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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Thu May 17, 2018 9:29 am 
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Central Bank have published an Economic Letter: New Mortgage Lending Activity in a Comparative Context

https://www.centralbank.ie/news/article ... 6-May-2018

Quote:
An Economic Letter by Enda Keenan and Martin O’Brien examines the ratio of new mortgage lending to household disposable income for the purpose of monitoring cyclical systemic risk in the residential real estate lending market in Ireland.

The key findings are:

As at end-2017, the ratio of new mortgage lending to household disposable income (NMDI) stood at 6.7%, which was broadly consistent with key structural factors in the Irish economy such as long-term real interest rates and demographics.

If annual growth in new mortgage lending continued through 2018 at the average rate of increase seen over the previous five years (c.25%) and household disposable income rose in-line with the latest Central Bank forecasts (3.5%), then the NMDI ratio would be approximately 8% by end-2018.

As a result, near-term developments in the level of new mortgage lending warrant careful monitoring so that higher levels of activity are not accompanied by the emergence of excessive cyclical systemic risk.


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Wed May 30, 2018 1:24 pm 
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April sees jump in number of mortgage approvals
https://www.independent.ie/business/per ... 61229.html
Quote:
THE number of people being approved for a mortgage jumped in April, reversing a fall in the previous month.

A total of 3,751 mortgages were approved in April.

Almost half of these were first time buyers.

There had been a fall in approvals in March, which was blamed on the weather, but the Banking and Payments Federation Ireland figures show a 14pc rise in April.

The average mortgage approval amount was €238,000, a rise of 6pc on the same month last year.

Analysts said half of rise was down to house price growth and half was due to more buyers being in the market.

First-time buyers got the go-ahead to borrow €225,000 on average, up almost 8pc on a year ago.

The average mover purchase approval rose by 1.7pc year-on-year to €258,533.


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Wed May 30, 2018 8:34 pm 
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Can the surge in credit growth induce another property bubble as the OECD are warning

Quote:
Signs of overheating have begun to emerge in the Irish economy, the Organisation for Economic Cooperation and Development (OECD) has warned.

In its latest biannual Economic Outlook on Wednesday, the Paris-based think tank said new mortgage loans and SME loans driven by construction-related activity have risen sharply.

While the Central Bank’s loan-to-value and loan-to-income lending caps had reduced the share of risky loans, it said these may need to be “extended if necessary”.

The OECD warned of another potential property bubble on foot of rising house prices and rapid credit growth.

“Property prices may increase more strongly, which would boost further construction activity in the near term but may induce another property bubble associated with a strong surge in credit growth,” it said.
https://www.irishtimes.com/business/economy/signs-of-overheating-in-irish-economy-oecd-warns-1.3513610

Its an interesting dynamic now though. We have a shortage of house building, blamed partly on a lack of construction finance; All political parties and NGOs are shouting for construction activity yet when this increases...it's high alert for a bubble. Looking at The Jackal's mortgage growth analyses above, it's an 18.6% yoy increase in mortgage lending but still a fraction of peak lending. I suppose the commentators don't want to be accused of not sounding the alarm. Is this fair comment or how we sleepwalk into the next crisis?

G.


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Thu May 31, 2018 12:50 am 
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Neo Landlord

Joined: Sep 9, 2017
Posts: 293
Gilroy wrote:
Looking at The Jackal's mortgage growth analyses above, it's an 18.6% yoy increase in mortgage lending but still a fraction of peak lending.


It is a fraction of the Celtic Tiger years, and probably at least half of the growth is due to Price increases, rather than a rake of new borrowers coming on the scene. The banks are still really only treading water in terms of net new lending. We continue to pay down/redeem mortgages, and the Banks recycle this cash as Gross new lending, with maybe a bit more on top, which is slightly more than it was in 2015-17. It's hardly earth moving stuff though.

Plus as has been said many times, fresh capital is not attracted to a dysfunctional mortgage market where the asset cannot be foreclosed. So long as the 'where's my nama' agenda reins supreme, nobody sane will inject their own fresh capital to the Irish market.


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Tue Jun 26, 2018 2:22 pm 
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Posts: 293
Well this isn't going to help

https://www.rte.ie/news/business/2018/0626/973329-counter-cyclical-capital-buffer/

Quote:
Irish banks poised to face increased capital demand - source
Irish banks are set to be forced to hold more capital to cope with a future economic downturn, according to a person familiar with the matter. 
The Central Bank is leaning toward increasing the so-called counter cyclical capital buffer from 0% in coming months, according to the person, who asked not to be identified as the information is not yet public. 
The bank could announce an increase within the next 10 days, when the latest buffer review is due to be published, though no final decision has been taken, Bloomberg reports.
Last month, the Central Bank said it saw a growing argument for building buffers, as home prices rise and the economy strengthens. 
Earlier this month, French authorities activated the buffer requirement for the first time, setting it at 0.25% for French exposures, joining financial powers such as the UK and Sweden in raising the rate above zero.
Introduced in 2015, the buffer is meant to guard against banks' tendency to boost lending in boom times and then slash it in a bust, potentially exacerbating an economic slowdown by denying companies credit when they need it most. 
It is designed to be built up when risks are growing, and released during times of stress.
The Central Bank here is weighing a range of factors as it considers increasing the rate, according to the source. 
Most Irish banks already hold more capital than strictly necessary, so could handle an increase in the minimum requirement, which would take a year to fully implement. 
In addition, a move now may not hurt the buoyant economy, Bloomberg said.
Unlike other tools, the buffer targets general lending rather than a particular area of credit such as mortgages. 
In a downturn, the buffer can be reduced, allowing banks to release capital back into the economy through lending if needed. Generally, a central bank may set it at between 0% and 2.5%. 

Introducing the buffer now "would indicate that the Central Bank believes a CCyB at the higher end of the scale would be more appropriate in time, should credit growth normalise," Davy analysts Stephen Lyons and Diarmaid Sheridan said in a note today.
That may "apply upward pressure" to lenders’ management capital targets, "which would in turn have implications for both the cost and supply of credit to the economy," they said. 
If the first ever increase has a more negative than anticipated economic impact, it could be reversed any time, the source said today. 
A decision on the buffer will be released shortly, the Central Bank said in response to questions.
Deputy Governor Sharon Donnery "has recently stated that the arguments in favor of setting a positive CCyB sufficiently early in the cycle, to build in resilience and mitigate pro-cyclicality in a downturn, are compelling," the bank said.


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Tue Jul 31, 2018 4:07 pm 
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Analysis of the Q2 2018 BPFI / PwC Mortgage Market Profile figures

https://www.bpfi.ie/publications/bpfi-m ... drawdowns/

Mortgage Lending by Volume
Q3 2017: 8,894
Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435 (4,547 FTB + 2,495 Mover + 339 RIL + 1,304*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Volume:
Current: Q2 2018 8,435
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows Q2 2018 is - 77.2% lower than Peak and + 338.1% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q3 2016 to Q2 2017 there were 29,973 mortgages by Volume or 2,498 per month
In Q3 2017 to Q2 2018 there were 34,221 mortgages by Volume or 2,852 per month
This shows a change of +14.2% from 12 months previously


Mortgage Lending by Value €m
Q3 2017: 1,967m
Q4 2017: 2,162m
Q1 2018: 1,630m
Q2 2018: 1,905m (983m FTB + 635m Mover + 47m RIL +298*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Value €m:
Current: Q2 2018 1,905m
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows Q2 2018 is -78.7% lower than Peak and +483.3% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q3 2016 to Q2 2017 6,220m was lent for mortgages by Value or 518m per month
In Q3 2017 to Q2 2018 7,663m was lent for mortgages by Value or 639m per month
This shows a change of +23.2% from 12 months previously


Average Loan by Value €

First-time Buyer
a) Change since Peak: Q2 2018 216,096 vs Peak Q1 2008 251,831. Fall since Peak -14.2%
b) Change since Trough: Q2 2018 216,096 vs Trough Q1 2013 150,292. Rise since Trough +43.8%
c) Annual change: Q2 2018 216,096 vs Q2 2017 200,728. Annual increase +7.7%

Mover Purchaser
a) Change since Peak: Q2 2018 254,586 vs Peak Q2 2008 327,927. Fall since Peak -9.7%
b) Change since Trough: Q2 2018 254,586 vs Trough Q2 2014 101,606. Rise since Trough +28.7%
c) Annual change: Q2 2018 254,586 vs Q2 2017 248,826. Annual increase +2.3%

Residential Investment Letting
a) Change since Peak: Q2 2018 138,943 vs Peak Q1 2008 267,327. Fall since Peak -57.6%
b) Change since Trough: Q2 2018 138,943 vs Trough Q4 2012 136,174. Rise since Trough +36.7%
c) Annual change: Q2 2018 138,943 vs Q2 2017 131,181. Annual increase +5.9%

Re-mortgage
a) Change since Peak: Q2 2018 228,302 vs Peak Q1 2008 267,327. Fall since Peak -14.6%
b) Change since Trough: Q2 2018 228,302 vs Trough Q4 2012 136,174. Rise since Trough +67.7%
c) Annual change: Q2 2018 228,302 vs Q2 2017 230,615. Annual decrease -1.0%


Note 1: BPFI states "We estimate that the data covers well in excess of 95% of the mortgage market." So I add 5% to the Volume and Value figures.

Note 2: I've included 50% of each quarter's Re-Mortgages figure, as BPFI defines it as "a loan which is issued by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release."

Note 3: I exclude Top-ups, as BPFI defines it as "a further mortgage advance to an existing borrower which is issued to finance expenditure other than house purchase."

EDIT 1/1/18: fixed few errors in tots


Last edited by TheJackal on Thu Nov 01, 2018 2:27 pm, edited 1 time in total.

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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Thu Nov 01, 2018 2:20 pm 
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Analysis of the Q3 2018 BPFI / PwC Mortgage Market Profile figures

https://www.bpfi.ie/wp-content/uploads/ ... ebsite.pdf

Mortgage Lending by Volume
Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909 (5,247 FTB + 3,077 Mover + 403 RIL + 1,420*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Volume:
Current: Q3 2018 9,909
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows Q3 2018 is - 73.2% lower than Peak and + 414.7% higher than Trough

b) Change from Peak and Trough lending by Volume:
Peak: Q4 2005 37,015
Trough: Q1 2013 1,925
This shows a change of -94.8% from highest to lowest Volume of mortgages

c) Annual Change by Volume:
In Q4 2016 to Q32017 there were 31,275 mortgages by Volume or 2,606 per month
In Q4 2017 to Q3 2018 there were 35,236 mortgages by Volume or 2,936 per month
This shows a change of +12.7% from 12 months previously


Mortgage Lending by Value €m
Q4 2017: 2,162m
Q1 2018: 1,630m
Q2 2018: 1,905m
Q3 2018: 2,256m (1,153m FTB +776 Mover + 57m RIL +325*50% Re-Mortgage + 5% per Notes 1-3)

Analysis
a) Current v Peak and Trough by Value €m:
Current: Q3 2018 2,256m
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows Q3 2018 is -74.8% lower than Peak and +590.8% higher than Trough

b) Change from Peak and Trough lending by Value:
Peak: Q3 2006 8,947m
Trough: Q1 2013 327m
This shows a change of -96.4% from highest to lowest by Value of mortgages

c) Annual Change by Value:
In Q4 2016 to Q3 2017 6,671m was lent for mortgages by Value or 556m per month
In Q4 2017 to Q3 2018 7,953m was lent for mortgages by Value or 663m per month
This shows a change of +19.2% from 12 months previously


Average Loan by Value €

First-time Buyer
a) Change since Peak: Q3 2018 219,779 vs Peak Q1 2008 251,831. Fall since Peak -12.7%
b) Change since Trough: Q3 2018 219,779 vs Trough Q1 2013 150,292. Rise since Trough +46.2%
c) Annual change: Q3 2018 219,779 vs Q3 2017 206,856. Annual increase +6.2%

Mover Purchaser
a) Change since Peak: Q3 2018 252,076 vs Peak Q2 2008 327,927. Fall since Peak -10.6%
b) Change since Trough: Q3 2018 252,076 vs Trough Q2 2014 101,606. Rise since Trough +27.5%
c) Annual change: Q3 2018 252,076 vs Q3 2017 256,159. Annual decrease -1.6%

Residential Investment Letting
a) Change since Peak: Q3 2018 140,215 vs Peak Q1 2008 267,327. Fall since Peak -57.2%
b) Change since Trough: Q3 2018 140,215 vs Trough Q4 2012 136,174. Rise since Trough +38.0%
c) Annual change: Q3 2018 140,215 vs Q3 2017 126,796. Annual increase +10.6%

Re-mortgage
a) Change since Peak: Q3 2018 228,786 vs Peak Q1 2008 267,327. Fall since Peak -14.4%
b) Change since Trough: Q3 2018 228,786 vs Trough Q4 2012 136,174. Rise since Trough +68.0%
c) Annual change: Q3 2018 228,786 vs Q3 2017 229,525. Annual decrease -0.3%


Note 1: BPFI states "We estimate that the data covers well in excess of 95% of the mortgage market." So I add 5% to the Volume and Value figures.

Note 2: I've included 50% of each quarter's Re-Mortgages figure, as BPFI defines it as "a loan which is issued by one lender to refinance an existing mortgage with another lender. This may or may not include further equity release."

Note 3: I exclude Top-ups, as BPFI defines it as "a further mortgage advance to an existing borrower which is issued to finance expenditure other than house purchase."


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Thu Nov 01, 2018 2:21 pm 
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Why has lending for mortgages in Ireland suddenly stalled?

https://www.irishtimes.com/business/per ... -1.3682825


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Fri Nov 02, 2018 12:02 pm 
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Neo Landlord

Joined: Sep 9, 2017
Posts: 293
In the midst of boom, we are in the death of the mortgage contract

Lending at 1988 levels

Quote:
Mortgage lending here at about 1988 levels
Updated / Friday, 2 Nov 2018 10:28

By Brian Finn
Business Journalist

The numbers of people seeking approval to buy a home showed signs of 'flatlining' in September, according to the Banking and Payments Federation.
The Federation said that 11,000 people drew down mortgages in the three months to September in what was considered to have been a fairly strong quarter for mortgage lending.
However, Frank Conway, founder of the Irish Financial Review and Moneywhizz, said it was still a fairly anaemic market. "The market has been recovering since the lowest point in 2011. It's been coming back slowly. Last year we had around 30,000 mortgages for first and second time borrowers and investors. In the overall context, looking back to the 1970s, we're looking at 1988 levels of lending. That's around 36,000 mortgage drawdowns for the full year," he said.
Ideally, Frank Conway says we should be aiming for in or around 50,000 mortgage drawdowns a year. "Take the population growth from 1988 to now - around 1.2 million. We should be up at around 46,000 - probably a bit more. We're well off that track in terms of overall lending,"
he stated.

In terms of the flat-lining concerns raised by the Banking and Payments Federation, the Central Bank lending rules appear to be squeezing potential buyers. "First-time buyers are hitting that ceiling of 3.5 times income multiple in terms of lending capacity. The other side is the supply of properties. That hasn't taken off."
So is it time to look at loosening the Central Bank lending restrictions? Not according to Frank Conway. "The Central Bank regulations are very good. They need a period of stability for people to work into - the biggest issue in the housing market is supply."
The banks here have come in for criticism over the high rates that they charge on mortgage borrowing compared to their European peers. Much of that has to do with the reluctance to repossess properties. "Repossession rates are very low here against the overall arrears rates. Lenders have worked with borrowers but the maths are problematic for them. They can't take back the property so it almost becomes a sort of unsecured lending," the money expert said.
The high level of non-performing loans are likely to emerge as a problem for the Irish banks in the latest stress tests, the results of which are due to be published today. AIB and Bank of Ireland, however, are expected to fare better than the second and fourth positions from the bottom achieved in the last round of tests in 2011.



https://www.rte.ie/news/business/2018/1102/1008192-mortgage-lending-here-at-about-1988-levels/


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Fri Nov 02, 2018 10:57 pm 
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Posts: 1237
TheJackal wrote:
Why has lending for mortgages in Ireland suddenly stalled?

https://www.irishtimes.com/business/per ... -1.3682825


Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909

I can't read beyond the IT paywall but your figures indicate it hasn't stalled (where stall is understood in the usual sense of the word: stop/halt/nosedive. Maybe they are referring to a halt in growth?


Quote:
In the overall context, looking back to the 1970s, we're looking at 1988 levels of lending. That's around 36,000 mortgage drawdowns for the full year," he said.


Lest it be forgotten, in 1988 those 36,000 drawdowns would, in all likelyhood, have involved a single earner. It now takes two earners to buy the same house today. That's one big transfer of wealth.


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Sat Nov 03, 2018 2:29 pm 
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Joined: Mar 17, 2008
Posts: 993
york wrote:
TheJackal wrote:
Why has lending for mortgages in Ireland suddenly stalled?

https://www.irishtimes.com/business/per ... -1.3682825


Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909

I can't read beyond the IT paywall but your figures indicate it hasn't stalled (where stall is understood in the usual sense of the word: stop/halt/nosedive. Maybe they are referring to a halt in growth?


Quote:
In the overall context, looking back to the 1970s, we're looking at 1988 levels of lending. That's around 36,000 mortgage drawdowns for the full year," he said.


Lest it be forgotten, in 1988 those 36,000 drawdowns would, in all likelyhood, have involved a single earner. It now takes two earners to buy the same house today. That's one big transfer of wealth.


I think there are a number of reasons why mortgage drawdowns are lower -

1. The age of the average house buyer has gone back up to the level that it was in the late 1980s i.e. over 30. The era of 25 year olds buying houses (i.e. the last boom) was an anomaly.
2. The people in the majority house buying cohort (i.e. the 30-40s) that can afford to buy a house is lower - for one of the reasons that it was in the late 1980s - house prices were too expensive relative to wages (the other was emigration)
3. Using the increase in population is not a good measure - we have a large number of people who have come to work here - but not with the intention of staying here for ever - the current state of the housing market is not encouraging them to do so
4. The concept of people buying a starter home (on their own) , then a forever home (with someone else) is gone. Buying and selling two properties in a short time frame is too expensive, and too risky - prices fluctuate relatively rapidly in this country and it is difficult to sell and buy in the same market. There has also been a feeling that supply is restricted - I don't think it is at the moment - there are 5600 houses for sale in Dublin on Myhome - in November!


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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Sat Nov 03, 2018 3:55 pm 
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Posts: 5311
metalmike wrote:
1. The age of the average house buyer has gone back up...The concept of people buying a starter home (on their own) , then a forever home (with someone else) is gone

These factors are directly related, and also related to the longer amount of time it takes to get established in the jobs market.

Even with a relatively boring, frugal lifestyle you're going to be late 20s before you have enough deposit to buy an apartment, most people will be over 30. So they're just skipping that stage and going straight to co-ownership.

metalmike wrote:
prices fluctuate relatively rapidly in this country and it is difficult to sell and buy in the same market


I don't think the price volatility is the issue since selling and buying need to be done at the same time. That is difficult due to lack of bridging finance and long transaction time. If it takes months to sell and months to buy, lining up those two events is tricky.

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"It's easy to confuse what is with what ought to be, especially when what is has worked out in your favour"
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 Post subject: Re: Irish mortgage lending falling off a cliff....
PostPosted: Mon Nov 05, 2018 9:49 am 
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Posts: 5182
york wrote:
TheJackal wrote:
Why has lending for mortgages in Ireland suddenly stalled?

https://www.irishtimes.com/business/per ... -1.3682825


Q4 2017: 9,662
Q1 2018: 7,231
Q2 2018: 8,435
Q3 2018: 9,909

I can't read beyond the IT paywall but your figures indicate it hasn't stalled (where stall is understood in the usual sense of the word: stop/halt/nosedive. Maybe they are referring to a halt in growth?


Yes, slow in growth as opposed to the drop in overall mortgage drawdowns. It's a poor headline for the article

Quote:
Mortgage lending is stalling. Having grown very strongly over the past couple of years, the latest figures show that growth in new loan approvals has now slowed sharply


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