Just what does ‘break even’ mean?
Does it mean getting back the original sum advanced? What about the cost of finance to the bank (whether in the form of deposits, interbank, or bonds)?
Where in that article does it show how “No to NAMA” are tackling negative equity.
It sounds like they just found a few quotes from different people about negative equity, repossessions, house prices etc. Nothing at all to do with its title.
I think in this case No Nama is simply a byword for no-mortgage-holders-in-negative-equity-bailout.
This idea originated in an article written by Brawn in Friday’s Examiner which is not available online.
In it he called for a “NEMA” (Negative Equity Management Agency).
like InForADime points out, I think you’ve mis-read the title
I saw that too.
The eejit obviously doesn’t understand how NAMA works. Step 1 is to pretend that you’re dealing with ‘assets’. He should have called it ‘RAMA’ as in Residential Asset Management Agency’. The was a letter writer in yesterday’s De Paper who had a better grasp of things.
So far then we have calls for OBAMA-RAMA. How about MAMA to handle messy divorces - Marital Assets Management Agency? Or SCAMA - Shoebox in Clane Asset Management Agency for all those commuters serving a life sentence? Sure Frank Fahey says it’s the ECB paying for everything, so why not?
If a NAMA for people with negative equity mortgages was setup…
could it be used along with NAMA itself…
to stop house prices dropping and maybe even start to raise house prices?Step 1: Create NAMA Step 2: Allow people to get flusters and demand a NAMA for people with negative equity mortgages Step 3: Create a NAMA for people with negative equity mortgages Step 4: Create a new bubble Step 5: Let the good times roll?
Negative equity, only becomes a problem if you want to/ have to sell.
Those in this situation should get some help but we all must learn the lesson of this bubble otherwise it will all happen again. The suggestion that the negative equity could be carried with you is a good one.
What really gets my goat is that the bankers and developers are being given a safety net by the people in negative equity and everyone else lucky enough to have a job.
The other worrying point is that as suspected, Cowen is introducing the idea that the Gov (ie you and me) will buy these properties from NAMA “tapping unsold private housing through Nama” How stupid does he think we are ? Are we that stupid that we will let FF bail out their buddies at our expense ?
It’s time to revolt!!!
Doesn’t the mortgage interest relief extension effectively amount to an aid for people in negative equity?
Not really. It doesn’t help them move if they have to for family/work reasons. These would be, in the main part, solvent borrowers who can afford their mortgage despite the negative equity.
I talked about something similiar on the negative equity thread. There is one key problem, though. It would have to be, in the main part, underwritten by the government as Mr. Brawn points out. The problem is the government’s cost of funding is above what people are paying on their mortgages. If you currently have a low tracker, you are paying a max of 2.5% The cheapest the government can get ten year money is about 5.5%, so the government would have to charge about 6% to fund the negative equity NAMA, without taking risk into consideration. Economically, it makes no more sense than the other NAMA. Not necessarily the over-riding obstable, but for the poor state of the public finances.
You’re not channelling Brendan Burgess there are you Nicky
That particular phrase is so annoyingly, demonstrably false.
For example; lets say Joe Shoebox has a €250,000 mortgage on an Apartment in the city. Meanwhile Mary Sensible opted out of the madness & is renting an identical apartment. They both go for a job interview as they both recently lost their jobs. They are both identically qualified, but one has benefited from a 25% drop in rent, while the other is looking forward to increasing interest rates in the future. So one can ‘afford’ to work for considerably less than the other.
Who would you offer the job to, the one with the Mortgage, or the one who’ll accept say 10% less salary ?
Who do you think considers NE a problem ?
But that is not a NE problem, per se, that is an overpayment problem. The overpayment problem is the one that puts the lie to “there’s never a bad time to buy”. The NE problem is the counterbalance for “you are buying an asset”…
Plus of course if your in NE you have no option to seek a better value mortgage if your lender increases their variable rate margins irrespective of what the ECB does. The Business Section of the Sunday Times has a story suggesting that variable rates will rise 0.5-0.75% this year from February after NAMA starts going meaning that variable rate mortgage holders are looking at a 1% increase in interest rates if the ECB increases rates by only 0.25% this year. A mortgage holder not in NE has the option of shopping around for better value - one in NE does not have that option as no other lender will touch them with a barge pole.
Ah YM, you & I both know that no-one in NE overpaid. It’s just that the banks don’t realise what the property is actually worth