gnf_ireland
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@Brendan Burgess is it worth trying to arrange a meeting with Mr Cunningham in advance of its 'pending' launch and see if it would be possible to outline some of the main issues with the current lending practices and ask him to consider addressing some of them contractually in their mortgage agreements
Well, you say this, but look at, say, Bank of Ireland. Variable rate of 4.5% for >80% LTV, and 4.2% for 60-80. These are terrible. No-one should be going with them. And yet presumably people are; otherwise they would drop their rates or stop advertising so heavily. Maybe because of their cash back incentive?A lot of naivety there Brendan...
1) Fair mortgage rates i.e. a lot lower than the current rates
Market/competition will dictate this....
6) A rate cap. "Whatever happens the ECB rate the rate charged by us will not exceed 5% over the next 10 years.".
1) Fair mortgage rates i.e. a lot lower than the current rates
Market/competition will dictate this....
4) No tricks or gimmicks to hide high rates
Not sure what you have in mind here - all retailers will add incentives to try and differentiate their products - mortgage providers will be no different - as long as pricing is clear wouldn't have thought this to be a major issue...
5) A tracker
Ideally a tracker for the duration of the mortgage. Of course,they won't be able to do cheap trackers ECB +1%. But something like ECB +2.5% for <50% Loan to Value
If they can't do trackers for the full length of the mortgage, then a tracker for 3 years or 5 years.
Mortgage providers have lost their shirts on trackers - you'll wait many a long day for them ever to go down that road again - indeed it would be irresponsible of them to do so....
6) A rate cap. "Whatever happens the ECB rate the rate charged by us will not exceed 5% over the next 10 years."
And when cost of funds exceeds 5% and mortgage providers are again losing their shirts on mortgages - you and other financial commentators will articulate how stupid mortgage providers were to offer such an nonsensical guarantee... again not one in the realms of reality...
8) Pre approval for further borrowing. Let's say I get mortgage approval for €300k based on my income and LTV. But I need only €200k. I can draw down the remaining €100k if I need it. Subject to a review of credit status. Clearly if I have been missing payments, then I would not get it.
What you've described isn't a pre-approval - it's a formal approval of E300k - but client only draws E200k - again there will be a capital implication if it were to remain available but undrawn...
8) An interest only mortgage. Repaying capital on mortgages over 60% LTV should be optional.
Sanity check on this one??? Has the country tried this before??? If borrowers can't afford capital repayments they shouldn't be borrowing (and mortgage provider shouldn't be lending the money)
9) An indefinite mortgage - there is no reason why a mortgage should be repaid at a particular age. However, the lender would have to have the right to seek repayment after 20 years.
And where will the mortgage provider find the indefinite funds to lend on 'on an indefinite basis'???
Well what happens if a lender offers a fixed rate of 3.5% and the cost of funds exceeds 5%? Irish lenders can offer a rate cap and presumably buy a financial product to offload their risk. With rates forecast to be very low for the future, this should be relatively cheap. Of course, it would have to be priced into the rate which might make it too expensive.
Is anyone really forecasting with any confidence that rates will remain low for a decade, though?
Fair point! All things being equal the loan risk will improve in line with the packback/upward movement in property prices. Offering a tiered LTV rate system to existing clients would involve a very clear set of rules on property valuations. Cost of valuation would also need to be factored in. The market is moving somewhat in this direction where the highest rate would be on the >80% LTV and tiered down by circa 20% increments.2. Number 3 above, how would you like this to work in practice? I like the idea but not sure how it could work
Ideally a tracker for the duration of the mortgage. Of course,they won't be able to do cheap trackers ECB +1%. But something like ECB +2.5% for <50% Loan to Value
If they can't do trackers for the full length of the mortgage, then a tracker for 3 years or 5 years.
.
Things like flexible random capital repayments or protection in the event of unemployment cost money.
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