Blog – David McCarthy – Galway Talks, 06/03/2014

galway-bayfmIssue:  Recent data shows lack of Mortgage lending by banks.

Comment:  Despite the claims by mainstream lenders, recent figures suggest that mortgage lending is still nowhere near the level it should be.  Whilst the property market has picked up, there are also indications that a large number of buyers are utilizing cash.

Until such time as the criteria for sanctioning mortgages has relaxed somewhat, then we will not see the type of normal activity in the property market that an economic recovery will justify.

Issue:  Recent press reports suggest an increase in property repossessions in Galway.

Comment: Last week the City Tribune reported on 80 repossessions pending in the court.  Whilst this is obviously a high figure, it must be remembered that up until the start of 2014, legislation made it very difficult for banks to repossess a property.  This has now been amended and the process is easier for them than previously.

However, when you compare the number of repossession applications and the overall level of arrears, this figure is quite low.  I do not believe that an increase in applications to the courts will result in a wholescale flood of properties coming onto the market.

Issue:  KBC Bank – Agrees new deal with Irish Mortgage Holders Organization.

Comment:  Last year the Irish Mortgage Association (IMHO) agreed to act on behalf of customers, who were experiencing difficulties with their mortgages if they are with AIB Bank.  It appears that this system has worked very well and they have now extended it to an agreement with KBC Bank.  Press reports suggest that they could also be in discussions with both Ulster and Permanent TSB.

There is no doubt that customers are more comfortable dealing with a body like the IMHO, rather than having direct contact with the bank.

Issue:  Permanent TSB introduces new deal on Tracker Mortgages.

Comment:  Up until now it has been impossible for customers, who are in negative equity to trade up or down, without losing their tracker mortgage.  Permanent TSB have now introduced a new product whereby they will charge an extra 1% onto the Tracker rate for the life of the loan, if the customer wishes to move from their current home. 

Normal lending limits will obviously apply and they will also charge a higher rate for any amount borrowed above their current mortgage.

It has also been reported that AIB are introducing a similar product which should certainly help people who feel “trapped” by their Tracker rate.