Homeowner with a Loan to Value of <50% gets a PIA with a 0.5% interest rate fixed for 18 years

Brendan Burgess

Brendan Burgess

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This is an absolute disgrace and explains why we have been paying the highest mortgage rates in the eurozone for most of the last decade or more.

When she applied for the PIA, Ms McEnerney’s mortgage stood at about €133,000 against a house valued at €295,000.

Mr Gannon argued the low interest rate was necessary to ensure Ms McEnerney’s return to solvency based on her income, expenditure and circumstances, and to achieve long-term affordability.

While I am very sorry for her, it's not the duty of the bank or its other mortgage customers, to house her.

If it is government policy that she should not lose her home, then the government should have taken over the mortgage.

Alternatively, the mortgage should have been put on an interest only basis at market rates.

Alternatively, the house should have been sold and the loan cleared.
 
He also argued the interest rate was profitable to the bank and provided it with a better outcome than bankruptcy would
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Where does bankruptcy come into it? The borrower agreed to a legal charge over the property in exchange for the loan. The value of the asset is greater than the value of the loan, so it should be sold to discharge the loan if the borrower cannot meet the payment obligations.
 
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Brendan you don't seem to understand the purpose of the legislation.

AIB bought the Loan from Ulster Bank. The interest rate they charge forms part of the profit.

If AIB had been the original lender it's unlikely the court would have approved it as the rate would be deemed unfair. But they are an investor, Investment returns can go up or down.

The Return in the arrangement is always compared against Bankruptcy as a measure of fairness. In this case irmt is the same.

They are being paid in full at less profit. The individual in question does not become a burden on the state in future.

AIB had the choice to prove their fubding cost yet chose not to do so.

The individual has the house adapted for medical reasons.

The court assessed her ability given her condition whether she could trade down. They decided there was not enough equity or resources for them to be able to do so.
 
I fully understand the purpose of the legislation, but I disagree with it.

The solution in any grown up democracy would be to recognise that it is secured lending. Secured lending is cheaper because it is secured. But the flipside is that if people don't or can't pay their mortgage, then the security is realised.

If we want to molly coddle people, fair enough. But in that case, she should have been charged market interest.

The fact that it was sold is neither here nor there. The difficulty in realising the security was actually part of the reason these banks left Ireland.

If we behaved as grown ups, Irish people would have lower mortgage rates.
 
One way of looking at it but the comparison would ultimately be the tax payers in terms of social housing after savings disappatiated
 
Other people who have gone to the likes of Spry in similar circumstances will be miffed at this , they sorted out their debts at the expense of their inheritance when they die .
I am surprised that the Banks did not have such a defence in this case , will they appeal ?
However I suspect this is not the end of the matter , the last 2 paragraphs are telling , there could be an arrears issue in the not too distant future in this case .

The judge also rejected an objection to the length of the mortgage term, noting the court had previously approved PIAs where the mortgage was extended into the debtor’s 70s and 90s.
She found that a shorter term may well have made repayments unaffordable, and that Ms McEnerney’s growing equity leaves her free to sell and redeem the mortgage earlier without breaching the arrangement.
 
Spry loan is based on age wouldn't clear the loan at all. Lump sum is higher based on value and life expectancy. She's early 60s so wouldn't get much
 
Correct. Spry would not solve this problem.

And a lender would not give a lifetime loan to a 60 year old with 50% Loan to Value.

But AIB should be prepared to give her a lifetime loan at Spry's rates. Let the interest mount.
Even better lend the money at market rates and she pays the interest every year.

It's bonkers that you can get a PIA to repay capital which is a form of saving.
 
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