Moodys: Almost 14% of mortgages in arrears, 20% price drop

From, 15th June 2012


](Almost 14% of mortgages in arrears, house prices due to drop 20%: Moody's)

Blue Horseshoe

But we’ve already reached the bottom… :laughing:

i wouldnt be unhappy if they did but i cant see it happening.

Great analysis :laughing:

Of course this prediction of another 20% drop from Moody’s would, they say, result in a total peak to trough fall of 60%.
They believe that prices have only fallen 49.4% from the peak.

If you want to believe their prediction of another 20% fall you have to believe they are also correct in saying that prices have only fallen 49.4% to date and that Myhome, DAFT and CSO are all wrong when they say that prices have fallen by up to 60% already.

And they’re criticising the CB for using out of date data :open_mouth:

Can i not have an opinion anymore ? Why do i have to provide analysis for every comment. Some of you Pinsters are unreal. This is the property pin. Prices go up and down. Get on board with that fact.

Why not?

Its mainly based on what i am seeing on the ground. Consumer sentiment seems to positive as those who have sat on the fence are now jumping in. The housing market is a very different place to what it was even as recent as Jan 12. The banks are lending. Interest rates are low and buyers are plentiful. Stock is low. Demand is high. We can see the market rise again. I’m not over the moon about it but thats whats happening.

I’ve removed some irrelevant posts to the topic. Can we have civility please?

DDG, when you say “banks are lending again” do you have any stats to back that up. Because if so, the sneaky devils seem to have started doing it again without telling the Central Bank. … 57078.html

Unemployed at 14.1% (CSO)
Net Emigration of over 34,000 per year (CSO)
Mortgage Lending down 2.4% year on year to 1st June (Central Bank)
Most impacted age group by unemployment & emigration? The FTB cohort (CSO)

Number of empty properties … ? How many new builds coming on line each year … ? What about Estate sales … ?

Seems to me that would be a very strange backdrop to induce any sort of market rise.

Blue Horseshoe

The banks are not lending again at the levels pre 2007 or anything like it. I accept that as fact. However, if you are in employment and have savings they will lend 4.75 - 5 times your salary. The stock of quality housing is low and its selling quickly. Good stock around the 500 - 700k bracket is selling well. I dont believe that these are all cash purchases.

Two quick points

(1) A 60% decline from peak to trough is slightly bigger than the Central Bank 59% adverse scenario for last year’s stress tests. What impact would a 60% decline have on banks’ capital needs? Difficult to say but I’d guess in the hundreds of millions.

(2) They also issue what is the lowest estimate of GDP growth for Ireland in 2012 of just 0.2%. The next Central Bank of Ireland forecast is due at the start of July 2012 but we know they use a model which looks at GDP growth in the UK, US and Europe generally eg -1% decline in GDP in UK equals a -0.8% decline in our GDP. So the betting is that by July 2012, the consensus forecast will be 0% GDP growth in 2012. God knows about GNP but the official forecast is for a decline.

I haven’t much time for Moody’s generally, but if their predictions are on the mark, then it’s bad news.

We are taking about the beginning of a recovery. I’m not talking about a return to the stupidity of the lending binge the banks went on up to 5 or 6 years ago, but the recovery has to start somewhere.

I think Moodys and S&P are always behind the curve. The CSO figures lag behind reality too. I think the market has fallen as low as 70% in some places and in certain pockets they have recovered some of that, perhaps as much as 5% in the likes of D4, 6 and SCD. I cant comment on the market outside the capital where i would expect its still falling.

A couple of reasons why the Moody’s report might be wrong:
1 The report claims that house prices have fallen 49.4% and another 20% fall will result in a 60% peak to trough fall. Moody’s are well over a year behind the curve, prices are down by 60% already. They don’t know what level prices are currently at so do you really think their prediction for a further 20% fall carries any credibility?
2. It was reported on Newstalk this morning that the basis for the Moody’s estimate of 14% of arrears was analysing mortgages taken out from 2000 onwards and extrapolating that to the entire population of mortgages. Do you think that’s reasonable.

I’m not saying prices will fall or rise, merely pointing out that the Moody’s report is a crock of shite.

Still, people here seem to like their conclusion that prices will drop another 20% so far be it from me to point out the obvious mistakes in their analysis

The speculation about future falls might be a crock of shite, but the arrears data is per their review of RMBS and up to date.

Its all over the hourly news stations all day long today.

I was expecting to hear very little of it.

With respect to Moody’s projection/forecast/prediction/guess that residential property has another 20% to fall, it says that this estimate is based on a starting point of a 49.9% fall recorded by the CSO in April 2012. I think the CSO is a competent organisation and it now covers 8 mortgage companies including Ulster Bank, and I think its indices are representative of the mortgage-transaction market.

What gives the rest of us something to argue about is the cash market. And there are estimates from estate agents that this may represent 20-35% of the current market. In addition there are estimates that we are already down 60%. Who knows, but

(1) If the market is indeed down 60%, and 50% is representative of mortgages-based declines and mortgages comprise 75% of the market, then that implies that cash-transactions are 85% off peak (50%*75% + 85% * 25% = 60%)
That looks high to me!

(2) Moody’s starting point is a 50% decline and they forecast a trough of 60%. It is unclear if the starting point is 60%, whether or not the forecast trough would still be 60% or if it would be 20% more than 60% or 72%. Feel free to argue the toss according to your interests!

A case of Moody’s being right by being wrong
I don’t anyone can seriously believe that prices across Ireland will stabilise at their current level

While Dublin is showing some signs of life at a low level the rest of the country will be in the doldrums for a long time yet with large falls in the next 1-2 years.
The current stability in Dublin may not continue for long but factors which are outside our vision will determine what is going to happen in the medium term.

The Moody’s report says prices are down in April 2012 by 49.9% from peak of September 2007. The RPPI nationally for September 2007 was 130.5 and for February 2012 was 66.1 - a fall of 49.3%: … Index.html

Are they?

Because this states they’re using “90+ day delinquency trend and 360+ day delinquent loans”: … 12-1912314