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Is spain going to do anything to address the issue of negative equity for all that have purchased in the last 7 years at the height of the boom? America has addressed the issue with debt forgiveness, Ireland is dealing with this in the sense of a deferred interest scheme – where you park part of your mortgage for 5 years the govenment pays a certain percentage to the bank for the part of the mortgage that was parked – if and when things pick up for the individual financially you can start to pay all of the mortgage again – there are strict criteria to to this scheme – property prices in ireland have fallen up to 50%.
British, Irish and other nationalities purchased property in spain as a second home – not all for investment purposes, for lifestyle to hold on to for later in life – that for many is no longer a reality and are forced to sell up at a loss. I am sure a good percentage purchased property with mortgages which now cost way more than the property is worth and with interest rates rising and wages dropping. It will be interesting to see how and if Spain will address this issue.
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The short answer to your question Angela is that it isn’t.
To begin with the country is still in denial about the scale of the problem. Official stats show that falls from peak are only on the 10%-15% region.
http://www.globalpropertyguide.com/real-estate-house-prices/SBefore any government could tackle such an issue it would have to admit that there was a problem. In order to acknowledge that there was a problem, they would have to admit that the official INE stats are rubbish. This they simply couldn’t do. Leaving aside the obvious political embarrassment, any such admission would probably cause a market and banking collapse.
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@shakeel wrote:
In addition to brainc_li posting. Even if Spain does take such an action it would only be Spaniards.
Surely if Spain did address the issue of negative equity they cannot discriminate – the wealth tax was a perfect example of this. Most expats either own a second property in Spain or live there and have borrowings against these properties – why should there be one rule for foreigners and another for spaniards where negative equity is concerned. Spaniards also own second homes on the costas. As brianc_li said it will never be addressed – until it is the property market will keep falling.
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It won’t….is the long and short of it. It will deal with -ve equity in the same way it deals with Land Grab, corrupt officials,or Illegal builds…it will deny, deflect, ignore, and generally stall on any action.
If in the future it did decide to take some form of action, you can bet that the financial hawks, and the usual suspects within officialdom will make plenty, at the expense of the unfortunate home owners.Simples
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excuse me but this is not a communist state !!! buying a property is not a one way bet and if the value of your house falls and you’ve borrowed to much, or lost your job, can’t sell etc etc tough titty !!!!!!!!!! or do you expect the state or the prudent to bail you out!!!!
Angela, what do you think of the government/the prudent taking a slice of the gains when your property value goes up??? or do you want it just one way???
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@UBEDA wrote:
excuse me but this is not a communist state !!! buying a property is not a one way bet and if the value of your house falls and you’ve borrowed to much, or lost your job, can’t sell etc etc tough titty !!!!!!!!!! or do you expect the state or the prudent to bail you out!!!!
Angela, what do you think of the government/the prudent taking a slice of the gains when your property value goes up??? or do you want it just one way???
With an attitude like that I’m not even going to grace you with an answer. 😡
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There is not much difference in how countries across the world deal with negative equity, banks are global and it’s the banks which dictate a lender’s action, not individual governments.
Governments can intervene and make payments to the global banks if they wish, at a cost to the taxpayer, and they can even bail out the severely stricken banks with taxpayers money, but this has no effect on negative equity – ultimately.
Whether we like it or not, we live in free Western democracies under capitalism which is market-driven, only communist countries could directly interfere with negative equity in their states.
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Angela – on whether you think the Spanish Government might feel any obligation to ‘deal with negative equity’, if you look at a situation like the Priors or the many expats affected by the Land Grab rules, I think you have your answer as to whether the Government give a damn or not regarding people ‘losing out’.
On whether there actually is any moral obligation/responsibility for them to intervene, much as I hate to agree with UBEDA (‘cos this will be the first time 😉 ) am afraid
I think he hits the nail on the head with his post on this one.Katy – you wish! 😆
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@angela wrote:
With an attitude like that I’m not even going to grace you with an answer. 😡
Rich, coming from someone who has just basically said they want to steal my and millions of others pensions so they can be bailed out of negative equity.
The fact is borrowers, those who gamble with other peoples money to speculate on property, are already being bailed out at the expense of savers through low interest rates. If you have a mortgage and are getting a lower interest rate, that is money you are stealing from responsible savers.
If you want a communist solution to negative equity, how about the one the Russians used agianst the Poles? Its cheap.
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Some interesting points about Spain, the Country’s, treatment of foreign residents. At the top level they do their best, realising the importance of the large foreign presence in their country for lots of reasons, mainly economic ones. At autonomous levels, the picture changes, understandably perhaps, but at those levels, foreigners go to the back of the queue. It’s often a subtle change, only noticed in extreme cases, when the bulldozers start to roll.
It’s funny about negative equity, the banks are ruthless in re-possessing properties from their own nationals, but hesitate when it comes to foreigners falling behind with their payments. It’s more difficult to pursue foreigners back in their own countries, and it’s more expensive.
Perversely, maybe that is why the banks still offer silly mortgages to foreigners, while their own people need larger deposits and real employments records rather than the foreigners forgeries downloaded from the internet.
(I don’t see anything wrong with Katy’s suggestion, the Conservatives are back in (half in), why shouldn’t they help their own?)
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@peterhun wrote:
@angela wrote:
With an attitude like that I’m not even going to grace you with an answer. 😡
Rich, coming from someone who has just basically said they want to steal my and millions of others pensions so they can be bailed out of negative equity.
The fact is borrowers, those who gamble with other peoples money to speculate on property, are already being bailed out at the expense of savers through low interest rates. If you have a mortgage and are getting a lower interest rate, that is money you are stealing from responsible savers.
If you want a communist solution to negative equity, how about the one the Russians used agianst the Poles? Its cheap.
Seemed to have hit a nerve there peterhun – relax – No I’m not stealing your millions – I don’t have a mortgage in Spain! At least here in Ireland the Government have been honest about the property crash and are doing something to address the issue not trying to cook the books!
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@peterhun wrote:
Rich, coming from someone who has just basically said they want to steal my and millions of others pensions so they can be bailed out of negative equity.
The fact is borrowers, those who gamble with other peoples money to speculate on property, are already being bailed out at the expense of savers through low interest rates. If you have a mortgage and are getting a lower interest rate, that is money you are stealing from responsible savers.
If you want a communist solution to negative equity, how about the one the Russians used agianst the Poles? Its cheap.
I have been reading these forums and have never bothered to comment, but I just had to add my opinion to this one!
How dare you??!! peterhun!!!
You pensioners have had the all the luck…
You all purchased back then in your youth when the properties were pennies and you have seen your properties value rise by thousands of pounds…yes thousands….
Most of you live now in your property mortgage free with no worries and stand to make thousands of pounds from the gains you have made from the purchases of your properties… because of the massive booms you have seen in the past decades…And you have the nerve to moan about the fact that you are not making money on your savings…or that by helping the poor people who have been caught out by the governments and banks mess, might lower your interest rates from your savings….
It is the poor youth of today that are getting it hard….
They purchased in boom times, because that is what it has always been for the last decade or so….Now they stand to lose thousands and end up paying the banks back for years to come….
whilst you pensioners are sitting on a hefty profit, living off the interest you generate off your savings and moaning about the fact that you can’t get a house in spain for free! plus you get a pension.
The youth won’t even stand to get a pension at this rate…Have a word with yourself….and STOP MOANING…the lot of you…..
The only ones groaning on here are pensioners who are in the above position and are still trying to sting the youth by wishing even more of a drop in prices so they can spend their thousands on a property abroad…
Angela, you are right, if other countries are doing it why shouldn’t Spains government and the banks….after all, they are the ones who got us in this mess in the first place!!!!!!
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@katy wrote:
If people with negative equity are going to get bailed out why not a bail out for those living off investment income some who have seen their income cut drastically
oh poor you….
you can hardly compare the position of someone who is in negative equity owing thousands of pounds to the banks to someone who is living off the interest from their savings…..Today, the way things are, we are lucky if we can pay for our bills let alone save…..
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If you are living in the house what difference does it make if you are in negative equity? The mortgage rate has never been as low so many should be paying a lot less. When we first bought a house we had to pay 10% cash deposit and I can remember mortgage rate being around 15%. It doesn’t cost any more to live in a house with negative equity. If it’s a second home I sympathise but I still don’t see why there should be a bail out, about as crazy as asking for a bail out if you lose money in any investment.
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[quote=”jonas
I have been reading these forums and have never bothered to comment, but I just had to add my opinion to this one!
How dare you??!! peterhun!!!
You pensioners have had the all the luck…
You all purchased back then in your youth when the properties were pennies and you have seen your properties value rise by thousands of pounds…yes thousands….
Most of you live now in your property mortgage free with no worries and stand to make thousands of pounds from the gains you have made from the purchases of your properties… because of the massive booms you have seen in the past decades…And you have the nerve to moan about the fact that you are not making money on your savings…or that by helping the poor people who have been caught out by the governments and banks mess, might lower your interest rates from your savings….
It is the poor youth of today that are getting it hard….
They purchased in boom times, because that is what it has always been for the last decade or so….Now they stand to lose thousands and end up paying the banks back for years to come….
whilst you pensioners are sitting on a hefty profit, living off the interest you generate off your savings and moaning about the fact that you can’t get a house in spain for free! plus you get a pension.
The youth won’t even stand to get a pension at this rate…Have a word with yourself….and STOP MOANING…the lot of you…..
The only ones groaning on here are pensioners who are in the above position and are still trying to sting the youth by wishing even more of a drop in prices so they can spend their thousands on a property abroad…
Angela, you are right, if other countries are doing it why shouldn’t Spains government and the banks….after all, they are the ones who got us in this mess in the first place!!!!!![/quote]
Jonas, well said, couldn’t have put it better myself!
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@katy wrote:
If you are living in the house what difference does it make if you are in negative equity? The mortgage rate has never been as low so many should be paying a lot less. When we first bought a house we had to pay 10% cash deposit and I can remember mortgage rate being around 15%. It doesn’t cost any more to live in a house with negative equity. If it’s a second home I sympathise but I still don’t see why there should be a bail out, about as crazy as asking for a bail out if you lose money in any investment.
No Kathy I am not living in the house, and I don’t have the mortgage in Spain so my interest rate is not low at present it stands at 5.19%. We purchased in Spain with the hope of holding on to it for retirement and to enjoy holidays with our kids and extended family. I merely asked the original question as negative equity has been addressed by other countries and is trying to deal with the problem. I am a taxpayer and paying severly due to austerity measures in my country like thousands of others for the mistakes of the banking system.
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@angela wrote:
No Kathy I am not living in the house, and I don’t have the mortgage in Spain so my interest rate is not low at present it stands at 5.19%. We purchased in Spain with the hope of holding on to it for retirement and to enjoy holidays with our kids and extended family. I merely asked the original question as negative equity has been addressed by other countries and is trying to deal with the problem. I am a taxpayer and paying severly due to austerity measures in my country like thousands of others for the mistakes of the banking system.
Angela, at least you are taking the time out to be considerate to the thousands of unfortunates who got caught up in this mess, even though it doesn’t directly apply to you.
It really winds me up how people bang on about how its the buyers fault for buying in the boom. When you start out you buy, boom or not!
unfortunately a lot of us who bought in the boom weren’t sat in front of a screen all day analysing the market. The only people who do that is older folk who have lived through recessions and have seen it all happen before. I bet when you lot all bought your first property you weren’t analysing the state of the market!
you have been fortunate to have been born in an era when you could save tons of money and see your investments grow. We don’t stand a chance.Us younger folk are going to suffer from all the mess the older genaration have made and we stand to pick up the pieces when you lot are long gone. With probably no pension, no paid off mortgage as you can’t even get on the ladder now adays!
so stop feeling sorry for yourselves cause your losing a bit of interest on your savings and sitting there wishing the market to drop so you can pounce on all the unfortunate ones and on top of that judging them in the process.
Stop generalising who bought and for what purpose! We are not all shrewd money making investors like you lot on here!
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The older generation I admit had it better but they are not the cause of what is happening now. If anyone is playing the blame game it should be the younger generation who wanted it all and borrowed to the hilt. There is such a thing as prudence! Mortgages used to be calculated on 2.5 times salary, what did it finish up about 7X salary…says it all.
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@katy wrote:
I still don’t see why there should be a bail out, about as crazy as asking for a bail out if you lose money in any investment.
well, America and Ireland seem to disagree. Spanish banks gave out mortgages they should not have to naive buyers, and overvalued properties by thousands with their own tassadors so they could offer the mortgage. Maybe a few thousand letters of complaints to brussels from distressed sellers might help. Spain have already had their hands slapped with other issues and made to change their laws, ie, discriminating foreigners into paying a flat 24% on rental income with no deductions, They made them change that, so should get a petition started.
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Well, that makes a change – a young versus old debate, on Spanish property prices, of course. I’m not old, but I’m not young either, and I voted Liberal, twice now, but maybe never again.
I think that people of my generation had it much harder than today’s pampered young people. We needed large deposits to buy our houses and our mortgage interest rates were twice what they are today. If we were unfortunate enough to become unemployed, there was only one benefit and it was tiny. Housing benefit and all the other nonsense being paid out today was not even heard off.
Those of us who worked really hard and had the courage to work hard abroad too, may now own our homes in Spain, but by God did we have to work for it. I put in a 16-hour day to start with in Spain, and that went on for years. And that was after 12-hour days in the UK for even more years.
I’ve never moaned about my life in Spain, I praise it daily, and if today’s young people work as hard as I did, they will be able to join me in the sun.
(And I’m still working too, but not for 12 or 16 hours a day any more).
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@jonas wrote:
@peterhun wrote:
Rich, coming from someone who has just basically said they want to steal my and millions of others pensions so they can be bailed out of negative equity.
The fact is borrowers, those who gamble with other peoples money to speculate on property, are already being bailed out at the expense of savers through low interest rates. If you have a mortgage and are getting a lower interest rate, that is money you are stealing from responsible savers.
If you want a communist solution to negative equity, how about the one the Russians used agianst the Poles? Its cheap.
I have been reading these forums and have never bothered to comment, but I just had to add my opinion to this one!
How dare you??!! peterhun!!!
You pensioners have had the all the luck… ➡ Sorry, we’renot all pensioners . I’ve got years to go & if there’s
You all purchased back then in your youth when the properties were pennies and you have seen your properties value rise by thousands of pounds…yes thousands….
➡ In relation to wages the prices have gone up , yes, but there’s not a lot of difference. In addition we all had to put down a 10% deposit , at least. I had to work abroad to come up with that deposit, not cobble up some dodgy figures for a ‘self- certification’ scam.
Most of you live now in your property mortgage free with no worries and stand to make thousands of pounds from the gains you have made from the purchases of your properties… because of the massive booms you have seen in the past decades…
➡ No I don’t own anything in the UK anymore.
And you have the nerve to moan about the fact that you are not making money on your savings…or that by helping the poor people who have been caught out by the governments and banks mess, might lower your interest rates from your savings….
➡ I’m not moaning ,their isn’t any interest on savings worth talking about. Certainly nothing that you can live on . I just don’t like people being paid benefits who’ve never worked, want to work or come from other countries & are scrounging off the backs of the honest , law-abiding taxpayers. They ,along with all the bankers should be tossed out in the clothes they stand up in along with all the non-dom’s not paying taxes.
It is the poor youth of today that are getting it hard….
They purchased in boom times, because that is what it has always been for the last decade or so….➡ & where did a lot get the deposit from ? Oh yes, mum & dad . So we’ve coughed up twice to buy houses, & many parents have re-mortgaged to supply this deposit!
Now they stand to lose thousands and end up paying the banks back for years to come….
➡ Why? Unless they want to sell they’re not going to lose out.
whilst you pensioners are sitting on a hefty profit, living off the interest you generate off your savings and moaning about the fact that you can’t get a house in spain for free! plus you get a pension.
The youth won’t even stand to get a pension at this rate…➡ I’m not as I don’t own in the uk. I am sitting on one here , if I could sell but it’s 50% down on what I could have got at the top of the market, sadly. I’m not living off savings interest as their isn’t any & it’s years before my pension , if ever. The pension debacle is down to the government spending money like it would never stop instead of ring-fencing the oil revenues, like the Norwegians, for pensions & healthcare.
Have a word with yourself….and STOP MOANING…the lot of you…..
The only ones groaning on here are pensioners who are in the above position and are still trying to sting the youth by wishing even more of a drop in prices so they can spend their thousands on a property abroad…
➡ See above, there’s more under- pension age on here than pensioners , I believe.
➡ Yes, something should have been done about the banking situation long ago. When they had to bail them out it was simple. No bonuses ,nothing until the deficits gone. If they say the staff would leave , then let them go ,but they go with nothing nor can they work again in the UK in any capacity. They’d go with the clothes they stood up in forfeiting every thing else, along with their families, no benefits whatsoever & the same applying to the non-taxpaying non-doms the same.
We didn’t buy houses cheaply, in relation to wages years ago the situation was the same . A ****ing struggle. We had to go without , a situation a lot of the youngster, my own included, are not accustomed to. You can’t have everything unless you work long & hard for it. I got what I have by working 80-100 hours, 7 days a week for 33 years. The way I always looked at it was if you could go out after work then you were not working hard enough !
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@Rocker wrote:
Well, that makes a change – a young versus old debate, on Spanish property prices, of course. I’m not old, but I’m not young either, and I voted Liberal, twice now, but maybe never again.
I think that people of my generation had it much harder than today’s pampered young people. We needed large deposits to buy our houses and our mortgage interest rates were twice what they are today. If we were unfortunate enough to become unemployed, there was only one benefit and it was tiny. Housing benefit and all the other nonsense being paid out today was not even heard off.
Those of us who worked really hard and had the courage to work hard abroad too, may now own our homes in Spain, but by God did we have to work for it. I put in a 16-hour day to start with in Spain, and that went on for years. And that was after 12-hour days in the UK for even more years.
I’ve never moaned about my life in Spain, I praise it daily, and if today’s young people work as hard as I did, they will be able to join me in the sun.
(And I’m still working too, but not for 12 or 16 hours a day any more).
I am also mid age going upwards!
I also worked 16 hour shifts in spain in my younger days, so I don’t fit the category you are on about. And I still work near 10 to 12 hours a day now as I run my own business, so hard work doesn’t scare me. There are a lot of dossers now adays, I don’t argue that. But don’t make out you had it harder than me. What benefits? never been on benefits. I work for a living, but I look at the older generation who are getting a pension, they are using their savings interest to top up their pension, their house is paid off and they own it outright.
What do you think awaits our generation when we get to their age??!! We certainly won’t be getting high earnings from our savings cause we won’t have hardly any!
Possibly no pension, low savings as what you do save goes straight back out again to pay bills, and unless you are lucky enough to get on the property ladder, no house either. And we will get the added bonus of working until we are about 80 at this rate! wow, something to look forward to.
So I don’t agree that pensioners had it easier than my generation.
There are of course the few fortunate ones who earn a high wage to sustain a good lifestyle but the majority of youngsters now adays struggle like hell. ( when I say youngsters I mean under 40)
I suppose you have to live it to understand it. -
I think there may be some misunderstanding here about what the “Deferred Intersest Scheme” (DIS) in Ireland and Debt Forgiveness in the US is. Neither directly address negative equity and neither involve the governments bailing anyone out.
DIS is a voluntary scheme that some lenders, but not all have signed up to, whereby, as Angela said, part of the interest payable to the lender is deferred but not cancelled and it is not paid by the government. It accumulates as a seperate item and although it attracts no further interest it is ultimately payable by the borrower to the lender. The attraction to the lender is that there is a prospect that they do ultimately get paid back and it is supposed to help borrowers get though a sticky time.
Debt Forgiveness is equivalent to the Individual Voluntary Agreement (IVA) process in the UK whereby a borrower and lender might agree to reducing an unsustainable debt that the borrower can pay back. It is a legal agreement and the attraction to the lender is that they at least get something back that they wouldn’t otherwise if they forced a bankruptcy. The only government involvement in the US version of this is that, until Congress passed the Debt Forgiveness Act, tax was payable on the amount of the reduction, now it is not.
Well that’s my undertanding anyway.
I suspect, but don’t know, that similar agreements might be made with Spanish lenders if they accepted that getting something from a borrower is better than getting nothing.So really no government bailouts are involved.
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Peterhun, you only paid 10% deposit? lucky you!
I had to find 20% as I am self employed and that was a couple of years back!
yes, 20% of hard graft, mum and dad never gave me a penny.
I also work non stop every day. Always have. Love it, keeps me going.
So in the same boat as you really
But I still think the buyers in the boom were not to blame. I would even say the banks lied about the tasacion to get you the mortgage. No one knew the crises was looming.
Did you sit there checking out the market when you bought your first property? I doubt it, you only had the luxury of the world wide web a few years back. So all I am saying is don’t generalise so much. -
I’m with Jonas on this. Also mid 40 heading northwards, we have worked hard and long hours even during the boom years, never got anything handed to me on a plate. I would have regarded myself to have been prudent before buying in Spain – I worked hard to pay off mortgage early on main residence which enabled me to buy in Spain. If I knew what was coming down the line 7 years ago I would have never bought in Spain – even the best educated investors were caught out.
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@angela wrote:
I’m with Jonas on this. Also mid 40 heading northwards, we have worked hard and long hours even during the boom years, never got anything handed to me on a plate. I would have regarded myself to have been prudent before buying in Spain – I worked hard to pay off mortgage early on main residence which enabled me to buy in Spain. If I knew what was coming down the line 7 years ago I would have never bought in Spain – even the best educated investors were caught out.
well said, Angela 100% with you on this one.
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Here’s an up to date example of negative equity in Spain, with a happy ending. A member of my extended family, an English builder in his forties, came to Spain two years ago. Contrary to all advice, he bought a repossessed house from a Spanish bank, with a 100% mortgage. Everybody told him that an English builder couldn’t possibly survive in Spain, not with the collapse of the construction industry and a ridiculous level of unemployment in the sector. And although he bought the house at what was considered cheap two years ago, he was buying into guaranteed negative equity.
He showed me round his house earlier today. When he bought it, the repossessed Spanish owners had wrecked the house, which seems to be the normal practice. I could not believe what I saw today. Not only had the house been completely restored, it had also been extended, and looked like a palace. A local estate agent, a proper one, had valued it recently at three times what he paid for it.
And the builder is busy. He works round the clock and the quality of his work means that his order book is full. I watched him build a high wall around a nearby house and it took him three days, the local Spanish builders would take at least four weeks to do an inferior job.
He has proved everybody wrong since coming over, but I consider him to be a one-off, the other English builders have left town long ago.
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@jonas wrote:
Peterhun, you only paid 10% deposit? lucky you!
I had to find 20% as I am self employed and that was a couple of years back!
yes, 20% of hard graft, mum and dad never gave me a penny.
I also work non stop every day. Always have. Love it, keeps me going.
So in the same boat as you really
But I still think the buyers in the boom were not to blame. I would even say the banks lied about the tasacion to get you the mortgage. No one knew the crises was looming.
Did you sit there checking out the market when you bought your first property? I doubt it, you only had the luxury of the world wide web a few years back. So all I am saying is don’t generalise so much.No it was me , Gus ,who wrote that in reply to your reply to Peterhun.
You were one of the sensible ones then putting down a deposit. Most self-certified with the collusion of brokers & banks & put down nothing. In addition 7x salaries was always going to end in tears. Personally I think that anyone is foolish to buy in the UK as the odds ,in the event of you losing your job & falling on hard times , are heavily weighted in favour of people renting & those on benefits. -
Here is an article from today’s Sunday Independent, Ireland. Ireland is further along in the property bubble than Spain but eventually Spain will have to tackle this problem. Apologies for the long format, can someone tell me how to post a link. TIA Angela.
Grinding despair of negative-equity generation hangs over all our lives
It’s vital for the country’s survival that our impoverished homeowners get help,
writes Carol Hunt. Sunday February 13 2011“All truth passes through three stages.
First it is ridiculed.
Second, it is violently opposed.
Third, it is accepted as being self-evident”.
Arthur SchopenhauerIreland, 2031. A teenager and his teacher are walking out of an economics class. “My God, what lunacy,” says the teen. “I can’t believe that the banks were allowed to behave like that.”
“I know,” answers his lecturer. “Imagine, they were able to sell full-recourse mortgages to naive first-time buyers, often way over 100 per cent, without any risk to themselves whatsoever. No wonder they all went mad and pushed money on any poor sod they could.”
“And then when the crash came, all the big property borrowers and the banks were protected by the Government via Nama and the bank guarantee, while all the small homeowners were screwed?”
“Correct, son.”
“That’s not capitalism, that’s extortion,” says the teen. (He knows his Adam Smith, does this lad.)
“And even while billions of taxpayers’ money was being used to pay off unsecured British, French and German bonds, the Government and
banks still refused to help any of the small struggling homeowners break out of a life-time debt sentence.”
The teen scratches his head. He studies ethics as well as economics, you see.
“That doesn’t make sense. Ireland was a democracy — surely the people refused to put up with that?”
“Ah, yes,” answers the lecturer. “The ultimate conundrum. Why were the people so
docile? But remember, even though it became obvious later that the banks and the regulator had seriously misled the public, the Government was also in on the whole swindle — it was making a fortune from all that property swopping.
“The massive amounts of cash the Government pulled in through stamp duty alone was keeping it — and all the crony friends it placed in myriad State quangos — in perks and pensions that they would demand to be paid for the rest of their lives.”
“Thank God they eventually saw sense, reduced stamp duty and banned recourse mortgages,” says the teen.
“Yes, they did — eventually — but not before hundreds of thousands of people’s lives were ruined by rising interest rates, falling wages and the curse of negative equity.”
“And the bankers, regulator and politicians who allowed this to happen — what happened to them?”
“Eventually, some of them were charged with economic treason and either fined or jailed. But most of them — along with the property developers that they supported — fled to the US or Australia. The present government is still trying to extradite some of them.”
“Mad,” says the teen, unable to envisage a cowboy country that allowed such injustice to occur.
“Totally mad,” agrees his lecturer.
Unfortunately, we are still a paradigm shift away from the time the above conversation takes place. But it will eventually occur. Non-recourse mortgages will be self-evidently the fairest way to go — as happens already in many other countries. It’s already started.
Bank of Scotland has admitted that it has agreed to write off some of the debts of some of its mortgage holders — it is reducing capital owed by people in negative equity.
But Irish banks haven’t followed suit, with one mortgage expert being quoted as saying that our banks “do not have the capital to make the kind of decisions Bank of Scotland has made”.
I wonder how long the banks’ head-in-the-sand attitude will last?
Last week Fine Gael announced an interesting proposal geared to help the “negative equity generation”, where it proposed to give increased mortgage interest relief to first-time buyers who bought between 2004 and 2009.
The proposal has some flaws — not least of which is that it may assist people who are not in need — but at least it recognises the elephant in the room that is negative equity combined with rising interest rates and falling wages.
“Debt forgiveness”, “co-responsibility”, “burden-sharing”, or whatever you want to call it, basically means banks doing deals with impoverished homeowners in negative equity. But the mere mention of it seems to raise the hackles of the most compassionate of social democrats. Why is this?
Moral hazard?
Oh, please. As Stephen Kinsella, David McWilliams and other independent economists have repeatedly explained, moral hazard is only relevant when individuals do not suffer the consequences of their actions. This may apply to the banks — which drove the boom relentlessly despite being far more aware of the potential for it all to fall down than many of their hapless customers — but it does not apply to the ordinary Joe and Josephine Murphy who worked and saved and eventually were able to buy their own home.
Sadly for them, it occurred in the middle of a bank/government/regulator-induced property bubble that was then followed by a chronic recession, fuelled by the need to pay off the banks’ debts.
These people weren’t landowners or investors or property gamblers. They didn’t follow the stock market or know what a ‘property portfolio’ was. They just did what all Irish people did before them. And they trusted the experts.
But now the Jo Murphys of this country are in serious distress. In fact, most of them are terrified.
Not just that they will lose their home — that seems like a preferable outcome — but that they are being forced by the banks to stay in a home they can’t afford and can’t sell.
They’ve already gone through all their savings and anything they could borrow from family and friends. Means test them if you want to, satisfy yourselves that they haven’t a pot of gold or a half loaf of bread stashed away somewhere (the Department of Social Protection should manage that easily enough). But don’t condescendingly tell them to sit it out with a bowl of gruel and a tallow candle until property prices rise again: that ain’t going to happen anytime soon — nor should we want it to if we are to improve our competitiveness and kick-start the economy.
And yet the critics of co-responsibility are piously concerned that if these people are allowed hand the keys of their homes to the banks, they will go straight out and get themselves right back in the same hole again.
Not only is this bad logic, it’s bad economics.
“Why should Jo Murphy get help when he/she was stupid enough to buy during a bubble?” is what we hear on the street and the airwaves, time and time again.
Why? Because if Jo doesn’t get help, an entire generation will be poverty stricken and the economy/society will go completely under.
The markets are looking at this country and suspect that if the Government doesn’t do something to address the situation, there will soon be massive defaults on home mortgages. Small wonder they aren’t investing.
And, ultimately, if you drive a generation to despair, if you leave them with no help, no hope, no reason to dream for their future and the future of their children, yet still demand every penny they earn to give to foreign bondholders, they will explode.
Co-responsibility begins at home. We must accept this self-evident truth — before it’s too late.
Sunday Independent
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Why are they going to lose their home? Interest rates have gone down. Surely the people who borrowed the money should take some responsibility, just because it was available doesn’t mean you have to borrow it. I have 3 credit cards all with a high limit…does that mean it’s the banks fault if I spend the limit on them all?
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@katy wrote:
Why are they going to lose their home? Interest rates have gone down. Surely the people who borrowed the money should take some responsibility, just because it was available doesn’t mean you have to borrow it. I have 3 credit cards all with a high limit…does that mean it’s the banks fault if I spend the limit on them all?
Maybe if you took time to read the article you’d realise interest rates have gone up by 4 increases since 2009! People were trying to get a start in life and take a mortgage out to buy a roof over their head. Every been their Katy or did you live mortgage free all your life?
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Angela, that article is spot on!
It seems like every day that goes by more and more people are getting angry over what has happended and something will be done.
I am going to get a letter sent to brussels outlining these points.
Let’s see if all these poor souls, in spain and every where else can see justice as it should.Having 3 credit cards up to their limit as opposed to a lifetime of debt with a bank that almost conned naive people into believing they were offering them a mortgage they could afford are incomparable situations.
Banks have a responisbility to lend money out sensibly to those who can afford to pay it back.
Banks are known for selling things they shouldn’t to make their millions and this is the same situation, especially as they were over valuing the properties on purpose so they could offer these mortgages to people.
It’s a bit like when they were mis-selling endownment policies, that back fired in the end, same thing will happen here.
If other countries see if fit as trying to resolve this problem, then other countries will follow. Even if it does just mean giving people a break in their interest repayments over a few years to get through it.
Lets see how all this pans out, but hopefully, people can sit on their properties to ride the storm with a bit of help from the banks so they don’t have to sell their home to investors waiting to pounce.
Already in Spain they offer a 2 year break on your interest repayments and they are looking to extend this to 4 years. They are trying to avoid reposessions at all costs as they already have too many on their books and it doesn’t look good on the banks.
So seems like they are already starting to help distressed sellers out so they can ride the storm.
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@katy wrote:
If you are living in the house what difference does it make if you are in negative equity? The mortgage rate has never been as low so many should be paying a lot less. When we first bought a house we had to pay 10% cash deposit and I can remember mortgage rate being around 15%. It doesn’t cost any more to live in a house with negative equity. If it’s a second home I sympathise but I still don’t see why there should be a bail out, about as crazy as asking for a bail out if you lose money in any investment.
when have interest rates ever been that high???
The problem we have here is, all those in negative equity who can’t sell because of being in negative equity, want to sell now, because they know that, even though the interest rates are low now, they will rise and rise and rise, because of the state the economy is in. So it may not affect people now, but will do in the future. So sellers find themselves in a no win situation.
If you purchased an “overvalued property by the bank” becuase that is what they were, all highly overvalued, your mortgage will be a lot higher than it should be. So even though the interest rates are low now, they may not be in the future, and with an overvalued property, you will be paying more than you should be because the banks overvalued them in the first place. This is why I agree with the post. It is the banks and governments faults and the sellers are now paying for their greed.I can understand how this is hard for those people who come from pampered public school backgrounds, play golf to pass the time and worry whether they are going to lose a bit of interest on their thousands of savings (thanks to the “bubbles” by the way..) to understand as they have probably never had much of a mortgage or any if that. So to be blunt their opinions in this matter don’t count as they don’t live in the real world.
I am talking about real people who do live in the real world and are struggling to pay their monthly bills, and are stuck with a huge debt thanks to the banks, those are the ones that need a hand whether it be a 5 year gap on interest repayments or any other form of help, which is what Ireland and america are doing.
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Yes we had a mortgage when we first got married. We also realised that property and mortgage rates can go up and didn’t borrow to the max.
These are average rates for mortgages with Building
Societies. Comparable figures prior to 1984 are not available….Year Average Rate2 Basic Rate3
1984 12.19 11.88
1985 13.01 12.75
1986 12.32 12.30
1987 10.34 10.30
1988 12.75 12.77
1989 14.44 14.42
1990 14.34 14.48
1991 11.39 11.52
1992 8.98 8.98
1993 7.94 7.99
1994 7.84 8.14
1995 7.48 7.98
1996 6.51 7.00
1997 7.58 8.16
1998 7.29 7.75
1999 6.49 6.88
2000 6.65 7.31
2001 5.17 5.341 The average rates are based on information provided by Building
Societies. The figures reflect rates at the end of the year.Really people with mortgages have never had it so good 😛
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@katy wrote:
Yes we had a mortgage when we first got married. We also realised that property and mortgage rates can go up and didn’t borrow to the max.
These are average rates for mortgages with Building
Societies. Comparable figures prior to 1984 are not available….Year Average Rate2 Basic Rate3
1984 12.19 11.88
1985 13.01 12.75
1986 12.32 12.30
1987 10.34 10.30
1988 12.75 12.77
1989 14.44 14.42
1990 14.34 14.48
1991 11.39 11.52
1992 8.98 8.98
1993 7.94 7.99
1994 7.84 8.14
1995 7.48 7.98
1996 6.51 7.00
1997 7.58 8.16
1998 7.29 7.75
1999 6.49 6.88
2000 6.65 7.31
2001 5.17 5.341 The average rates are based on information provided by Building
Societies. The figures reflect rates at the end of the year.Really people with mortgages have never had it so good 😛
So sellers in spain should be grateful to be in negative equity and think themselves lucky that the interest rates are “temporarily low”?
aren’t they the lucky ones, so what happens to these people when the rates go up to those previous levels???You appear to have not read the whole post, or chosen to ignore it
As I said before people from priveleged backgrounds living in their own “bubble” need to come back down to earth, and maybe spend a few years living in the real world, then your views might change a bit and you might agree what has happened to these people is not “tough titty” as someone else wrote in another post, but something which needs addressing in the same way Ireland and America are addressing it.
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Katy,
Banks back in those days were actually doing their jobs and would not loan people amounts of money without stress testing to the limit even though you had a job in those days you were not guaranteed a mortgage – if this had happened and Banks acted prudently along with governments, there might not be the mess there is now. Property booms and busts are cyclical and apparently have a life span of 7 years – but this time it was more than a property crash it was a world wide crash.
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@jonas wrote:
So sellers in spain should be grateful to be in negative equity and think themselves lucky that the interest rates are “temporarily low”?
aren’t they the lucky ones, so what happens to these people when the rates go up to those previous levels???You appear to have not read the whole post, or chosen to ignore it
As I said before people from priveleged backgrounds living in their own “bubble” need to come back down to earth, and maybe spend a few years living in the real world, then your views might change a bit and you might agree what has happened to these people is not “tough titty” as someone else wrote in another post, but something which needs addressing in the same way Ireland and America are addressing it.
Your attitude is astounding.
You made a decision to buy a property, something that most young people cannot do as you and others drove prices so high in the UK and elsewhere as to make it impossible to buy. So, in fact you are a privileged position of being financially supported by savers who were not irresponsible to buy something they couldn’t afford. Most savers are pensioners and young people saving to buy a home, why should they pay for your buying decisions? The majority of people are savers not borrowers and they are being penalised by YOUR behaviour.
I, for instance, have never bought a property with a mortgage. I got a loan that I can easily afford and will pay it back in five years. This is possible because I bought what I could afford and I earn enough. You decided to take a gamble with other peoples money and leverage yourself, as this is a purely optional act its no different from any other investment – you can lose as well as gain. Tough shit – its entirely your fault.
There is no chance you will get away from negative equity, unless you go bankrupt of course. It is not the job of the government (nor is it even possible) to bail out investors who lose.
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[quote peterhun=”Your attitude is astounding.
You made a decision to buy a property, something that most young people cannot do as you and others drove prices so high in the UK and elsewhere as to make it impossible to buy. So, in fact you are a privileged position of being financially supported by savers who were not irresponsible to buy something they couldn’t afford. Most savers are pensioners and young people saving to buy a home, why should they pay for your buying decisions? The majority of people are savers not borrowers and they are being penalised by YOUR behaviour.
I, for instance, have never bought a property with a mortgage. I got a loan that I can easily afford and will pay it back in five years. This is possible because I bought what I could afford and I earn enough. You decided to take a gamble with other peoples money and leverage yourself, as this is a purely optional act its no different from any other investment – you can lose as well as gain. Tough shit – its entirely your fault.
There is no chance you will get away from negative equity, unless you go bankrupt of course. It is not the job of the government (nor is it even possible) to bail out investors who lose.[/quote]
I think you have a very insular minded attitude and also selfish attitude just because your savings are not bumping you yield returns. Even government ministers admitted on national tv here in ireland last night how badly the banks have behaved through the boom years – be it all for election purposes but at least they are acknowledging the mistakes that have been made and setting out criteria to address this to help the economy to stabilise and get back on track without this it will keep going under as will Spain if it does not address the issue. What would happen if everyone who is in negative equity defaulted on their mortgage – the banks would be in severe difficulty. Other countries have acknowleded this problem. What would happen if you invested some of your savings in to a scheme and you ended up owing more than you had invested because the scheme went pear shaped – I’m sure you would take it sitting down???
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I hesitate to wade into this argument but I agree completely with Peterhun.
There have always been alternatives to mortgages and private home ownership. Traditionally owning a home was a dream for my parents generation never mind a home in another country for holidays.
Fine so things have improved for working people and hail to that. However in the last decade the property market simply lost it’s marbles and sucked in the gullible.
People with absolutely no concept of risk stepped into a world they did not fully understand.
Well folks that’s capitalism and market economics. Its also a form of evolution. The strong survive the weak fail. Its the most fundamental essence of our human civilization.
The banks were bailed out when they failed because government decided they were too important to fail. People with negative equity have little significance in the scheme of things. In any case if they give up and walk away the bank usually takes the hit.
Bailing out individuals in any form is nonsense. People need to take more responsibility for their follies and not expect help from anyone but themselves.
Losses go with any speculation. Buying abroad is just that. You have to wipe your mouth, pick yourself up and deal with it alone in the best way you can. -
@logan wrote:
I hesitate to wade into this argument but I agree completely with Peterhun.
There have always been alternatives to mortgages and private home ownership. Traditionally owning a home was a dream for my parents generation never mind a home in another country for holidays.
Fine so things have improved for working people and hail to that. However in the last decade the property market simply lost it’s marbles and sucked in the gullible.
People with absolutely no concept of risk stepped into a world they did not fully understand.
Well folks that’s capitalism and market economics. Its also a form of evolution. The strong survive the weak fail. Its the most fundamental essence of our human civilization.
The banks were bailed out when they failed because government decided they were too important to fail. People with negative equity have little significance in the scheme of things. In any case if they give up and walk away the bank usually takes the hit.
Bailing out individuals in any form is nonsense. People need to take more responsibility for their follies and not expect help from anyone but themselves.
Losses go with any speculation. Buying abroad is just that. You have to wipe your mouth, pick yourself up and deal with it alone in the best way you can.Well logan, what has been suggested in Ireland is a deferred interest scheme not a bailout, whereby to help people who have purchased during the boom years and have had wage cuts and are struggling to pay for their repayments now – this scheme has been introduced. The scheme which has strict criteria allow for those people that qualify to park part of their mortgage for an agreed period of time – for example the pay 66% of the interest of the mortgage, 34% is parked for an agreed time until the individual gets back on their feet -the goverment will subsidise the part that is parked. It is not a bailout – it is an attempt to get a dead property market back on its feet.
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OK Angela, I understand that but parking 34% of the interest simply stacks up more unpaid debt. Does that not simply postpone the eventual crisis?
I can see a certain logic if the house is a sole family residence it may give the debtor space and time to successfully deal with the matter. There again it simply may make a bad situation much worse.
However, please not for holiday homes in Spain. That’s just plain daft. 🙂
I actually believe that the banks should have gone to the wall. It was a huge error to bail them out. Shareholder accept risk, depositors receive refunds due to statutory laws. Why spent billions keeping them afloat?
Britain’s defences are now being weakened with cuts because in part banks were bailed out. It’s institutionalised insanity. -
@logan wrote:
OK Angela, I understand that but parking 34% of the interest simply stacks up more unpaid debt. Does that not simply postpone the eventual crisis?
I can see a certain logic if the house is a sole family residence it may give the debtor space and time to successfully deal with the matter. There again it simply may make a bad situation much worse.
However, please not for holiday homes in Spain. That’s just plain daft. 🙂
I actually believe that the banks should have gone to the wall. It was a huge error to bail them out. Shareholder accept risk, depositors receive refunds due to statutory laws. Why spent billions keeping them afloat?
Britain’s defences are now being weakened with cuts because in part banks were bailed out. It’s institutionalised insanity.Logan, Ireland has bailed out the banks to billions I have lost count at this stage and you are right they shouldn’t have been bailed out at all we should have let them sink and we might be further along now. The IMF were called in – taxpayers saw their payslips in January it is sickening what we are paying now paying due the bailout of the banks. The only positive on the horizon here is the General Election and that the govenment are helping struggling homeowners keep roof over their head – thankfully we both have jobs and are able to keep going.
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Your attitude is astounding.
PETERHUN:
And YOUR attitued stinks!!!!!!
You made a decision to buy a property, something that most young people cannot do as you and others drove prices so high in the UK and elsewhere as to make it impossible to buy. So, in fact you are a privileged position of being financially supported by savers who were not irresponsible to buy something they couldn’t afford. Most savers are pensioners and young people saving to buy a home, why should they pay for your buying decisions? The majority of people are savers not borrowers and they are being penalised by YOUR behaviour.
How the hell can you say that WE drove the prices so high????!!!!! How did you work that one out then????!!!!!
Young people savers???!!!! not in this day and age.. It’s pensioners who have been priveledged enough to be able to save over the years thanks to all the boom times they have lived through, and now you are trying to squeeze the last pennies out of the unfortunate ones who stand to lose everyghing so you can get your dream in the sun.
PLUS no one is saying anything about writing the debts off, but helping people by giving them breathing space
What do you mean by MY BEHAVIOUR, what do you know personally about me then????
I, for instance, have never bought a property with a mortgage. I got a loan that I can easily afford and will pay it back in five years. This is possible because I bought what I could afford and I earn enough. You decided to take a gamble with other peoples money and leverage yourself, as this is a purely optional act its no different from any other investment – you can lose as well as gain. Tough shit – its entirely your fault.
You must be VERY WELL OFF to have purchased a property on a loan alone and paying it back in 5 years!!! What did you buy, a shed??!!
How dare you sit there and judge people less fortunate than you. The rich are getting richer and the poor are getting poorer and stuck up people like you dont’ help. Get off your high horse and take a few weeks out playing golf and come and see what is happening in the real world.People did not gamble anything, they purchased a home as a home. Gambling didn’t come into it.
There is no chance you will get away from negative equity, unless you go bankrupt of course. It is not the job of the government (nor is it even possible) to bail out investors who lose.[/quote]
The banks got bailed out. All distressed mortgage owners are asking for it some help; NO ONE MENTIONED A BAIL OUT
Any anyway, Ireland and America see it fit, so who cares what the likes of YOU think!
Do you know what, I have been reading these posts from the last few months, and funnily enough, the majority who are against helping the less fortunate are ones who have written posts claiming to have been brought up in public schools, play golf all the time at 45euros a pot and send their grandchildren to public schools at over 5000 pounds a term. One poster even said that: the fact that spanish public schools are cheaper is not important, the ones in the uk are far better as they have, theatres, boats, lakes, etc….and oh, they only cost £5000 a term! They should have bloody golden toilet seats at that price.
So unless you live IN THE REAL WORLD, you have not got a CLUE!!!!! 👿
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Angela, I keep seeing statements in your posts that say or imply that the Irish government are going to subsidise the proposed DIS. I’ve not seen or read that anywhere else. As I understand it this scheme involves no government money at all. They are only encouraging Banks to make a sensible commercial decision i.e. to park some of the interest that is due and collect it in full from the borrower at a later date. This is painted as a better alternative than to make the borrowers bankrupt thus losing the banks even more money and many of the Banks have agreed to sign up to it.
But not all the banks have signed up, some 30% of borrowers are with banks who have refused to sign up.
The implication in this thread seems to be that if the Irish government are willing to spend taxpayers money to ease the burden of negative equity then why can’t the Spanish government do likewise.
Maybe I’m wrong, if so can you post a link to any article that confirms the Irish government are in fact proposing to give taxpayers’ money to the banks?
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@jonas wrote:
Do you know what, I have been reading these posts from the last few months, and funnily enough, the majority who are against helping the less fortunate are ones who have written posts claiming to have been brought up in public schools, play golf all the time at 45euros a pot and send their grandchildren to public schools at over 5000 pounds a term. One poster even said that: the fact that spanish public schools are cheaper is not important, the ones in the uk are far better as they have, theatres, boats, lakes, etc….and oh, they only cost £5000 a term! They should have bloody golden toilet seats at that price.
So unless you live IN THE REAL WORLD, you have not got a CLUE!!!!! 👿
I was born in a now demolished slum house and grew up on a council estate. I am in no way privileged, never played Golf in my life, don’t have a pension or savings. I bought a farm in Poland for £35k because I could afford it, not a an over priced property in Spain. My wife inherited her apartment but thats the extent of my luck, I earn a living. So please cut the crap about golf and public schools.
You are the one living in a fantasy land, I’m afraid. You think there is a disconnect between buying a property and the overheated market, you think that banks are a collection of toff’s with money to throw away and that the poor suffering mortgage holder is a victim.
Bullshit.
Property investors like yourself borrowed money to leverage your money(a principle banned in any other investment beside property, BTW). You made all the decisions, the banks enabled it and together you drove up the property market until the peak of borrowing is hit and the bubble bursts. This is a well know scam, its happened many, many times before and the government, banks and speculators all take part in the silly game knowingly. If you didn’t realise what you were doing then you are a poor and ignorant investor but perfectly entitled to make your own mistakes as a adult.
The give away term to differentiate between speculators and simple home owners is ‘negative equity’. This only matters to an investor, to a home owner you can die in you home and not give a crap as inflation will remove it eventually.
Speculators do not get bail outs so Spain doesn’t need to ‘do’ anything about negative equity as it a not a problem. -
@zoro wrote:
Can you post a link to any article that confirms the Irish government are in fact proposing to give taxpayers’ money to the banks?
Hi Zoro,
Below see details from Irish newspaper in November 2010 – forgive me I don’t know how to post link any pointers would be appreciated. The reason I imply the government may be funding it is that I read it but cannot trace back to it but I was under the impression that the government would be paying banks 3% or 4% per anuum to do this scheme – with banks losing money here I fail to see how they will introduce this scheme without some help from govenment. Even though 70% of banks have said they will do this scheme – as of yet it is not up and running – time will tell. See below:
The Irish Times – Thursday, November 18, 2010
A GOVERNMENT-appointed expert group has recommended against debt forgiveness for homeowners with lengthy arrears on their mortgages.
The Expert Group on Mortgage Arrears and Personal Debts proposes new measures to ease the difficulty faced by those in debt, notably the creation of a deferred interest scheme.
In its final report, the group warns that arrears levels will persist for some time and the problem “may get worse before it gets better”. However, it points out that repossession levels in Ireland remain substantially lower than in the UK and claims lender forbearance is working well here.
More than 40,000 mortgages, or 5.1 per cent, were in arrears for over 90 days at the end of September, up from 26,000 a year ago, the Central Bank indicated yesterday. In 28,000 of these, the arrears were more than 180 days.
For the first time, the bank has published an estimate of the number of rescheduled mortgages, at 45,000. Since there is an overlap between mortgages in arrears and rescheduled cases, the bank estimates 70,000 mortgages are either in arrears or have been rescheduled.
The report says 90 per cent of mortgage accounts are being repaid normally and two-thirds of rescheduled accounts are paying at least full interest.
The group, chaired by Hugh Cooney of KPMG, examined debt relief schemes in different countries but found none provided a precedent for introducing debt forgiveness in Ireland. Financial Regulator Matthew Elderfield said the State couldn’t afford such a scheme and claimed it could give mortgage-holders a “perverse incentive” to stop paying.
The deferred interest scheme proposed by the expert group has already been accepted in principle by four of the largest lenders – Bank of Ireland, AIB, Irish Life Permanent and EBS – but some banks have declined to participate. To qualify, borrowers would have to be able to pay at least two-thirds of their mortgage interest payments.
Mr Elderfield said the proposal would ensure indebted borrowers wouldn’t have to pay interest on their interest payments and could “warehouse” the shortfall in their repayments for a period.
He said the cost for the banks would be marginal but the scheme could save borrowers up to €1,000 over five years as well as buying them time.
The report urges the Department of the Environment to implement new regulations to enable borrowers at risk of losing their homes to become eligible for social housing assessment before a repossession order has been made. It calls on lenders to facilitate trading down by borrowers who are in negative equity and for whom such a move would result in more affordable monthly payments. It calls for the introduction of new bankruptcy laws and mechanisms to allow repossessed borrowers to stay in their homes for a time, while the housing authority finds them another home.
Mr Elderfield acknowledged the arrears problem was worsening but predicted the trend would reach a plateau shortly in line with unemployment figures, which he said was the main driver of mortgage arrears. He also emphasised that although arrears figures were still rising, the loss rate they imply for the banks was still below the average rate for the industry.
The Central Bank figures show mortgage lenders have made formal demands in 5,576 cases and court proceedings had been issued in over 3,000 cases. However, just 98 repossession orders were granted during the quarter and 81 houses were repossessed.
Among the other members of the mortgage arrears expert group are senior civil servants and representatives of the ESRI, Free Legal Advice Centres and the Irish Banking Federation.
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@peterhun wrote:
:
I was born in a now demolished slum house and grew up on a council estate. I am in no way privileged, never played Golf in my life, don’t have a pension or savings. I bought a farm in Poland for £35k because I could afford it, not a an over priced property in Spain. My wife inherited her apartment but thats the extent of my luck, I earn a living. So please cut the crap about golf and public schools.
You are the one living in a fantasy land, I’m afraid. You think there is a disconnect between buying a property and the overheated market, you think that banks are a collection of toff’s with money to throw away and that the poor suffering mortgage holder is a victim.
Bullshit.
Property investors like yourself borrowed money to leverage your money(a principle banned in any other investment beside property, BTW). You made all the decisions, the banks enabled it and together you drove up the property market until the peak of borrowing is hit and the bubble bursts. This is a well know scam, its happened many, many times before and the government, banks and speculators all take part in the silly game knowingly. If you didn’t realise what you were doing then you are a poor and ignorant investor but perfectly entitled to make your own mistakes as a adult.
The give away term to differentiate between speculators and simple home owners is ‘negative equity’. This only matters to an investor, to a home owner you can die in you home and not give a crap as inflation will remove it eventually.
Speculators do not get bail outs so Spain doesn’t need to ‘do’ anything about negative equity as it a not a problem.[/quote]To start with, no need to swear, it lets your otherwise valid argument, come across as abusive
I have put you in a category as you seem to feel the need to put me into one..not nice is it?If you have a paid off plot of land and an inherited apartment why does the spanish market bother you anyway??? Or are you looking to invest?
Who said anything about me being an investor. I am a homeowner. The homeowners are the ones I am talking about.
What about those who live in spain, spanish or expats, it doesn’t matter, who purchased a home in the bubble because they wanted a home, and have now either lost their job or their business has gone under.
These people cannot sell because they are in negative equity and are paying over the odds for their mortgages because the bank overvalued the properties, they can’t afford to pay their mortgate without a job and can’t sell! So negative equity matters to them!They are in a no win situation.
And don’t say they shouldn’t have purchased something they couldn’t afford, because if that is the case then no one should ever buy a property because no one knows if they could lose their job tomorrow or their business could fail. Only a few can afford to buy any property with cash.
You are putting everyone who owns a home in the same category. You don’t know everyones personal circumstances, just like I obviously don’t know yours, but you didn’t like it that I did put you in a silver spoon category did you?
Just a way of highlighting what you are doing to homeowners in spain.GOOD ON IRELAND, is all I can say, and whether YOU like it or not, hopefully everywhere else will follow….just a matter of time.
If Spain let distressed sellers have a break in their repayments, then they would no longer be distressed sellers. They could hold on to their properties and sell on when the market bottoms out.
The market would bottom out quicker by doing this as buyers would realise that sellers are not going to drop their prices any more.I somehow think this maybe the reason none of you agree with helping distressed sellers as you want the market to drop even further!
Lets hope spain see sense like ireland and america and it moves things along quicker and helps out distressed sellers to not lose everything they have worked hard for.
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@jonas wrote:
If you have a paid off plot of land and an inherited apartment why does the spanish market bother you anyway??? Or are you looking to invest?
I’m two years into a five year loan. By the end of the five years Spain may be worth looking at. I realised that borrowers such as yourself will be cosseted at the expense of savers so I took out the biggest personal loan I could as inflation would wipe out the debt.
@jonas wrote:
Who said anything about me being an investor. I am a homeowner. The homeowners are the ones I am talking about.
As you have a leveraged debt on the property you are not a homeowner, the banks owns it and you are gambling together. As Logan pointed out, buying property is an investment. I’ve rented all my life.
@jonas wrote:
What about those who live in spain, spanish or expats, it doesn’t matter, who purchased a home in the bubble because they wanted a home, and have now either lost their job or their business has gone under.
These people cannot sell because they are in negative equity and are paying over the odds for their mortgages because the bank overvalued the properties, they can’t afford to pay their mortgate without a job and can’t sell! So negative equity matters to them!Lost the gamble, bad luck. I don’t know how they are paying ‘over the odds’ for a mortgage as you know the terms when you sign up. I’ve seen 20year, fixed interest, Euro mortgages so whats the problem?
@jonas wrote:
I somehow think this maybe the reason none of you agree with helping distressed sellers as you want the market to drop even further!
So what, its an investment and how capitalism works. Tinkering with the figures will have zero effect on the end result.
@jonas wrote:
Lets hope spain see sense like ireland and america and it moves things along quicker and helps out distressed sellers to not lose everything they have worked hard for.
I don’t know of the scheme you are talking about in the USA, but prices there have fallen drastically and people are being repossessed, distressed seller still ‘lose out’ (?!?!). With a short sale for instance you are banned from credit for 5 years. Prices are still falling and whatever scheme it is has made no difference.
If you look at the scheme in Ireland it will save mortgage debtors 1000 euro’s over five years. Meaningless – all it will do is extend the crash, it will protect the banks to an extent and reduce the amount they can lend out.
Taking money from one set of responsible people and bailing out irresponsible people will help neither in the long run. As well as being utterly unfair to savers who simply wanted 100% security, debtors will have no one to buy their depreciating assets.
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Angela, to put in a link to a web page, go to the web page, (preferably by starting another browser session from the one you are using to post a reply) copy the URL that starts “http” that is in the second line down of your browser then go back to your “post a reply window” and copy it into your post, like this:
http://www.irishtimes.com/newspaper/ireland/2010/1118/1224283624863.html
Then highlight it with your mouse pointer, when highlighted click on the URL button at the top right of the post a reply window. This will cause some special characters to be inserted at the beginning and end of the address that will turn it into a link when submitted.
Back to the subject; I have read this report and several others. They all seem quite comprehensive but none say that government money is involved. In fact given the conditions of the EU bailout with respect to cutting the deficit I’d be surprised if they did.
There is a hint in this Irish Times report that there is no subsidy since it states that the cost to the banks would be minimal. I’m just a little sceptical that given Ireland’s financial position they would be providing any more money to the banks than they had to.However if you do find that statement (now that you’ll be able to post the link 😉 ) I’ll be glad to take back my scepticism.
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@peterhun wrote:
Taking money from one set of responsible people and bailing out irresponsible people will help neither in the long run. As well as being utterly unfair to savers who simply wanted 100% security, debtors will have no one to buy their depreciating assets.
Here you go again putting everyone in the same boat.
What is irresponsible about buying a home????It sounds like you are bitter, maybe because you never had the money to buy your own home??!! Don’t let it out on everyone who did buy a home, because you have never been in a financial situation where you can afford to buy! Sour grapes is what it is.
Do not worry yourself, there will always be people willing to buy properties, whether it be now or in 5 years time.
If the banks can help people along the way so they don’t have to sell their houses at a loss (or should I say, owing the banks for years to come for something they no longer own) then the people can sell when they want to not because they have to.Being bitter because you have had to spend your life throwing your money down the loo on rent is not the fault of people who could afford to buy.
And gambling..the only ones who gambled were the banks, with everyones future!
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Below is the full report on the Deferrered interest scheme set up in Ireland. A little light bed time reading for you!!
Thank you Zoro for educating me on how to post a link! Nothing in there do which says anything about Government subsidising this – I read it on another forum called the http://www.thepropertypin.com back in November but cannot trace it.
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@jonas wrote:
@peterhun wrote:
Taking money from one set of responsible people and bailing out irresponsible people will help neither in the long run. As well as being utterly unfair to savers who simply wanted 100% security, debtors will have no one to buy their depreciating assets.
Here you go again putting everyone in the same boat.
What is irresponsible about buying a home????It sounds like you are bitter, maybe because you never had the money to buy your own home??!! Don’t let it out on everyone who did buy a home, because you have never been in a financial situation where you can afford to buy! Sour grapes is what it is.
Do not worry yourself, there will always be people willing to buy properties, whether it be now or in 5 years time.
If the banks can help people along the way so they don’t have to sell their houses at a loss (or should I say, owing the banks for years to come for something they no longer own) then the people can sell when they want to not because they have to.Being bitter because you have had to spend your life throwing your money down the loo on rent is not the fault of people who could afford to buy.
And gambling..the only ones who gambled were the banks, with everyones future!
Well, I guess I must be bitter. I least I’m not reduced to begging to be bailed out from my investments. When the property market hits rock bottom I’ll invest and have a laugh at the idiots who make such comments as ‘ rent is dead money’.
>>What is irresponsible about buying a home????
LOL. -
Just want to thank everyone for the comment on this post, I started the post so now I feel it is time to finish it. As I pointed out American and Ireland are dealing with negative equity – I feel because the interest rates are so low in spain it will not be addressed by the Government for now. One poster said if you are living in the house what difference does negative equity make – if the interest rates are rising which they are and income has been cut by up to 50% which it has in the private sector here and the mortgage is eating in to a large portion of your income then for approximately 300,000 people and more in Ireland the threat of losing their house is a worry. The Government of Ireland have acknowledged this is a major problem and have put in place a scheme to help homeowners until things improve for them – but the Goverment are not bailing out homeowners – the banks apparently are to bear the cost.
Thank you to all! 😀
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peterhun:
Some one has to own the property you want to rent & the odds are, in the UK, that the landlord has a mortgage. I’ve always taken the view that given I have to live somewhere, that I’ll pay my own mortgage rather than rent & pay someone elses mortgage.
The mortgage I have on my house in Surrey currently costs £300 per month, if I want to rent a similar property it would cost me around £1500 pm.
I don’t treat my house as an investment, it’s where I live & have lived for 14 years. My repaytment mortgage will be paid in full in 11 years time, what is irresponsible about that? What is greedy about that?
When I bought 14 years ago, I bought at a price I could afford & felt that I had bought at the top of the market, that’s what we all do. Even then, my mortgage was less than the rent on my neighbours houses.
I don’t expect anybody to ‘bail’ me out from any failed investment, unless I was lied to &/or conned & there are laws in the Uk to protect me.
Over the last 35 years I’ve lost money on property & been lucky enough to make money on property & if I chose to sell now I would make enough to come out ahead on all my property purchases, but I would then have no where to live.
I do have to say however, that any-one who bought in Spain as an investment & with mortgages took an enourmous gamble & they have lost out.
Were they lied to? probably. But, if you choose to buy several properties on the same development, either to flip or to keep, without checking on the rental situation & without realising that there were & are just too many properties for rent, were frankly fools.
They are different however, to those who bought a property for themselves to use.
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@peterhun wrote:
Well, I guess I must be bitter. I least I’m not reduced to begging to be bailed out from my investments. When the property market hits rock bottom I’ll invest and have a laugh at the idiots who make such comments as ‘ rent is dead money’.
>>What is irresponsible about buying a home????
LOL.And beg people will if they have to. Who cares, as long as the likes of you are getting stung on their savings, I would be more than happy to beg! 😆
So you must also be irresponsible as you also want to invest in a home 😆 😆 😆
The only idiot on here is you, I don’t normally result to personal insults but in this case I will make an exception as you are so rude, arrogant and aggresive in your posts! You sad pathetic excuse for a human being.
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@jonas wrote:
@peterhun wrote:
Well, I guess I must be bitter. I least I’m not reduced to begging to be bailed out from my investments. When the property market hits rock bottom I’ll invest and have a laugh at the idiots who make such comments as ‘ rent is dead money’.
>>What is irresponsible about buying a home????
LOL.And beg people will if they have to. Who cares, as long as the likes of you are getting stung on their savings, I would be more than happy to beg! 😆
So you must also be irresponsible as you also want to invest in a home 😆 😆 😆
The only idiot on here is you, I don’t normally result to personal insults but in this case I will make an exception as you are so rude, arrogant and aggresive in your posts! You sad pathetic excuse for a human being.
well you two are both as bad as each other,i don’t see anything wrong in buying a home to live in as long as you have worked out that as long as you stay in work you can afford it even if intrest rates go up.fools are people who borrow the maximum they can, just to be flash and there are plenty of them around all driving bmw/audi’s and living in vastly overpriced boxes on new estates trying to outdo there neighbours.
As for hitting the savers this does get my goat why people who are in a position to save and have money in the bank should loose out because of wild banking and reckless borrowing annoys me.
i am lucky at 43 i have bought my own home and purchased a flat that i rent but my savings were not doing any good so i have had a gamble to see if i can earn from them i invested in the market when the ftse100 was at 5200 and as long as it is above that in 3 years from investment i get 20% which is a half decent return but a risk not like just getting bonds that pay over 7% a year like you could a few years back.
jonas i hope you get to keep your house and peter go do some farming 😀 -
@dartboy wrote:
@jonas wrote:
@peterhun wrote:
Well, I guess I must be bitter. I least I’m not reduced to begging to be bailed out from my investments. When the property market hits rock bottom I’ll invest and have a laugh at the idiots who make such comments as ‘ rent is dead money’.
>>What is irresponsible about buying a home????
LOL.And beg people will if they have to. Who cares, as long as the likes of you are getting stung on their savings, I would be more than happy to beg! 😆
So you must also be irresponsible as you also want to invest in a home 😆 😆 😆
The only idiot on here is you, I don’t normally result to personal insults but in this case I will make an exception as you are so rude, arrogant and aggresive in your posts! You sad pathetic excuse for a human being.
well you two are both as bad as each other,i don’t see anything wrong in buying a home to live in as long as you have worked out that as long as you stay in work you can afford it even if intrest rates go up.fools are people who borrow the maximum they can, just to be flash and there are plenty of them around all driving bmw/audi’s and living in vastly overpriced boxes on new estates trying to outdo there neighbours.
As for hitting the savers this does get my goat why people who are in a position to save and have money in the bank should loose out because of wild banking and reckless borrowing annoys me.
i am lucky at 43 i have bought my own home and purchased a flat that i rent but my savings were not doing any good so i have had a gamble to see if i can earn from them i invested in the market when the ftse100 was at 5200 and as long as it is above that in 3 years from investment i get 20% which is a half decent return but a risk not like just getting bonds that pay over 7% a year like you could a few years back.
jonas i hope you get to keep your house and peter go do some farming 😀Yep, commercial paper is the way to go with 8-11% compounding returns (capital doubles in 10 years at 7% compounded) .
Property as an asset class is a dead duck until the next generation cycle in 10-15 years time.
Anyone smart enough will simply rent for 4 months at a time in 3 different countries (Jersey, Spain, Thailand) in retirement — enjoy income and avoid tax residency and live tax free.
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@jonas wrote:
The only idiot on here is you, I don’t normally result to personal insults but in this case I will make an exception as you are so rude, arrogant and aggresive in your posts! You sad pathetic excuse for a human being.
These comments are a bit over the top. Mark why don’t you have a word in their shell like. The strengths of this forum used to be reasoned argument and an acceptance of diverse opinions.
If this short of rubbish persists I will leave. -
@logan wrote:
@jonas wrote:
The only idiot on here is you, I don’t normally result to personal insults but in this case I will make an exception as you are so rude, arrogant and aggresive in your posts! You sad pathetic excuse for a human being.
These comments are a bit over the top. Mark why don’t you have a word in their shell like. The strengths of this forum used to be reasoned argument and an acceptance of diverse opinions.
If this short of rubbish persists I will leave.Logan, the only reason I responded in this manner is because Peterhun is being quite aggresive in his posts if you read back. So please highlight his posts not mine! I know I am new on here and everyone like to attack the newbies but I think you are unjust in highlighting my response to the aggresive emails Peterhun has been adding on here!
….Plus by reading back previous months of posts, I don’t think insulting people on here has ever been a problem as everyone seemed to do it on a daily basis at one point!
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@peterhun wrote:
quote]
Your attitude is astounding.
You made a decision to buy a property, something that most young people cannot do as you and others drove prices so high in the UK and elsewhere as to make it impossible to buy. So, in fact you are a privileged position of being financially supported by savers who were not irresponsible to buy something they couldn’t afford. Most savers are pensioners and young people saving to buy a home, why should they pay for your buying decisions? The majority of people are savers not borrowers and they are being penalised by YOUR behaviour.
you can lose as well as gain. Tough shit – its entirely your fault.
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@peterhun wrote:
Well, I guess I must be bitter. I least I’m not reduced to begging to be bailed out from my investments. When the property market hits rock bottom I’ll invest and have a laugh at the idiots who make such comments as ‘ rent is dead money’.
>>What is irresponsible about buying a home????
LOL.[/quote] -
Peterhun as far as I can see has made valid points and not used the insulting language you have. If you cannot make a valid comment with an argument you lose credibility and the argument. If you wind people up with insults you must expect to receive them.
I think this thread is exhausted so I’m reaching for the unsubscribe button. -
@logan wrote:
Peterhun as far as I can see has made valid points and not used the insulting language you have. If you cannot make a valid comment with an argument you lose credibility and the argument. If you wind people up with insults you must expect to receive them.
I think this thread is exhausted so I’m reaching for the unsubscribe button.Oh come on Logan, the insultive language came from Peterhun first, it is in black and white on the thread for all to see! so stop sticking up for your chum buddy, to be precise, he used the language:
It is tough shit
and called me an idiotSo try to be fair to newcomers and realise he started with the abusive language
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@peterhun wrote:
Jonas, its best to end this discussion. The fact is Spain will do nothing about negative equity so there is no point arguing about it.
I agree with you lets end this discussion as it is going no where. But we will have to disagree on the fact that Spain is not helping those who are struggling with their mortgages. I know of quite a few people in Spain who have had their 2 year interest only repayments extended by another 2 years, so a total of 4 years paying interest only and stalling their repayments on their mortgages. So I think the banks are helping people to save their homes already!
Which is great news for those struggling to keep up the repayments.
So to any distressed sellers reading this, go to your banks and ask them to sort out a “carencia” (I will start a thread on this) this means that you only pay the interest you owe and the stop the repayments for you. Normally this is only for a total of 2 years, but once the two years is up, if you have been paying that ok, they will extend it for you. It is at a cost, but it helps so you don’t have to sell your property at a loss and you can therefor keep hold of it for at least 4 years so they don’t have to repossess you.
The bank manager has informed me, today funnily enough, that they are looking into doing this to avoid a reposession as that is the last thing they want to do!
So great news for all those trying to sell because they can’t affor to pay! 😀
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