Jim Power - The Fundamentals are not sound!

Jim Power explained it thus: "The 100% mortgage…facilitates home ownership in a prudent manner. "

The whiff of BS in this country is becoming overwhelming.

just on the 100% mortgage things - in some respect, I would say the damage is not the 100% mortgage, but - more honestly - the dilution of the salary criteria. 100% of three times your salary is a lot less than 100% of 5 times your salary.

That, imo is where the rot set in.

Was the 100% mortgage not based on affordability, i.e. percentage of income devoured therefore one and the same thing?

Then, the obligatory 40 year, fixed for 3 years to get you borrowing package…

Lovely, just lovely… :open_mouth:

In 1998, the ceiling changed from a function of your Gross (3.5 + 1 then), to a function - 40% - of your DISPOSABLE income. I remember the time well. It shocked me because it then represented 5.5x. This was new then, like the tap had been opened. Rate was 5.99 fixed for 3 years or slightly less for staright variable.

Then we became ‘Euro’. Interest rates kept falling.

Well shock horror property prices kept rising. Straight back to ARW’s point, money got cheaper and cheaper, but crucially, easier to get. I had friends tell me they could get 6x two years later, and interest rates were still falling.

Amazingly 8) Over the next couple of years More of my friends got married - and bought houses that must have been 8x minimum. I felt like a gobshite. Now that 9% stamp duty had been introduced to quell the market I was trapped. Hindsight being 20/20, this was where it got really nuts. Incredibly there was another 4 years to run UP !

And they kept selling money to an increasing risk group. There’s no way this would have happened if you required an Unborrowed 10% down, a balancing statement from the revenue covering 6 years, a P60 (Original) and 6 months bank statements. That’s all a lender should need. If in doubt, get 3 years bank statements.

Simple. Easy to check for forgery. Conclusive. Safe money does safe things, and doesn’t speculate with itself.

Rant over !! :imp:

Proximo

Safe money does do safe things but…

With the banks making so much profit then and the pressure to continue along that vein growing added to the rubbish coming from politicians and the spin from VIs.

With property prices spiralling out of control and the feel good factor of the Celtic Tiger blinding people the headlong rush into a life of indebtedness was upon us before we knew any different.

Its only in the cold light of day mistakes/misadventures or stupidity become available in plain view. We as a country had an opportunity to avail of the cheap credit and make life easier for ourselves, instead greed,stupidity or pure wanton excess took over and common sense went out the window.

Can we frame this post? :laughing:

It sums up what is and was inheritantly wrong with lending in this country for the past 5 yrs or so.

Well said Proximo.

Not sure I agree with this statement Proximo.

LTV is a fundamental factor in the risk analysis of a mortgage - the higher a stake the borrower has in the property, the less likely they are to default. Not to mention the fact that saving for a deposit demonstrates financial prudence.

The problem was that saving for a deposit was a mugs games, when the value of the deposit was outstripped by the growth in house prices. It just didn’t make sense to save a deposit.

Now the banks face being hung by their own petard however, in that the situation they cultivated (rising house prices) led to them slackening their risk control (100% mortgages) and now they face the prospect of rising defaults since the economy is slowing down.

Cheers Gurramok ! Feel free …

Or to sum it up, this was when the word ‘affordibility’ replaced ‘Gross Salary’, in assessing your mortgage limit. I remember it well.

Fair point Conor_mc.

To qualify my point a bit more, I’m not suggesting 100% is healthy. It’s dangerous.

I’m referring only to PPR’s, nothing else. Of course, a lower LTV should attract a discounted rate.

You’re spot on about the deposit though - chasing it’s own tail and making the whole game self perpetuating.