Why bail out builders?

[Green_Bear]

Why bail out builders?
The Market, Mark Keenan, Sunday Times, 26 Oct 2008

Unlike Ireland’s rebelling pensioners, the owners of second-hand starter homes remain blissfully unaware that they, too, have been taken for a ride by the government in the budget.
If Brian Lenihan announced his intention to take €10,000 from every one bedroom owner and hand it to the builders, then these keyholders would be pounding the pavements alongside the pensioners and calling for the finance minister’s hide to be fried in a faux-period, fake concrete fireplace.
But this is exactly what the budget’s new Home Choice loan scheme does.
Home Choice, which is outwardly designed to allow those first time buyers who have been refused credit by banks to get on the property ladder is in fact a big, fat rescue scheme for every developer stuck with a hundred unsaleable shoeboxes in outer suburban Dodgeville.
Let me explain.
The scheme offers a council loan of up to €285,000, but for new homes only.
Why not second-hand properties, too we ask?
A quick glance at what’s available in the city new homes market for €285,000 reveals little but the massive overhang of small and unsold one-bed apartments in secondary areas.
Had these buyers got a chance of getting a proper mortgage, as they certainly would have a year ago - and probably will have again by next year - it’s quite unlikely they’d all flock to those schemes.
And anything that makes new properties comparatively more accessible that their second hand equivalents ultimately reduces demand for, and thus the value of, those second-hand equivalent properties.
And while the government may indeed argue that these people can’t buy a second hand home now anyway, the tight behaviour of banks is temporary and these loans will be transferred to banks once the buyers have proven that they’re good for repayments.
Impatient first-time buyers who op for a HomeChoice to get on the ladder now rather than later are all potential second hand buyers when the lending climate settles down again.
It’s the very same as taking money from the private property owner’s pocket in order to bail out the builders.
That was surely not the intention? Or was it.

[kerrynorth]

Someone should direct him to here.

[BertieBasher]

@kerrynorth

Someone should direct him to here.

Oh I think the piece of **** knows we exist. He has robbed enough material from this site to prove he is a regular. In fact if someone asked me I could lay out a pretty good guess what identity he has on the pin.

[kerrynorth]

@BertieBasher

@kerrynorth

Someone should direct him to here.

Oh I think the piece of **** knows we exist. He has robbed enough material from this site to prove he is a regular. In fact if someone asked me I could lay out a pretty good guess what identity he has on the pin.

Pray tell?

[Persius]

Now, now. I don’t believe we should be speculating on pinsters identity if they wish to remain anonymous.
Check out the forum rules/guidelines as well.

[provost]

@Persius

Now, now. I don’t believe we should be speculating on pinsters identity if they wish to remain anonymous.
Check out the forum rules/guidelines as well.

Yes, this is true. It goes against the rules on this thread:
viewtopic.php?f=25&t=1048

Cut it out BB and KN.

[MortgageBroker]

even if he robbed every bit of the info from a site the good thing is that more people read the IT than the PIN (as much as i would like to see that change i don’t think it will!) and getting some of the ridiculousness out about homechoiceloan is a good thing no?

the fact is that this site has become a news source.

[Django_Returns]

@MortgageBroker

even if he robbed every bit of the info from a site the good thing is that more people read the IT than the PIN (as much as i would like to see that change i don’t think it will!) and getting some of the ridiculousness out about homechoiceloan is a good thing no?

the fact is that this site has become a news source.

Have to agree here, while it would be nice if the pin got a mention at least he is spreading the good word.

More of this please.

[Thing_Fish]

Its not really bailing out the builders as much as bailing out the banks.

Those up to €285k loans end up as deposits in the banks anyway and they help shift an empty in the process.

Kinda like the govt going back to the SSIA schemes, which guarenteed the banks free money.

[onestepbehind]

Its not really bailing out the builders as much as bailing out the banks. Siamese twins

[jcsmith]

Good article Mark. As for crediting the pin - nice though that would be, it’s not our primary objective.

[Django_Returns]

@Thing Fish

Its not really bailing out the builders as much as bailing out the banks.

Those up to €285k loans end up as deposits in the banks anyway and they help shift an empty in the process.

Kinda like the govt going back to the SSIA schemes, which guarenteed the banks free money.

It is bailing out the developers, while there is an argument for not allowing banks to go bust (wider repercussions etc.) there is no justifiable argument to save the developers.

By all means bailout the banks directly but there is no reason to recapitialise the banks via developers.

[Poacher]

@jcsmith

Good article Mark. As for crediting the pin - nice though that would be, it’s not our primary objective.

Sanity prevails

[yoganmahew]

@onestepbehind

Its not really bailing out the builders as much as bailing out the banks. Siamese twins

I don’t doubt this is part of the intention - but it is a monstrously inefficient way of doing it. This was one of the primary reasons the TARP in the US was denigrated so much. If you want to recapitalise someone, do it directly and get something back.

[CaveCanem]

This is the line that I took from that article.

the tight behaviour of banks is temporary and these loans will be transferred to banks once the buyers have proven that they’re good for repayments.

I’m afraid I won’t be adding to the compliments.

[MortgageBroker]

@CaveCanem

This is the line that I took from that article.

the tight behaviour of banks is temporary and these loans will be transferred to banks once the buyers have proven that they’re good for repayments.

I’m afraid I won’t be adding to the compliments.

so the government are getting into the ‘securitization’ game? don’t they realise that the banks already got burned there? Why would a bank put a debt onto their balance sheet that they didn’t underwrite?

that bit just doesn’t make sense, how would the state (who are bailing out banks) hope to ‘transfer’ loans across?

[CaveCanem]

@MortgageBroker

@CaveCanem

This is the line that I took from that article.

the tight behaviour of banks is temporary and these loans will be transferred to banks once the buyers have proven that they’re good for repayments.

I’m afraid I won’t be adding to the compliments.

so the government are getting into the ‘securitization’ game? don’t they realise that the banks already got burned there? Why would a bank put a debt onto their balance sheet that they didn’t underwrite?

that bit just doesn’t make sense, how would the state (who are bailing out banks) hope to ‘transfer’ loans across?

I hope he isn’t making predictions on the return of the rmbs market. I’d suspect he’s thinking people will switch. Why banks would be in a position to offer cheaper rates than the state, only he can answer. Maybe by magic.

This guy is probably one of our “property experts”. There is no reason to value their comments beyond telling you the relative loveliness of one house over another. They don’t understand that property happened to be the asset class backing this particular credit bubble.

[Bigby]

@jcsmith

Good article Mark. As for crediting the pin - nice though that would be, it’s not our primary objective.

agreed - I’m not too pushed if he rips stuff off the pin just so long as the word is getting out there. I would be nice if he mentioned the pin but on the other hand if every single news article pushing this PoV were to mention “it says so over on the pin” then readers would start thinking “well who are these guys on the Pin anyway and how trustworthy are they?”. Simple repetition of the point over and over again in different papers with no backing references will probably convince people more of our argument than if they heard over and over that its coming from the Property Pin. It worked for the other guys! If the papers have decided to run with this argument then I think we should be thanking our luck stars that sanity is starting to prevail

[Lefournier]

John McManus in the Irish Times today pulls no punches in his opinion piece headlined “Home Choice Loans, another stupid State intervention”. He makes the point that:
“The home choice scheme has in effect put a limit on how far the Financial Regulator can roll back the lending practices of the banks - assuming that it is of a mind to do so.”.

irishtimes.com/newspaper/fin … 74389.html

[fishfoodie]

@Bigby

@jcsmith

Good article Mark. As for crediting the pin - nice though that would be, it’s not our primary objective.

agreed - I’m not too pushed if he rips stuff off the pin just so long as the word is getting out there. I would be nice if he mentioned the pin but on the other hand if every single news article pushing this PoV were to mention “it says so over on the pin” then readers would start thinking “well who are these guys on the Pin anyway and how trustworthy are they?”. Simple repetition of the point over and over again in different papers with no backing references will probably convince people more of our argument than if they heard over and over that its coming from the Property Pin. It worked for the other guys! If the papers have decided to run with this argument then I think we should be thanking our luck stars that sanity is starting to prevail

While I agree that the message is the key thing.

I think letting lazy journos plagiarise the posts of others should be discouraged.

Hence, if anyone feels strongly enough, they should e-mail Marks Editor & express their displeasure !