foreign) have the funds to carry out these repossessions?
(4)How many more homes do you think will be repossessed, due to the effect of these initial 150,000 repossessions, plus the effect of immanent rising interest rates taxes etc?
Yes Conor!
Owning a house is indeed a privilege not a right.
However.
Banks do in fact have to abide by rules, regulations and they must have a duty of care to their customers.
They must be open minded about ways of dealing with this travesty that they themselves have created, instead of just putting out their dishonest little hands for another bailout from the taxpayer/their customers.
There are 150,000 mortgages in arrears.
There are another 30,000-40,000 mortgages in some sort of forbearance.
There are 500,000 mortgages in negative equity.
Some mortgages are up to 80-90% in negative equity.
This has been going on for the past 5-6 years.
Yet saying that the vast majority of these people (victims of banker’s recklessness/ corruption/criminality) are still paying what they can.
What have the bankers paid Conor?
Well in fairness none of these people will get mortgages again, and most perhaps should never have in the first place.
Nothing wrong with renting Harry. You borrow money, pay it or lose the collateral. A bank isn’t a charity.
With that I bid you adieu, im repeating myself and you just keep repeating yourself about bankers and the Belgian government. Good luck.
They probably should not have got mortgages at such ridiculous levels in the first place, however it seemed to suit the banks at the time.
Many of the mortgages that I have seen were given out by banks (high street not subprime) on 10x times+ basic salary.
If these mortgages were not given out so recklessly, there would be far fewer in arrears,especially seeing as Ireland always had historically low arrears/repossession rates.
Nothing wrong with renting granted.
And yes again (as you have said 3 times) the bank isn’t a charity.
I’m sorry if you feel like that, It is probably just that I have been in my own business all of my life and look at things a bit differently than you do.
I have most likely have had more first hand dealings with banks than yourself.
and (maybe to my detriment) I am probably more tenacious around such issues than yourself.
Have a nice weekend Conor.
PS: You might let me know the answer to my 4 questions above.
I’d love to know your opinion on them.
In order to qualify, you must have permanent pensionable employment preferably in the secure public sector. These are not mortgages for which mere mortals qualify. They are for the privileged.
We need 110% mortgages and Seanie will head this up. If it all blows up, it will be a soft landing. Wear the green jersey. Why don’t the moaners and cribbers hide behind their smokes and daggers.
We don’t need an economy; we need nothing but a housing market.
Property will only ever increase in value. Get onto that ladder before it’s too late!
@ Dave, exactly! Let’s make money. Property always keeps it value, it always washes its face and the Bankers always know what’s good for us. Never met a bad banker in my life. You don’t have to add honest to banker because banker implies honesty.
Remember, the bankers just want to look after us. They are not in this for the money.
Indeed, they are so generous that their charity group, the IBF, likes to feed struggling politicians.
90% mortgages do they never learn?
What’s wrong with 90% mortgages? The only people that have to learn are the clowns who didn’t assess their means correctly, signed up to a ludicrous investment and now blame everyone else for their misery.
I’m was risk averse, I didn’t NEED to get on the property ladder – Now not only can I get a better mortgage rate, I can by the house next door for a fraction of the price.
Caveat Emptor.
*buy the house
Matteen, I could not agree more with you..
Fianlly someone with a bit if sense..
A$$hole much?
Went for a 150,000 mortgage in 2006. BOI said that my wife and I could borrow up to 275,000 and that they were wondering what 150,000 plus our saving could buy? I read about the coming bust and decided to rent until this year. Got a 90,000 mortgage now. Same house, 3times less than these greedy clowns offered us.
I buy house, I can’t afford house, it’s everyones fault but mine, I want government to pay for said house out other peoples tax funds.
And I’m the a$$hole?
Exactly…Free to those who can afford it,very expensive for those who cant.
Matteen – what’s wrong with 90% mortgages? – it encourages people to spend more on a house than they can afford. Future earnings are not certain.
I’m going for a 95% one myself only because the government here in the uk will give you 20% interest free for five years and the prices are just so good now. I really do feel sad for my friends that bought about five years ago!
You people are deluded if you think property is good value at the moment. The arrears figures in Ireland are truly shocking. Repo mania is coming down the tracks. Property tax, water rates and high interest rates are all factors to consider. Then also consider the current price of houses compared to the average industrial wage. We then have the government artificially inflating prices by witholding stock in NAMA. Not to mention the three more austerity budgets to come.
It sickens me to see the ads for the indo peddling another property boom in “areas that are steadily rising”. Open your eyes before you jump into a life of negative equity. You are all being played again.
Maybe in Ireland but it’s a different story here in the uk
Sorry I just re-read your post. The situation over there is far removed from the mess over here. Best of luck with our new place.
All well and good if same rules applied to the money the banks borrowed.
How much rent did ye pay for the last 7 years ????
Feck all, only moved out two years ago how I miss my mammy!!!
Oh dear.
How much value has your house lost (if you own one) in the last seven years? How much (including interest do you end up paying back on a 280,000 mortgage at current interest rates? Do the sums on both of those and come back to me.
Mr Jingles.
I think that you’ll find that
(1) The wealthy House builders in the U.K lobbied hard for that system to be put in place
(but I’m sure that their heart is in the right place)
(2) That this system is only available for newly built properties
That are
(3) 30% smaller
And
(4) 30% more expensive than older properties in mature tried and tested areas.
I’d beware.
I even seen Cameron out championing this sham.
So I’d beware on the double.
I know they have to be new. There’s a major advantage about looking to buy a place when your an engineer on the development ;)
Well I suppose if being an engineer gets you a 50% discount on the purchase price it might be worth a punt.
(And only if its not an apartment with extortionate service charges that go straight back to the developer)
It sounds a bit like when Audi,BMW and Mercedes were forced to supply finance on their own cars when they realised that no one was willing to buy them with real money.
; )
@Ollie…. Rent paid over the last 7 years was a better move than purchasing….
1. Your not tied to some with a starter home you “planned” to sell in a few years for a profit but know are stuck in
2. For every 100k you took out you pay the bank another 100k in interest
3. Property crashed each month by more than the cost of renting a home
Eg… 200k house now worth 100k, mortgage to be paid back 400k against 200k if you bought it now
Rent 1k x 12 x 7 = 84k
Saving = 106k
And your the dummy who thinks rent is dead money…..
Harry, I meant that at least ill know how well it’s built. Considering it will only cost me 4.5 times my wage (I’m only a graduate as well) and it’s in a nice area, I think it’s pretty good.
Relax with the negativity it’s not good or your head.
Oh boy ! @ollie PWNED
I bought a house 6 years ago for approx 400k. It is now worth 280k (neighbours house sold for that a few months ago). On the surface, that is a net loss of 120k. However, in that time, I would have paid 72k in rent. Now my net loss is only 48k. However, I have a tracker mortgage of 1% above ECB, so my rate is currenly 1.5%. At this rate, the total interest I would pay over the loan is 87k (based on a 360k mortgage).
The best I could hope for at the moment is about a 4.5% variable rate, at which my total interest payments would be just 205k on a 30 year loan (based on a 250k mortgage). All this means, If I bought now instead of 6 years ago (near the height of the boom), I would pay €70,000 MORE over the lifetime of the mortgage. (obviously interest rates will change over the lifetime of the loan)
No worries Mr Jingles.
But be careful that you are not confusing caution with negativity.
Well said Matteen.
Well done Jason.
Canada can control their own interest rates and devalue the canadian dollar if they have economic problems which they dont,ireland is at the behest of the ECB,what will happen to tracker mortgages when the ECB up interest rates?people in ireland must believe that for the entire duration of a 30 year mortgage there is job security and a secure salary that will never drop,when will ireland ever learn
Dirk its irrelevant if your salary drops or you lose your job not only are u going to struggle to pay your mortgage your going to struggle with car loan credit card and other things,i always wondered why austria a country of 8 million people and a member of the euro currency can have 4.5% unemployment and a healthy banking sector well more or less,well I think its because the vast majority of austrians rent while their RETAIL banks lend to small and medium businesses research and development etc etc,here in ireland its micheal davitt landwars the peasant farmers and the english landlord mentality
One of the biggest problems from the property boom is that people were too greedy. They got mortgages for houses they had no intention of staying in, thinking if they stayed in them for a while they’d be able to sell on for a profit. Then when the bubble burst they were left with a house they didn’t want and paying way more for them than they were worth. No profit comes without risk.
I plan to buy a house soon with my partner. I currently rent at a rate of €600 per month. In 20/25 years at this rate I could have bought a pretty good house. I’m not thinking of the sell on value. I’m thinking of a secure future where I end up with something to show for my €600 a month other than a rich land lord.
Unfortunately Steve, people like you were few and far between in the Celtic Tiger days. Well said.
It should be only 80% like it was in the 70′s and 80′s. Let people save for a few years to get a deposit. Young people these days want it all. The trophy house and furnishings, trophy car and trophy lifestyle. It is time that they live in the real world.
Feck all, only moved out two years ago. How I miss my mammy!!!
@ robin Pickering..let me give you a big fat green thumbs up for your first comment
Aww, thanks Conor! Feelin’ the love :-)
jesus did we learn anything or are we going to let them do it all over again?
Here we go again! (sighs)
@ Harry. I think you need to talk to a therapist and have a good cry!!!
The reckless banks that let us not forget bust the entire county and that now want to torment young fathers and mothers to the point of suicide should be providing therapy for their victims Niall.
Ask FLAC and MABS about the heavy handed, ruthless, vile acts and tactics that these “bankers” perform behind closed doors.
Bankers???
They are more like financial “rapist” and “perverts”
150,000 decent, families in mortgage arrears.
An unpublished doctoral thesis by a UCD economist reveals that in Ireland the primary determinant of residential property prices is borrowing capacity.
If there was a cap of 50 per cent LTV, a sensible multiple of income restriction and a conservative basis of valuation as a multiple of the rental value of the proposed security property, this would greatly diminish residential property value and make home ownership more sensibly affordable.
Add capital gains tax on gains derived from the disposal of residential property, not allow tax relief on mortgage interest even for first time buyers and add a specially higher rate of LPT on a sliding scale basis for higher income earners, say those earning above €75k per annum, this would help.
The problem in Ireland is that wealth and money are too much tied up with and in residential property.
Residential property should not be subject to speculative pressures.
This is weird…
They used to be called IIB Tom
one of the most reckless banks during the boom.
But they changed their name to pretend that they are a new “cleaner than clean” bank.
Just like Danske Bank/National Irish Bank recently did.
90% mortgages?! Not one lesson has been learned since the country was set up to fail in its financial windfall!
have your say