Products to allow those in negative equity to move house

The Irish Property Bubble The Republic of Property
#1

I just saw this on Newstalks breakfast shows twitter but wasn’t listening to the show myself so I don’t have any details.

“ESRIs John Fitzgerald says banks working on products to allow those in negative equity to move house”

Did anyone hear the show this morning?

#2

Maybe its a good idea, as long as the tax payer doesn’t fund it. Perhaps they are allowed carry their N.E. as a separate debt?

#3

And what do you think?

Negative Equity INterest relief anyone?

#4

Banks/Government to taxpayer " Ok so you didnt buy during the boom you rented and saved, right then could you bend over further please? Ah thats better we couldnt really 8- unless you were more compliant"

So those who didnt do any homework and were led singing into the gas chamber are to be given leeway to borrow more even though they may/will have trouble paying back what they owe now, hmmmm that makes perfect sense. :unamused:

#5

Just because they are in N.E doesn’t mean that they cant make their repayments.

#6

I suspect this is not aimed at helping too many people out.

This will be a way of letting people with well paid secure jobs move homes, taking the NE with them and in all probability ending up with a much higher interest rate as a result.

It strikes me a capitulation on the parts of the banks of sorts… they realize that the underlying assets are of no use so why not have slightly lower NE relative to the mortgaged property.

This will not benefit the consumer… but I’m sure that won’t mean they’ll be very popular.

#7

I think this is a good thing. Being trapped by negative equity helps nobody.

#8

John FitzGerald said he had heard talk of it but he was very non-specific. It sounded to me like he was talking about information in the public domain. My immediate reaction was that he had been reading my suggestions on the 'pin.

#9

I didnt say “cant make their payments” I said “may/will have trouble”. This if brought to the market is designed to allow lending for the banks not to help people stuck in a house they dont want casue it was all they could afford at the time of purchase.
It strikes me that its like government saying banks lent to people who made an ill-judged decisions in the past because they ran with the herd so lets encourage banks to lend some more to the lemmings.
Question if they bought some place cause they “had to get on the ladder” or “it was all we could afford at the time” why should they be let off the hook so to speak? I.e. if property had remained as highly priced as it was would they be looking/able to move if there wasnt a "helping hand " available to them for want of a better term?

#10

So it’s like playing pass the parcel with a bag of shit.

#11

That Fitzgerald family really look out for one another

My guess is that John ESRI Fitz puts out this rumour hoping that the idea will snowball and the government will be pressured to fund the bailout in some way or another

Hence more transactions for Sherry Fitz which are based on higher market prices that would otherwise be the case if they left the market alone

Nice fees for the Vis in the short term but the problem just put off further into the future

Negative equity and mobility is a serious problem but I don’t think increasing the moral hazard is the solution

Am I too cynical?

#12

I don’t see any probelm in it either. Actually it will help to improve liquidity in market and people with NE will not feel trapped.
And who said they will borrow more. I feel lot of these people will actually downgrade to decrease thier monthly payments.

#13

We don’t know yet if they are getting off the hook at all. As a later poster says, it may improve liquidity.

#14

For the younger among you, methods of dealing with negative equity have been explored before on the 'pin:
viewtopic.php?f=4&t=15467
(Nov 2008)

This rather prescient oneliner from jcsmith in November 2006:
viewtopic.php?p=1521#p1521

And so on.

Not trying to stifle the debate, just the idea that this is something new, unexpected, or unwarranted…

#15

Sounds like they want “debt until death” Just keep heaping it on and carrying it around and extending the term.

Like a snail carries its home around on its back all its life, some people want to carry the debt burden of their home around all their life.

#16

That’s how I read it.
I understand the desire of people to move from some apartment in Ballymun to a 3 bed in Rathmines if they get a great deal.
But you can be sure the banks is going to screw them and it would be a very shortsighted approach to take.

As others have mentioned. It’s staggering how folk who are deep in NE simply have not learned the error of there ways but instead are inclined to once again be emotive rather than make a decision based on the financial facts.
Tis like when people say I bought for say 200k and you ask how much will the house cost and they say 200k.
They seem to be unaware that the effing house will cost them almost double of what they borrowed!