In the context of what has gone on since, this paper from 2014 and subsequent article from Richard Curran (which few others picked up on) go a long way to explain where we are now on many levels.
Interest-only mortgages in Ireland (Jane Kelly, Gerard Kennedy & Tara McIndoe-Calder)
"Day of reckoning looms for those who took out interest-only mortgages in boom era", Richard Curran in Indo, 27.7.17
"In Ireland we have already been through this painful process - but only sort of. Back in 2014 economists at the Central Bank did a study into interest-only mortgages. The paper by Jane Kelly, Gerard Kennedy and Tara McIndoe-Calder had some interesting findings. Interest-only mortgages tended to be trackers used in Dublin and surrounding areas and the peak years were 2005 to 2008. Most of them were used in buy-to-lets and for around 43pc of them the interest-only period was due to end between 2014 and 2016.
The figures suggest that the interest-only honeymoon came to an end between 2014 and 2016 for several billion euro of Buy-to-Let (BTL) mortgages. Once this happens, the repayment burden rises dramatically. The Central Bank economists found that the median monthly interest-only repayment in mid-2013 ranged from €326 in the Midlands to €470 in Dublin.
The average monthly rent at the time according to Daft.ie ranged from €400 in Leitrim to around €1,230 in Dublin. However, once the interest-only period ended, the median estimated repayment ranged from €1,290 in the Border region to €2,050 in Dublin.
This might go some way towards explaining the financial drive towards rising rents in recent years. It also shows how little many people were paying on BTL mortgages for several years while raking in attractive rents.
In a lot of cases this has come crashing down around BTL landlords. Once interest-only periods end, there is tendency towards greater repayment defaults and mortgage delinquencies.
Even for the private dwelling home at hundreds of millions of euro in mortgages were coming off interest-only this year and next year, and house owners faced a whole new reality check or risk losing their home.
The authors of the Central Bank paper also found that a significant number of interest-only mortgage holders would be retired or close to it by the time the interest only period came to an end or the mortgage had to be repaid."
Interest-only mortgages in Ireland (Jane Kelly, Gerard Kennedy & Tara McIndoe-Calder)
"Day of reckoning looms for those who took out interest-only mortgages in boom era", Richard Curran in Indo, 27.7.17
"In Ireland we have already been through this painful process - but only sort of. Back in 2014 economists at the Central Bank did a study into interest-only mortgages. The paper by Jane Kelly, Gerard Kennedy and Tara McIndoe-Calder had some interesting findings. Interest-only mortgages tended to be trackers used in Dublin and surrounding areas and the peak years were 2005 to 2008. Most of them were used in buy-to-lets and for around 43pc of them the interest-only period was due to end between 2014 and 2016.
The figures suggest that the interest-only honeymoon came to an end between 2014 and 2016 for several billion euro of Buy-to-Let (BTL) mortgages. Once this happens, the repayment burden rises dramatically. The Central Bank economists found that the median monthly interest-only repayment in mid-2013 ranged from €326 in the Midlands to €470 in Dublin.
The average monthly rent at the time according to Daft.ie ranged from €400 in Leitrim to around €1,230 in Dublin. However, once the interest-only period ended, the median estimated repayment ranged from €1,290 in the Border region to €2,050 in Dublin.
This might go some way towards explaining the financial drive towards rising rents in recent years. It also shows how little many people were paying on BTL mortgages for several years while raking in attractive rents.
In a lot of cases this has come crashing down around BTL landlords. Once interest-only periods end, there is tendency towards greater repayment defaults and mortgage delinquencies.
Even for the private dwelling home at hundreds of millions of euro in mortgages were coming off interest-only this year and next year, and house owners faced a whole new reality check or risk losing their home.
The authors of the Central Bank paper also found that a significant number of interest-only mortgage holders would be retired or close to it by the time the interest only period came to an end or the mortgage had to be repaid."