Mortgage surge evidence of housing market on the mend

independent.ie/business/pers … 48053.html

Figures from November. No mention of this been peak MIR season. All those I know (admittedly a small group) who bought in November / December brought forward plans due to culling of MIR.

On the contrary, this is terrible news for the market. In a month where mortgage lending was 9% up, property prices were up only 1%. On a year-ago basis (ie vs Nov 2011), lending was up 38% but prices were down 7%. This means the market was able to easily absorb this increased lending and still drop significantly (vs Nov 2011) or rise only a teensy bit (vs Oct 2012).

So even though we all “know” that availability of credit is “what’s holding the market back” it turns out that the market doesn’t rise much even when credit it up a lot. In other words, there are fundamentals holding the market down far more than availability of credit is :open_mouth:

Surprisingly that’s not how the media will report this!!

Nicely said

The article points out that many of the people that got mortgages in November will not have bought yet. To expect prices to increase the same month people get approved for a mortgage is nonsense.

And Charlie Weston responsible for the article…
The pin has opened my eyes to the ‘real quality’ of this guy’s work.

A mortgage adviser said it, it must be true! :smiley:

In fairness, there may be a small amount of truth to it; the IBF numbers are based on firm approvals, in writing, for a specific property, where a valuation report has been received. So they are for people who are already sale agreed and about to draw down the mortgage. But I take the point that some may not have been drawn down until December. I suspect that there will be very few drawn down in Jan; if I was making an offer in Nov I would have made the price contingent on closing before Dec 31 in order to get MIR.

a small amount??
Seriously, how many people do you think will have managed to get mortgage approval in November, find a house, bid on it (some may have been a few steps along this process already), go sale agreed, get all legal docs sorted, close on the purchase, draw down the mortgage so the CSO then get the info to analyse and have in their report on November house prices just a few weeks later?
For someone that got approval on the last day of November that’s a lot to squeeze into a working day.

You are misrepresenting the process. The IBF numbers are from people who have previously got “approval” (ie approval in principle), found a house, gone sale agreed, and got some of the legals out of the way. That could all have happened months previously. The actual approvals included in the Nov numbers are only granted after that stage, when people are about to draw down the money. The IBF has a good explanation of the numbers if you’d like to spend a couple of minutes reading it. I also summarised it above if you’d care to scroll :slight_smile:

If fairness, the headline is correct. An increase in mortgages is evidence of a more active market. The article doesn’t state or imply that this will necessarily lead in increasing house prices.

A market with zero transactions is broken. There is very little point in being self-satisfied with falling prices if there are physically no properties being sold.

Now if NAMA / the banks were to act of arrears, repossess and auction, that would also increase transactions and that too would be good for the market.

I know how it works, I’ve been through the process and until you get approval there’s sod all you can do. You’ll do well to find an EA to take you seriously nevermind go sale agreed when you don’t have approval.

Trevor Grant of the** Association of Expert Mortgage Advisers** said many of those being approved for a mortgage in November would not have had enough time to beat the deadline for the withdrawal of mortgage tax relief on December 31.

Is there another association of rookie mortgage advisers piling their wares? Its not too often you see “expert” in the name of an association/organisation/bunch of cowboys :smiley:

No, I believe you are still misunderstanding. These days you will not get formal approval until after you have gone sale agreed and had a valuation done for the bank. What you get before that is the “approval in principle” which is just the result of their mortgage calculator and means nothing. It is not included in the IBF numbers. In the good old days the bank would give you approval in advance but no longer.

I really advise you to read the docs to understand what the numbers mean.

The first “approval” is known as “Sanction in Principle” with AIB.

Gets you in the door of the sale, but by no means a place at the table.

Im one of those who got full approval in November but didnt draw down as we withdrew from the purchase…havent I read somewhere that there was a very high rate of purchases that fell through or didnt complete in the last few months of the year.

LT

Sorry it didn’t work out. Out of curiosity, has the bank given you any indication of how easy it will be to get re-approved for a different property? I would have thought it would be straightforward, as long as the lending criteria haven’t changed in the meantime.

I have noticed a lot of sales falling through recentally. I know it has been higher than norm for the last few years but in the last month it has been even higher I think. Must be the people rushing in to buy because of the MIR ending, realiseing the tax incentive is not worth that much relative to the value of the house.

My own take on it was that a lot of people rushed in for the MIR, bidding based on what they thought they would be mortgage approved for and then when they actually got approval from the bank it was for a far lower sum.

Copy and Paste Weston in the Indo today:

independent.ie/national-news … 77876.html

Same “report” mentioned here too.

businessetc.thejournal.ie/charte … 5-Feb2013/

It’s hardly scientific.

So 350 people with a vested interest for prices to be increasing