EBS Building Society is to be reprimanded!

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andycole

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Below I have copied a couple of lines from this story which is in today's Irish Independent. I have also copied the link...(noted - posting guidelines) for people to directly read the story for themselves.
I am currently a FTB with mortgage approval with the EBS Building Society myself. Can I ask for people's opinion about whether they think the EBS is doing the right thing here? Is the 1% stress test sufficent for a FTB?
Should a FTB insist in a stress test for higher than 1%?


"EBS Building Society is to be reprimanded by the Financial Regulator after it decided to depart from industry norms on the stress testing of mortgage borrowers." REF:
http://www.unison.ie/irish_independent/stories.php3?ca=184&si=1765302&issue_id=15183
 
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People can register and access the Indo site for free if they want to access the article.
 
andycole said:
Should a FTB insist in a stress test for higher than 1%?
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Whatever the lending institutions do or IFSRA mandate a borrower should do his/her own stress testing to ascertain their ability to service debt now and into the future under certain interest rate conditions. Don't depend on the lender or regulator to protect you in all cases. Caveat emptor.
 
Heard that they are also going to introduce a new 40 year loan.
 
I dunno about that crowd, they wouldn't give me & hubbie a mortgage last year coz of our "childcare costs" and we have excellent jobs and salaries and got the mortgage in hours from another bank.
Then I know of someone who got 100% mortgage off them and earns €25k/€30k per annum and even hid the fact that she is a single parent, lied about her salary and was lent €300k by them last year so I hope that EBS do get in trouble if they are recklessly lending like that AND letting a borrower go interest only for their first year aswell!!!!. Then they refuse the honest applicants over affordability and go and do this...the mind boggles!.
 
Mag2006 said:
hid the fact that she is a single parent, lied about her salary
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Not sure what, if any, relevance her single parent status has but if she lied about her salary and maybe even supplied bogus documenation ostensibly corroborating her claims then no lender can really be blamed for that, can they?
 
Well if a FTB or another type of loan applicant lies about their personal circumstances to whatever type of financial institution then I think they are only going to bring trouble upon themselves sometime in the future.
I would'nt blame the EBS about this as they are depending upon the people to also be honest in the information that they are providing.
Similar to anyone doing business with the EBS they are going to attracted to doing business because of product advertisements etc... and they are taking it on trust that the finanical business is advertising honest information and not misleading information.
 
I just find it really weird that they actually fell for it, an institution of that size and they are highly reputable for the mortgage services. When I say the single parent lie, it's really the fact that she said she had no kids and got away with it, suppose it's easy enough to do if the child benefit is in book form instead of paid into the bank. She only has one but she is going to run into big trouble here, her salary cannot sustain the repayments when the interest only period runs it's course.
I just still cannot believe they actually gave the mortgage, when we applied for ours we gave original copies of everything even had to provide another payslip prior to mortgage cheque drawdown due to the time lapse. It's just amazing really, that's all I am saying.
 
I suppose it's different for everyone. For example, I didn't need a 2% stress test because I knew I was starting my career and my salary was going to double within 3 years, which it did. So maybe a 1% stress test is all some applicants need just to make sure they can get throguh the first year or two if rates go up.

I certainly don't think they should be reprimanded for it. It's people's own choice who they want to go with. If they do their own homework and are happy to only be given a 1% strees test then that should be up to them I feel. As long as the lenders are not falsely persuading people they can afford it when they can't then there shouldn't be an issue.
phoenix_n said:
Heard that they are also going to introduce a new 40 year loan.
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I got one of those 3 years ago from UB :D
 
There must be desperate times down at the old EBS to leave them scraping the barrel. I wonder will Shane Ross get his pen out for this one. Totally irresponsible by them but is anyone really suprised. They gave a workmate of mine a loan last year after AIB declined to loan her anything near the required amount so I would worry for that institution.

Could they not follow the Burlo's example and flogg their land (assuming they own their site that is).
 
I'm not sure that because one of the other banks wouldn't give someone a loan and EBS would that it makes EBS scraping the barrel.

A few years ago a friend went back to college to study an IT masters and obviously took no salary. Typically, a house she wanted to buy came up around that time and EBS were willing to lend to her in her circumstances where none of the other banks were. Turns out that they were right (so far) as the job that she got as a result of retraining means that she can comfortably manage her mortgage. She wouldn't bank with anyone else now.
 
ClubMan said:
Personally I wouldn't be smiling if I was lumbered with a 40 year debt!
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Na, I was just laughing because those loans have been around for a while. But I know what you mean, 40 years is a long time. But I didn't plan on taking 40 years to pay off a 2-bed apt in suburbia that's for sure. It's only a starter property so the 'real' mortgage will be more like 25 I'd say.
 
phoenix_n said:
Perhaps, but you are the first person that i know that actually has one.
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I just worked it out there actually, as a matter of interest (excuse the pun!). It's cost me an extra €4,000 over the first 2 years of my mortgage to take the 40yr loan rather than a 30yr loan.

I couldn't get approval on a 30yr loan 3 years ago when I applied, so if somebody had said to me, "You can take a 40yr loan now and it will cost you an extra €4,000 or wait 2/3 years until you can get approval on a 30 yr loan I'd still take the 40 yr. You might think I'm mad but if I waited until now I would surely have to pay an extra €4,000 at least on a deposit and get a loan one and a half times the size I have now, therefore costing me more in monthly repayments.

Maybe I haven't thought about it fully but it seems to me a small price to pay to get on your way...

Would anyone else do the same , or would you wait?
 
Hi ButtermilkJA,
I would rather not wait...as you say "I would surely have to pay an extra €X,000 at least on a deposit and get a bigger loan than the size I have now, therefore costing me more in monthly repayments."
However some factors to consider is future house prices directions (all speculation) and also interest rates? For the last 5 - 6 years or more interest rates have been favourable to people paying mortages and also the fact that the price of homes have been increasing. So in effect very easy to make this extra expense back?
 
Yes, I agree. It's easy to look back in hindsite and say, "Ah, I'm glad I did that". But I always knew my first property would be a quick turnaround, and I would definitely not be going so head-strong into a trade-up mortgage if I thought I would be staying in the property for 15/20/25 years. I'd really have to take a close look at things then.

But yes, you're right, the market has allowed me to right off this extra cost quite easily over the last few years but it won't be like that in the future I'd imagine. So more caution from now on!
 
ButtermilkJa said:
I just worked it out there actually, as a matter of interest (excuse the pun!). It's cost me an extra €4,000 over the first 2 years of my mortgage to take the 40yr loan rather than a 30yr loan.

...

Maybe I haven't thought about it fully but it seems to me a small price to pay to get on your way...
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Have you worked out the total cost over 30 versus 40 years! And then factored in the additional term mortgage protection life assurance premiums?

Using Karl Jeacle's mortgage calculator I estimate the total interest bill (excluding interest relief) on €300K at 5% over 30 years to be c. €280K and the equivalent bill over 40 years is c. €400K! This is the amount that you pay in addition to the original €300K borrowed.
 
Caution yes..but reflected in the following factors:

Good location (walking distance or along transport links to city centre)
Good location (savings to be made from petrol, car, costs etc...)
Interest Rates (still historically low compared to 15 - 20 years ago)
Rent a Room Allowance (at least minimum I think of 4 grand a year for me)

Good location should keep house value steady...or so I hope!
 
Forgot to mention...no stamp duty for FTB as well.
And also increased mortage interest relief.
 
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