AIB & BOI ignoring advice on p.ie

[mollox]

Hot on the heels of AIB announcing a one-year fixed rate discounted mortgage rate, BOI are offering a new 1-year fixed rate for First Time Buyers of 2.45%, which will rise by a minimum of 0.75% at the end of that yaer.

BoI offers low 1-year rate for first-time buyers - The Irish Times - Tue, Feb 17, 2009

Clearly neither Bank has paid the slightest bit of attention to my advice, posted on another thread back in January: particularly No.7

http://www.politics.ie/economy/40740...ike-see-3.html

Here’s a couple of rule changes that might help in the Irish Residential market.

1.Restrict domestic banks to a maximum Loan to Deposit ratio of 100%. This would reduce the volume of funds available for mortgage lending.

2. Presently, the amount of capital allocated to residential mortgage lending is less than that required for other lending, on the basis that residential mortgages are less risky. An increase in that capital allocation to mortgage book would restrict bank lending in this market, as well as making it somewhat less attractive for the bank.

3. New Maximum LTV limits: First time Buyer FTB 90%, Trading Up 80%, Buy to let 70%.

4. Maximum term of mortgage: 25-30 years?

5. Eliminate intermediary sellers (fee-based intermediaries selling advice only allowed to remain in business)

6. Adopt US system – borrower can hand keys back to the bank and walk away from outstanding mortgage, so negative equity risk rests with bank. (Hence elimination of intermediary sellers who carry no risk)

7. Eliminate initial short-term incentive offers e.g. 1 year @ x% below standard rate, deferred repayments, cash-back deals etc etc..

[wysiwyg]

[SIZE="7"]Sub Prime Mortgages.... [/SIZE]

Haven't these people learned a damn thing ?

For F's sake... the Government now effectively own 25% of these banks.. can't somebody please go in and tell them that large scale sub prime lending, based on offering discounted fixed rate mortgages to people, was what started all this collapse in the first place ?

[iartaoiseach]

Just hope no-one is dumb enough to swallow this crap. It's all about selling overpriced houses to mugs and restarting the silly season. first time buyers -myself included- should hang on a while and allow the market to get real. more fiddling by this shower is the last thing we need.

[LeftOfCentre]

[SIZE="7"]Sub Prime Mortgages.... [/SIZE]

Haven't these people learned a damn thing ?

For F's sake... the Government now effectively own 25% of these banks.. can't somebody please go in and tell them that large scale sub prime lending, based on offering discounted fixed rate mortgages to people, was what started all this collapse in the first place ?

Your understanding of Sub Prime is very skewed. . . . . .

AIB and BOI simply do not offer SUB prime loans! So stop throwing the word around like you know what it means.

Negative equity is always a risk, Even with a 50% mortgage.
You should have to save for a deposit (100% mtgs were a disgrace!) but you should not end up in a position were only those with rich parents can afford to buy property!

[wysiwyg]

Your understanding of Sub Prime is very skewed. . . . . .

AIB and BOI simply do not offer SUB prime loans! So stop throwing the word around like you know what it means.

Negative equity is always a risk, Even with a 50% mortgage.
You should have to save for a deposit (100% mtgs were a disgrace!) but you should not end up in a position were only those with rich parents can afford to buy property!

A large part of the sub prime mortgage crisis in America, which was the catalyst for the credit crunch worldwide, was the widespread practice of offering discount mortgage rates to entice in people to buy, who subsequently would be unable to afford the "real" mortgage rate when it was applied later on


Now, look at the offer....

2.45 % initial discounted rate (0.45%) higher than ECB...

The lower interest rate will apply for 12 months and – assuming no interest rate changes by the European Central Bank over the period – would increase by a minimum of 75 basis points after that point

Did you see the word "minimum" in the middle of that line ?

Thats a minimum 3/4% increase in interest rate... so the mortgage holder has no definite idea of what they will be paying in 12 months.. but, they will have at that point signed into a 30 or so year mortgage...

That was how the sub-prime crap started ..

[constitutionus]

somewhat coming to the defence of the big two.

do they have a choice?

one of the parts of the recap was they had to increase money to be leant out to mortgages. if i remember correctly if its not taken up the money is to be stashed in a fund for SME's so if everyone ignores this thing will it end up helping small business?

or am i confusing this initiative with something else entirely?

if its the latter its a ******************************g disgrace as these properties WILL depreciate in value. no "risk" of it at all, its a certainty. the rental sector has DOUBLED in terms of available units so two guesses what that'll mean to the purchase one mid term.

EDIT . just looking at WYSIWYG post above. to give an example ive just got MY revised mortgage rate today which factors in the latest .5% cut because im on variable from first active

its 4.10%

that means these guys COULD be facing a doubling of interest rates after a year if the banks feel like being a bastard.

there was an ad, sorry sorry, news item for this on RTE nine news last night. complete with property developers pimping their 2 bed dog boxes in the city centre highlighting this new "scheme" .

[Middleaged]

Meanwhile, Ulster Bank will Guarantee you up to 15% loss on your home, should the value decrease, nothing if the value goes up.

It will also advance 95% LTV

Now I still can't get my head around this one

[itstoolateforplacebos]

There is no intelligence making these decision, the job is to follow America and they have been doing it like clockwork.

Board members whose only vote is yes, it's not a surprise we just follow Britain, the US and Israel. Ireland does not have the capacity to make a decision. Our government and banking system has been completely gamed and is obsolete.

Question: Do our colleges teach budding economists to change the system or to just perpetuate it?

Anyway all this posting on the internet, Big Sister Anne Doyle might not like it.

[zakalwe1]

its called a teaser rate. it draws ftb's in but they will be assessed also whether they can afford the higher rate in yr2.

lots of banks offer discounted yr1 rates so that the buyers can buy furniture and all the accroutrements that are entailed when purchasing your first property.

[toxic avenger]

Yep, anyone who falls for this sh1te and squanders their money on something for which it has been well-trailed could lose more than half its value deserves to be weeded out by natural selection. There is no excuse any more...