This is a very positive move. ...
I think "productisation" would be a very bad move. If UB and EBS do what they say, surely that is sufficient? There is a way, for people who can demonstrably afford it, to trade up despite suffering negative equity in their current PPRs. I wonder how well stress-tested are the currently approved trade-ups? Interest-rate fluctuations, exchange-rate variations, property-value tumbles, and son on will effect them.This is to be welcomed if it will be genuinely rolled out. ...
Something the banks are against but is badly needed as the current legislation is in need of urgent reform to make bankruptcy an option for the little guy.bankruptcy reform
I'm curious as to how living in an apartment stops people from starting a family?
This may well create an artificial floor under property prices, particularly prices for units that were sold to first time buyers - apartments and small houses. Good (in the short term) for banks and others in negative equity, bad for the rest of this, particularly those who haven't yet purchased a property.
This product allows owners to sell at artifically increased prices. In the current situation, they can't bring their negative equity with them, so they are forced to sell at current market rates and take the hit on the equity. With these mortgages, they don't have to face up to their equity, so the they are selling at an artificial price.How? If anything, the opposite is the case. If the product became widespread, it would lead to a large increase in the supply of apartments into the market and a large increase in the demand for larger houses so if a 'floor' was to created, it would be for the larger houses. It is actually negative for apartment prices.
They said the same about 100% mortgages.I can't see this product becoming so popular that it would effect property prices anyway.
This product allows owners to sell at artifically increased prices. In the current situation, they can't bring their negative equity with them, so they are forced to sell at current market rates and take the hit on the equity. With these mortgages, they don't have to face up to their equity, so the they are selling at an artificial price.
I do take your point about possible increased numbers of apartments on the market.
They said the same about 100% mortgages.
That's my point - if you don't have to find the €30k, you are far more likely to proceed with this transaction, and allow the €220k sale to proceed.The only difference is that I don't have to find the €30,000 upfront to repay the bank the difference.
I'd like to see a focus on these being a trading down option rather than a trading up option.
Someone could have a €400k mortgage on a €300k house they don't necessarily need.
A €300k mortgage on a €200k house/apartment would leave them in the same position negative equity wise, but with 25% knocked off their monthly mortgage outgoings.
I'm sure there are many people for whom the reduction in mortgage would improve their lives immeasurably even when taking account of the fact they have traded down.
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