Noonan refuses to demand mortgage rate cuts by banks

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Finance Minister Michael Noonan has said he believes the country’s main banks will slash their high variable rates if their customer bases come under “threat” from new competitors.

Senior bank executives told Mr Noonan last week that they had put in place a series of “options” for borrowers, which would allow them to reduce their monthly payments.

These include fixed rates that are lower than variable rates.

Mr Noonan has urged mortgage holders to contact their banks and switch provider “if the offer is not satisfactory”.

But he is understood to have refused to request banks to slash their rates.

The minister is instead banking on the prospect of them doing so voluntarily as a result of increased competition.

“Competition is the best long-term way of reducing interest rates paid by Irish borrowers and ensuring that Irish banks offer a sustainable product range,” Mr Noonan said in response to a parliamentary question by Mayo Fine Gael deputy Michelle Mulherin.

Haven to further Reduce Mortgage Interest Rates

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Haven Mortgages Ltd are delighted to announce advance notice of  further reductions to their suite of Owner Occupier Variable mortgage rates , effective 1st October 2015. Applying to the Standard Variable Rate  and Loan to Value rate products, these changes are a further demonstration of lenders delivering real value for  existing and future customers.

The standard variable rate will be reduced by 0.25% to 3.72%. LTV’s will also be cut by 0.25% . 80% LTV’s are currently 4.0% and will be 3.75% from 1st October.

 

Income limits causing ‘mortgage lockout’ for First-Time Buyers

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Sunday Times article ; results of Mortgage Brain survey.

A new survey of brokers highlights that the income rules will provide a ‘killer blow’ for First Time Buyers (FTB) and not the deposits as previously expected by many analysts. This survey was carried out by Mortgage Brain Ireland, the team behind the IrishMortgages app. Some 200 broker companies were surveyed throughout Ireland. Brokers recommend increasing the lending limits to 4.0 or 4.5 times income.

 

The Loan to Income limits (3.5 times joint income) will be the real “killer blow for First Time Buyers trying to get on the housing ladder” according to Michael Quinn, Managing Director of Mortgage Brain Ireland. Some ” 48% of brokers feel that this income rule will have a high impact on the FTB’s ability to get a mortgage while another 40% of brokers believe there is a medium impact” according to Quinn.

 

Michael Dowling, a leading Irish Mortgage broker and chairman of Mortgage Brain Ireland said: “These new rules will directly impact First Time Buyers’ ability to purchase a home. The rules will likely put home ownership out of the reach of most young FTB’s unless they are earning a substantial salary. For example he points out that a couple who are now trying to buy a house worth €300,000 will need a deposit of €38,000 (12.6%) on a mortgage of €262k and this will require a joint income of €75,000.”

 

The new income limits (3.5 times joint income) will mean that the majority of public sector workers, and those on medium to low incomes, will not be able to borrow enough to buy a home in the city. This ‘mortgage lockout means that only white-collar professionals on high salaries will be eligible to borrow enough to match the high house prices in Dublin, Cork and Galway.

 

The IrishMortgages App survey asked Brokers their opinions on how we could improve the situation. Some 51% of brokers would recommend an increase in income multiples to 4.0 times income, while a further 33% suggested increasing this to 4.5 times income according to Quinn. In the UK the income multiple is 4.7 for single applicants and 4.5 for joint applications.

ESRI questions Noonan move to force banks into variable rate cut

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Moves by Finance Minister Michael Noonan to push banks to cut their variable rates have been questioned by the country’s leading thinktank.

Kieran McQuinn, the Economic and Social Research Institute (ESRI) research professor, said fostering competition would be a better way to get banks to drop sky-high variable rates.

Prof McQuinn appeared to back the stance of Central Bank governor Patrick Honohan.

Mr Honohan said he did not want the power to force banks to lower variable rates, and said competition was the best cure for higher rates.

About 300,000 mortgage holders pay among the highest variable rates in the eurozone.

The high cost works out at around €300 a month more than the costs for a similar-sized mortgage in the rest of the European Central Bank area.

The most effective way to ensure there are lower rates is to improve banking competition.

“The lower the level of competition in the market, the higher the mortgage interest rate,” the paper found. High levels of arrears and larger numbers of trackers also restrict banks from lowering variable rates, the ESRI paper says.

Mortgage affordability improves slightly over last six months

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Mortgage affordability has improved slightly over the last six months, according to lender EBS.

The EBS Affordability Index suggests that the proportion of disposable income required to fund a mortgage for the average first-time buyer working couple dropped to 19.5 per cent in April 2015, down from 20.6 per cent in October 2014.

As might be expected, the index shows that buyers in the Dublin housing market need a bigger chunk of their pay to meet their mortgage repayments.

In Dublin, a first-time buyer couple requires 22.6 per cent of earnings to fund their mortgage, down from 24.3 per cent in October 2014.

In Cork and Galway, the figure stands at 14.4 per cent and 13.4 per cent respectively.

Longford is the most affordable county in Ireland to buy a home, with a couple requiring only 6.9 per cent of their net income to fund their mortgage.

Mortgage-approval fall blamed on new rules

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There has been a “stark” slowdown in the number of people being approved for mortgages, with Central Bank lending restrictions being blamed.

Figures from the Central Bank show that lending for house purchases declined at an annual rate of 2.6pc last month.A total of 2,130 people were approved for a mortgage for a house purchase in April, down from the figures for the previous month.

The average loan approval amount has aslo decreased- currently €188,900, down from €190,300 in March.

10 moments when you should review your life cover.

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Life insurance is one of those things people forget about once they’ve bought it. However, you need to review it occasionally as your situation and your commitments change.

Here are 10 instances when a life cover review is essential:

1 Buying a house

Your mortgage will be the biggest debt you ever take on. You need to be sure it will be paid off should you die early, especially if you’re the main breadwinner.Banks and lenders often try to sell you life insurance when you start on the property ladder, but you should always compare prices before going ahead as there could be better and cheaper cover elsewhere.

2 Getting Married

Once all the fun of your wedding is over, you need to think about your new responsibilities. How would your partner cope alone with all the financial commitments you’ve taken on if they can’t rely on your salary too?

3 Having your first child

If you haven’t already bought life cover, it’s vital to buy it once you start a family. And if you have only insured for a small amount, you definitely need to review it now. Food, clothing, child care, schooling and even holidays all cost more once you have a little one.

4 Adding to your family

A second, third or more children all put a strain on your household budget. You’ve probably already noticed how much more salary you need to keep the family going. Is your life cover enough to pay for their needs should the worst happen and you are no longer there to provide for them?

5 Moving home

A larger home is likely to mean a bigger mortgage. Make sure your life insurance is enough to pay it off and, if you’ve increased the term of your home loan, that it runs for long enough.

6 Inheritance planning

Life insurance isn’t just about paying off large debts such as your mortgage should you die. It’s also about providing for your family’s day-to-day bills once you are no longer bringing in a salary.

7 Moving job

Many employers offer a perk known as ‘death in service’ benefit. This provides a lump sum to your named beneficiaries should you die while working for the firm. The amount is typically set at four times your annual salary.

If you move job, check the terms of your new employment. If you no longer have this benefit, you could need to increase the amount of life cover you have.

8 Retiring

Depending on your pension, it may mean that once you die your pension stops or at the very least your widow or widower will receive a smaller amount. If you’re worried they won’t have enough to live on without your pension, you could continue your life insurance.

9 Getting healthier

If you give up smoking, tell your insurer. Your premiums may come down. If not, you can look around for another insurer to see if it will be cheaper.

You must have given up smoking for at least 12 months before it counts and you can’t still be using nicotine replacement products such as inhalers, patches or chewing gum.

10 Dangerous activities

Those who take part in dangerous sports and hobbies such as flying, climbing, scuba diving and parachuting, will be considered a higher risk than normal and will no doubt have to pay a higher premium. Alternatively, your cover will exclude death as a result of one of these activities. If the company didn’t know about these activities and you die as a result, the claim is unlikely to be paid

New Government Measures: Local authority or charity to take over home if owner can’t pay mortgage.

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THE Cabinet has agreed a series of measures in a bid to keep people who are in mortgage arrears in their homes.

Details of the measures, released this afternoon, include legislative changes to allow the courts to review and overturn insolvency deals that have been rejected by the banks, but are seen as reasonable by a judge.The new change will weaken the much-criticised veto given to banks when the new Insolvency Service was set up.

It was also agreed to expand the mortgage-to-rent scheme, to allow more families to qualify. This sees a local authority or a charity take over a home when someone can no longer meet the mortgage payments. They pay rent instead.

The State’s Money Advice and Budgeting Service (MABS) is to be given a greater role in offering information, advice and assistance to borrowers in arrears.

Royal London Special Offer Extension

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Having received very positive feedback from clients, Royal London have decided to further extend their Protection special offer.

You can avail of 5% off Term Assurance and 10% off Mortgage Protection until 31st May 2015. The 5% offer includes Indexation and Pension Term Assurance.

Get in touch with us to discuss this special offer on 01-5052718.

 

Dubliners hit hardest with new lending rules.

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The new Central Bank rules on mortgage lending, while not as harsh as expected, still came as a huge blow to many house hunters. Most of those looking to buy a home today must now get together a larger deposit than had previously been the case.

We are in a state of flux at the moment when it comes to analysing the real impact of the new rules and ultimately it is still much too early to tell.

Many people had mortgage approval from banks before the rules kicked in and they still have time to proceed with these mortgage agreements to buy a property. Hence, much of the activity we are seeing on the market now is from these people.

What has become glaringly apparent is that where you want to live in the country will be a huge factor in determining the impact of the new rules. Ultimately, first-time buyers in Dublin, particularly those on low or middle incomes, have been crucified

Under the new rules, first-time buyers still only need a 10pc deposit – as long as the house they are buying is worth no more than €220,000. Otherwise, they must have a higher deposit for the portion of the home that is worth more than €220,000.

The average asking price nationwide is now €201,000, according to the latest house price report from Daft.ie. As this is below the €220,000 limit, many first-time buyers won’t be put out by the new rules. However, this is just a national average – the county averages vary hugely.

The most expensive areas in Ireland to buy three-bedroom properties are unsurprisingly all in Dublin. The average asking prices in Dublin, as well as Kildare and Wicklow, are well above the national average. However, average asking prices in Cork, Galway and Limerick are below the national average.

So what can house hunters do to ensure they can buy within the boundaries of the new rules?

First, if you have been saving for a deposit, continue to save. While you may have to alter the value of the properties you have been looking at, you don’t know what the future will bring and what will happen to house prices.

Second, don’t rush! All this uncertainty makes people on edge and often people can make rash decisions when they are feeling like that. Buying a house is a huge and long-term purchase. So the same deciding factors apply. Is it an area that you want to live in? Can you imagine yourself there long-term? And so on.

Third, affordability is key. It’s not just up to the banks or the regulatory bodies to ascertain whether or not you can realistically afford a property. Be prudent. You’re the one who will have to meet the monthly repayments which will directly impact the lifestyle you can have.