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Blowing Up the Housing Bubble

The housing ladder has remained a hot topic of conversation since the economic downturn and subsequent changing of the rules for applying for a mortgage. The conversation doesn’t seem to be going anywhere as the concern of Ireland falling into the housing bubble trap increases as more and more prospective buyers find themselves unable to pay increasing asking prices.

This week it was reported that these increasing house prices do not look likely to slow down in the coming years. Goodbody Stockbrokers have stated in their latest economic report that the average price of a house is set to continue to rise by up to 10% this year followed by another 8% in 2018 meaning an additional 18% cost increase on houses which have already increased massively in price in the previous three years.

The report states that:

“Mortgage approvals, even excluding cash purchases, are in excess of the amount of new supply expected to come to the market, thus house price inflation is expected to remain strong over the forecast period. […]“While supply remains low, demand appears to be running ahead of expectations”.

Existing housing demand is said to be 30,000 per year, and it is reported that it will take another number of years in order for the number or houses built to match up to tahis demand. This lack of balance between supply and demand is what has encouraged this somewhat bleak forecast from Goodbody Stockbrokers, who have also stated that they expect there will be €13.5billion in new mortgage lending in the coming years.

An additional issue with supply and demand is that there are far more prospective homeowners being approved for mortgages than there are houses available, which continues to push prices higher. A recent infographic shows the increasing prices as they continue to grow. Mortgage approvals are being boosted by the Government’s popular help-to-buy scheme but many of those approved will find themselves without a home to buy.

Should you have any queries on home ownership, or any other financial or business matters, please don’t hesitate to contact us here at EcovisDCA, where we will as always be happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Kick Bills before Buckets

With Irish people now beginning to get a foothold on the property ladder later in life, we are also beginning to start families slightly later and as such, thoughts often turn to what provisions can be made for your family in the unfortunate event of your death. Whether sudden or prolonged the death of a loved one has devastating emotional consequences so it is advisable to think ahead and do all that you can to avoid there also being devastating financial consequences. It’s a fairly morbid thought to begin the year with but we are big believers in thinking ahead and there are dangers to be found in ignoring the inevitable.

 

It is advisable to think ahead and to have your affairs in order in so far as possible at all times and at the very least to know what would happen to your existing finances or your current payments in the event of your passing. We might all have hated those conversations our parents would begin about the event of their death, but they are wise to open these discourses to avoid burying our heads in the sand. Having your affairs in order could prevent causing additional pain to your loved ones at an already emotionally painful time.

 

Something which is often overlooked are bank accounts. Whilst many of your debts will pass away with you, bank accounts are not among these. Your bank account will continue to issue payments etc. as usual until informed of the death, so it is advisable to ensure that someone is aware of all of your accounts as they may then be liable to take over a debt they were unaware of, or the account could be left running into difficulty. By contrast, the advantage of a joint account means that all funds can pass directly to the named survivor on the account.

 

Credit Union accounts are another issue which surviving loved ones are often unaware of as your loved ones might be able to avail of a pay out from your credit union savings following your death due to a little known life insurance scheme which accompanies your credit union account as well as being able to avail of any savings you have made. Credit Union loans differ from most as they will typically be cleared upon the death of the account holder.

 

The most crucial manner in which people fail to keep their loved ones up to date on their financial matters is their debts and loans. Many debts or unpaid loans will simply pass to your estate and interest will continue to accumulate on these until paid in full, causing a further headache for your family in what is already a difficult time, debts can even be recovered from existing accounts leaving loved ones without access to these previously available funds, whilst your estate can be liable for any remaining balance.

Mortgages can be problematic, some banks allow a moratorium following a borrower’s death although interest may continue to accumulate so it is wise to check your options in advance so all parties are aware of the situation, and to ensure your mortgage protection is full and up to date.

Having a current up-to-date list of your accounts and investments and ensuring that someone has the information or access to this information to avoid further heartache at a difficult time. Though these issues may feel morbid to bring up, they are vital to ensure that your loved ones can live on as comfortably as possible.

Should you require any assistance or guidance on these or any other financial or business matters please do not hesitate to get in touch or arrange a meeting with us.

 

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

IT’S A GOODBYE FROM DANSKE

As we have previously discussed, the Irish banking sector has in the last few years become an area lacking in competition and finance options for many business owners, particularly in the area of small and medium enterprise (SME) financing and an area rife with controversy in particular pertaining to mortgage issues. Recent years have seen many shifts in the sector. Arguably the most obvious clue in recent years that the Irish banking sector was entering a period of flux was Danske Bank beginning to withdraw from the banking sector in Ireland. Danske Bank first came to the attention of the Irish general public when the National Irish Bank became a part of Danske Bank. Just a few short years after this announcement, Danske Bank began its withdrawal from the Irish retail banking sector. Reports this week state that the bank is now embarking on the final phase of this lengthy withdrawal process.

Danske Bank has reportedly hired accountancy firm KPMG to find buyers for its €2billion residential mortgage book. This undertaking will be one of the largest sales of residential mortgages we have seen so far, with a portfolio that includes both owner-occupier and buy-to-let mortgages. This is expected to generate a great deal of interest from mainstream lenders.

Further to the selling of the mortgage book, Danske Bank is also due to sell all remaining parts of their business in Ireland in a call which will see debts such as overdrafts, credit card bills, overdrafts and other loans being offered. This news has sparked fears of so-called vulture funds we have spoken of previously, swooping in to buy these loans. There also concerns that some of the non-mainstream lenders such as debt collection agencies etc. will seek to buy these loans, which are said to be ready to be sold at a tiny percentage of their face value.

In a somewhat odd addition, the bank will also be auctioning its corporate collection of antique silver, which is unlikely to have any effect on mortgage-based homeowners or business owners but remains an important part of Irish history to be passed on and very clearly signifies that despite remaining one of Scandinavia’s top banking institutions, Danske Bank will soon exist as just a memory in the mind of the Irish public.

If you have any concerns regarding your own finances or that of your business in the midst of these uncertain times of upheaval, please don’t hesitate to contact us here at DCA Accountants, where we will be happy to assist and advise in any way possible.

 

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

MORTGAGE WOES KEEP BUYERS ON THEIR TOES.

Mortgage rules have been a point of contention in Ireland for some time now and whether house prices fall or rise, it has become increasingly difficult for those hoping to gain footing on the first step of the housing ladder. Last year, mortgage rules were changed to mean that only 3.5% of income can be borrows, and there must be a 10% deposit on all mortgages up to €220,000, and a further 20% on any cost above this figure.

 

At the time of this change it was suggested that these rules would be in place for a period of a year and then re-examined. As they were put in place in February last year, all eyes will be on these rules to see if there is any change which might allow for easier purchasing. DNG have suggested that they would like to see the borrowing limit raised to 4% and the 10% deposit rule extended to €300,000 as they have seen over the past year that many people are becoming trapped by these rules and are unable to buy due to higher house prices and stricter rules.

 

It has been reported this week that we may see an even bigger shake up in the mortgage industry. An Australian lender, Pepper is reportedly set to offer new incredibly competitive mortgage rates which will target first-time buyers in particular. This arrival of a new lender is expected to push current Irish lenders into offering new lower rates in order to respond to competition and demand.

 

Already since the announcement we have seen Bank of Ireland offer a new bonus. This bonus would see them add 10% to first time buyers onto their existing deposit savings. Additionally, Bank of Ireland were already offering 2% back of every new mortgage.

 

Pepper is said to be set to offer rates as low as 3.55% for both first time buyers and those looking to switch lenders. Pepper Ireland boss Paul Doddrell has suggested that Pepper will also be first in line with offers for those who have found themselves refused by other banks, including those who are self-employed. It is suggested that Pepper will also be able to lend to those who found themselves in arrears during the financial crisis, but have now found their way back to meeting payments.

 

Whilst these new offers may not be a complete end to Irish mortgage woes as these offers will only be available through brokers, the suggestion of another adjustment of the overly tight mortgage rules will be a welcome one for many first time buyers and prospective first time buyers. It is hoped that we will see a general reduction in rates, with the onset of further competition in the Irish mortgage market. If you require assistance with your own or your company’s finances whilst hoping to gain a mortgage, please don’t hesitate to contact us here at DCA accountantswhere we are always happy to help.

WHO YOU GONNA CALL? …BANKRUPTCY BUSTERS!

Bankruptcy is not a word that fills anyone with a sense of glee, but sometimes it is the only option for both you and your business during hard times. As is often said in business, there certainly comes a time when it is best to cut your losses and move on. For many, this involves the necessity of filing for bankruptcy until such a time as your finances are once again in order. In the past, becoming bankrupt has often been a very stressful and arduous time. Fortunately, new reforms are set to be introduced which could change this process and make it a lot easier and about as pain free as it is possible for this task to be.

 

Taoiseach Enda Kenny has said that there will be reforms introduced which will reduce the period that an individual is bankrupt for from three years to one year. These reforms would require an amendment in the Personal Insolvency Act of 2015, a change which the Taoiseach is said to be strongly in favour of.

 

This amendment would bring Irish insolvency and bankruptcy procedures into line with those currently in practise in the UK and Northern Ireland. TD Willie Penrose has been a major driving force behind this proposed change stating that in his believe it is better that these people be allowed to return to making economic contributions after one year rather than being outside of the business world for three. Penrose states that these people could be entrepreneurs ready to re-enter the business world, but they cannot.

 

CEO of the Irish Mortgage Holders Organisation, David Hall has largely welcomed these proposed changes stating that:

“This development will be of huge benefit to those debtors who are seeking a fresh start and want to rid themselves of debt.”

 

Certainly, these changes will somewhat change the face of business in Ireland and allow more opportunity for change and the ability to move on at a faster pace from a period of business which may have been unsustainable for a great many reasons. As we have seen in the UK and Northern Ireland models of dealing with bankruptcy, this has not caused a great many extra financial issues and should be a good fit for the Irish system.

 

Whilst these new rules will make the process of applying for bankruptcy in Ireland somewhat less painful, it is advisable to seek professional assistance when doing so. Should you require any professional advice or guidance in a matter such as this please do not hesitate to contact us at DCA Accountants where we will be happy to assist and to guide you in the best direction for you and the brighter future of your business.