While it may be misleaning, most people would understand the difference between the bank saying giving approval and the money being drawn down.
If the 100 per day figure is true then fare play to then. However the reality is that they are not lending and simply do not belive that they are approving (in principle) any close to that quantity of loans.
In times like these, banks everywhere are notorious for dishonestly inflating their lending figures by including as new loans, re-arrangements of existing loan facilities. It’s usually easy enough to spot if the bank’s balance sheet is static or shrinking, even as it protests about how it’s vigorously lending money to the real economy.
Does anyone know if that’s what Bank of Ireland are up to here?
The bank could turn around to a mortgage customer, perhaps one in difficulty, and agree a new set of terms, labelling this jiggery-pokery as a new home loan.
It wouldn’t surprise me. And I always thought that 100 mortgages a day figure was very much on the high side, knowing what we do of the volume of transactions in the market.
There have been a number of anecdotal cases where a bank in, say, January, gives conditional approval for x. In February the buyer finds a property for x and looks to secure the loan. The bank will only loan x-20%, so gives approval for another loan. The buyer can’t complete because the seller won’t accept the lower offer. The buyer then goes and gets a new approval in principle for a new loan, now x-20% on current economic conditions… Hey presto - 3 loan approvals and not a cent loaned.
Now, I don’t hold much of a candle for Mr. Varadker’s “it’s those nasty banks not giving people money to hang themselves with that’s the problem”. Personally, I think the uncertainties that NAMA has created with regard to prices (both through the pricing mechanism - why would you pay more than LTEV? If NAMA is saying LTEV is below 50% of book value (never mind peak value of the underlying assets), you’d be mad. Of course, this confuses the whole loans and assets thing, but this is the game the government have been playing. Keep it opaque, keep people confused, have no transparency on prices, use loans, assets, and properties interchangably.
Imagine, a government spin and bluster policy coming back to haunt them… It’s a shame the opposition seem to be still arguing on government terms…