Nervous lenders to cut 100 per cent mortgages - Sindo

[verbatim]

[*Nervous lenders to cut 100 per cent mortgages * (Nervous lenders to cut 100 per cent mortgages - Independent.ie)

TWO of the country’s biggest lenders are about to scale back on their 100 per cent mortgages. From Tuesday, only a select few first-time buyers will be able to borrow the full price of their home from First Active and Ulster Bank.

Previously, both lenders offered these mortgages to all first-time buyers. However only civil servants, public servants and professionals will be able to get 100 per cent mortgages. Many first-time buyers will only be able to borrow up to 95 per cent of the value of their home.

The clawback follows concerns about negative equity, where the recent fall in house prices means that some first-time buyers have borrowed more than the market value of their home, according to Michael Dowling, of the Independent Mortgage Advisers’ Federation. “It will put first-time buyers under more pressure as they may be forced to go to alternative lenders to make up the differential,” said Dowling.

Only Bank of Ireland, Halifax and Permanent TSB now offer 100 per cent mortgages without occupational restrictions. AIB offers 100 per cent mortgages to certain professionals. IIB Homeloans, Irish Nationwide and National Irish Bank don’t offer these loans.

[HouseBuyer]

Foolish bankers! Measures like this will only serve to accelerate the slump in the market.

This is the most significant piece of news for awhile.

[BertieBasher]

Many first-time buyers will only be able to borrow up to 95 per cent of the value of their home.

Oh the poor things, just 95%. It should be 80% or less. Too little too late.

[whizzbang]

@BertieBasher

Many first-time buyers will only be able to borrow up to 95 per cent of the value of their home.

Oh the poor things, just 95%. It should be 80% or less. Too little too late.

no-one should be expected to save 5% of their house value before buying a property! that would just be madness! All that would do is prove their ability to manage their money and live within their means!

/end sarcasm

Seriously, how did banks ever expect people who needed 100% mortgages to ever be able to deal with rising interest rates? If you finances don’t allow you to save a few grand together how are you going to be able to pay a mortgage? Why could people not accept that they could just not afford a house given their current and the market’s current situation?

[Thing_Fish]

will it just be the speculators who can avail of 100% interest only mortgages?

[Arthur_Daley]

The significance of this move is that First Active was the first lender to offer 100% mortgages to the average punter, back in summer 2005.

[Thing_Fish]

the financial instruments that are supposed to keep property prices above 2001 levels are being withdrawn.

[verbatim]

[*Permanent TSB cuts down on 100pc mortgages offers * (https://www.independent.ie/business/irish/permanent-tsb-cuts-down-on-100pc-mortgages-offers-1221968.html)

FEARS of negative equity have prompted a fourth lender to clamp down on offering 100pc mortgages.

Permanent TSB said yesterday it would heavily restrict the controversial 100pc loans because of changes in the housing market.

EBS Building Society abandoned 100pc lending earlier this year.

This was followed in the past fortnight by First Active and Ulster Bank, saying that from now on they will only give 100pc mortgages to public servants, such as gardai and teachers, because of their job security.

The banks fear negative equity will make 100pc homeloans a more risky prospect.

Last week a leading stockbroking firm said that as many as 35,000 homeowners face the prospect of negative equity.

Goodbody Stockbrokers said this was because house prices are likely to plummet by 8pc next year.

Apartment

Yesterday Permanent TSB said it would only give 100pc mortgages to those with a minimum income of €75,000 or more.

For those seeking a mortgage for an apartment or duplex it will only lend 95pc of the value of the property, and only if the apartment has two or more bedrooms.

In a statement, Permanent TSB said: “These changes simply reflect a prudent fine-tuning of our lending policies to reflect changes in the housing market and competitive positions.”

Asked about negative equity, a spokesman for the bank said: “We are looking at a market where prices are standing still.”

[Pill]

Asked about negative equity, a spokesman for the bank said: “We are looking at a market where prices are standing still.”

[shanegl]

Risk aversion leads to risk aversion.

[Blue_Horseshoe]

@verbatim

[*Permanent TSB cuts down on 100pc mortgages offers * (https://www.independent.ie/business/irish/permanent-tsb-cuts-down-on-100pc-mortgages-offers-1221968.html)

FEARS of negative equity have prompted a fourth lender to clamp down on offering 100pc mortgages.

I would disagree with this as the central premise for the lenders in question reducing the range of applicants they are willing to lend to, for a number of reasons.

1. Neg Eq would affect everyone so therefore if it was the reason then they would remove the 100% mortgage across the board.
2. Look at the jobs they have decided to continue offering the 100% loan to … income in excess of €75,000 (so twice the average industrial) and civil servants, public servants and professionals. So jobs you most likely can not be sacked from or are unlikey to be outsourced or made redundant from in a recession.
3. Over the life a mortgage (say 30 ish years) the value of the propery should rise sufficently to remove the impact of any property price “correction”.

I suggest the reason the lenders are removing 100% mortgates to the general population is not a fear of Neg Eq, but a much more worring and wider concern as to where the economy is going in the short to medium term and a resultant loss of jobs in the private sector (or could that be a loss of jobs in the private sector and the resultant direction of the economy in the short to medium term).

Blue Horseshoe

[fishfoodie]

So not so much negative equity, as negative equity for people who might default. The banks dont really care how you pay, as long as you continue to pay. True humanitarians !

[Boston_Irish]

see the part "only offer 100% to people earning above 75,000.

Who would fall into that catagory? You would have to assume that if you made in excess of that you would have the sence and ability to scrape 5% together in all honesty.

Unless straight out of med school or something but even still - could you not wait a year?

[Blue_Horseshoe]

@Boston Irish

see the part "only offer 100% to people earning above 75,000.

Who would fall into that catagory? You would have to assume that if you made in excess of that you would have the sence and ability to scrape 5% together in all honesty.

Unless straight out of med school or something but even still - could you not wait a year?

Most likely counting two incomes to the household.

Blue Horseshoe

[hi5]

This crash is happening a lot faster than I ever thought,the knock on effects are happening just as predicted and just like every other crash,horns are being pulled in everywhere.

If the lenders are expecting mass unemployment in the private sector then who’s going to pay the wages of the public sector?
Which comes first the unemployed or the public sector?
If the government make cutbacks in the public sector to fund the unemployed then they effectivly create more unemployment .

I can see the Eighties coming back all over again.
Moore McDowell was right “this is one to lose” [the general election 2007].

[daltonr]

If you’re not a Public Servant, and you don’t earn more than €75K and you’ve recently bought a 1 bed apartment you’re completely screwed.
If your apartment has 2 or more bedrooms, you’re just a little bit screwed.

Or so goes the expert opinion of PTSB.

-Rd

[Blue_Horseshoe]

RTÉ news report on the lenders tightening restrictions for 100% loans.

rte.ie/news/2007/1126/1news_ … 3,null,230

Blue Horseshoe