Homeowners to get negative equity loans

independent.ie/business/personal-finance/homeowners-to-get-negative-equity-loans-2228649.html

100 percent mortgages back for Spain. We can do better 8DD

Ulster Bank is not party to the guarantee, am I right?

Correct. However:

I’m fine with this, the sooner people get used to the fact that just looking at the current teaser monthly rate for 400k worth of debt is a really terrible idea the better of we’ll all be. When you sign on to repay a massive loans you actually have to repay them.

Letting people move NE is obviously something that should be avoided but I don’t see how it can be in the Irish market. The alternative will be people stuck in apartments for decades with all the associated problems.

Just kicking this idea down the road a bit, with the property ladder now spiralling downwards for at least the next 40 years, what happens when the buyers find the next property slumping into massive negative equity as well?? :open_mouth:
Is there some other taxpayer funded arrangement to make sure despite being in NE on their NE loan, they can still be guaranteed a soft landing and a comfortable retirement and old age? :blush:

:sick:

That’s quite a bold prediction!

Then the banks get their dream of perpetual debt to death fulfilled! A well services loan is a wonderful asset for a bank.

This is like coming across some poor individual burning to death and trying to put them out by throwing 3 gallons of diesel over them.

A person in NE is experiencing no actual hardship. The main problem faced by those in NE is mobility and these types of loans help with that.

But to use your analogy: We just had a boom of people who for some bizarre reason thought it was a great thing to douse themselves in petrol and set themselves alight, in fact they said people didn’t do that were a bit simple. Now they’re horribly disfigured and their solution is that people who didn’t set themselves on fire should be forcibly set alight so that everyone is equally disfigured, it’s only fair.

This plan is the equivalent to a pair of those fake glasses with the huge nose and moustache. Pretty ridiculous in any objective sense but slightly less ridiculous than the alternative.

As ridiculous as Zelig??

https://twi-ny.com/essentiallywoody1.jpg?

This is so lol it’s not even worth worrying about, esepcially in the context of the avowed aim to “to kick-start the crashed housing market”. Ain’t gonna happen. Also, the idea that 125% will cover the shortfall AND that there will be yet another greater fool to pick up people’s NE properties is wishful in the extreme.

This story did though put me in mind a of Trib story yesterday:

tribune.ie/business/article/ … -to-banks/

This is actually good for UB, as they can match paying customers with properties on which they are rolling up interest. NE already happened, they can’t do much about it, no way of reversing past. However taking off bad loans from books and replacing them with poor but performing loans is of great advantage to bank. This means less money to be set aside for impairment loans, that means better loan book, that possibly means cheaper money on market. See this section about case-by-case assessment - that is key, they are going to change very very bad loans for very bad loans. Additionally this is very good PR for UB, and happy customers who would be less likely to consider bankruptcy as it would lead to losing their dream house, not some poor apartment. I think there was in past article about UB willing to lend money on some estates which were build with loans advanced by UB. It is just next logical step of this strategy.

Negative equity isn’t a problem when you have the intergenerational mortgage!!! :stuck_out_tongue:

Whats wrong with this though?

May as well be in negative equity in a location which suits you.

Don’t see how it’s going to kickstart the market though as, as Larry pointed out, to do this you need to sell the original gaff.

Sounds like a good idea to me.

I was going to say that it might increase demand for mature areas but in order to avail of this people would need to be able to sell on their over priced shoe boxes which may prove difficult. Coupled with the fact there will always be trader uppers on different levels it may increase market activity but not supply and demand.

I’m still trying to figure it out, Ted. I suppose if its Ulster Bank, ultimately the UK taxpayer will be coping with any fallout from overborrowing. EBS, on the other hand …

What I’m trying to figure is this. Mr X has a €200k mortgage, taken out (say) three years ago, on a property now worth €100k. And lets assume the €100k is a real figure - that there is actually a real buyer at that price.

So Mr X liquidates, and is left just with the €100k of NE to carry forward.

Now, presumably, three years ago Mr X took out a €200k mortgage because that was close to his limit, on 6 - 8 times salary.

So why, three years later, do we expect that Mr X can borrow more so that he can afford that ‘dream home’? What I mean is, the €100k of NE that he carries forward has to impact on his ability to borrow. So he sells his €100k property, which leaves him with the ability to borrow €100k. And buy exactly the same kind of property as he just left.

Am I missing something here? I don’t see how this greatly changes things, unless there are a lot of people out there with substantially higher earnings than they had in 2006.

(Apologies on all the "Mr X"s. If you want, I’ll edit it to “Dr X” instead.)

Yeah, schuhart, it doesn’t work if you aren’t able to borrow more - to either trade up or sell a loss making investment property. On the other hand, if you wanted/needed to trade down…

Well for one thing Mr X might now have a Ms Y (ignoring the reverse sex assignment) with whom he wants to buy a new house instead of the one-bed shoebox.

For another Mr X might have a new job offer with a higher salary he wants to move for.

Couples who maxxed out everything to buy a one bedroom apartment in 2005-2007 will likely not be able to avail of this.

Somebody sitting on NE can now sell for less than their outstanding mortgage so asking prices on some of those properties that have been sitting on the market for ages might start falling.
If this enables someone to sell that previously couldn’t, due to their outstanding mortgage being greater than offers they were getting, then it also releases another buyer into the market.
People reducing prices + more buyers = more activity (possibly…)

Of course you’re missing out the fact that the borrower did’nt max out on his ability to borrow he only made the stupid mistake of paying too much for a mickey mouse house in the arsehole of nowhere which has dropped 50% in vale.
In the meantime with his now state job of gambling for Anglo an such he can borrow more with the new payrise he got courtesy of the halfwit the government appointed and we’ll bail him out with the ability to repay an even bigger loan cause hes worth it an we’ve all been taken for a ride by the gubberment but we’re too stupid to notice (well most of us anyway it would seem). :unamused: