Mobile banking and the use of smartphone bank apps is on the rise. No matter which financial institution you do business with, chances are in the future you’ll be doing a lot more of it on your phone.

With more Banks reducing staff numbers and closing sub-offices, it will not be long before dropping in to your local bank will take on a new meaning.

In rural areas it will mean travelling to a larger town and in larger urban areas it will also mean having to travel some distance to the bank.

The banks are reviewing their overhead costs and encouraging more people to bank online.

Yet for all the talk of a digital green economy, the likes of Bank of Ireland only launched their own mobile app in May of this year. Considering how long the iPhone has been with us, that’s a surprising fact.

Bank of Ireland believes it delivers high-speed, secure bank account access to its 500,000 personal banking customers. If anyone has an opinion on it we’re all ears…

Of course, phone banking and bank call centers have been with us now for some time. Both AIB and Bank of Ireland have launched apps for use with smartphone’s and tablet computers such as the iPad.

This is useful for checking your account and paying bills online or transferring money.

However, we checked the Bank of Ireland app on the iPad and found that it does not request your user ID unlike the original online bank portal.

This may affect anyone with separate login details for accounts in Northern Ireland.

The younger generation no doubt will take to online banking easily, but it will take some time before some of the older generation begin to use mobile banking.

This will mean less visits to banks and so less involvement with bank staff.

In the longterm, visits to banks will only become necessary when transactions such as mortgages or other large loans are being applied for, which requires proof of earnings or other documentation.

Or to demonstrate!

Further links:

Wikipedia on Mobile Banking

AIB mobile banking

Bank of Ireland mobile banking

What Do You Know About Mobile Banking?

When it comes to naming things, the Property Services Regulatory Authority Register isn’t likely to win any awards. Is it even the right type of register?

Off the top of my head, a few others spring to mind.

Surely a more appropriate type would be the Greedy Bastards Who Bankrupted The Country Register.

Joking aside, it looks like house prices are beginning to stabilise, at least in the more sought after areas in Dublin. It’s not like the Dublin-based media notice what’s going on around the rest of the country.

Is this a sign that we have reached the bottom and are now turning the corner?

It has been a long and financially painful time for a lot of the population since the property bubble burst back in 2008.

There are indications from auctioneers that some properties in sought after areas such as south Dublin are in demand and prices are starting to pick up.

The problem is that it is hard to know who to believe when you hear these reports.

Is it true, or are some people trying to talk up the market. There is no doubt that when prices do start to rise, the more fashionable areas will be in demand and they will show the first increase.

The government agreed to set up a property database register with records of all sales which will give a true indication of the prices paid for houses.

The legislation by the Government for the setting up of a Property Services Regulatory Authority has been put in place, but it has not yet produced its first register of sales. This is expected later in the year.

Then we will know for sure what prices are being paid. Up to now figures were based on mortgage lending, which do not take account of cash sales.

Expect more memorably titled government solutions in the future.

Bet you can’t wait.

“Property Services Regulatory Authority Register” just rolls off the tongue…

The Irish government recently published its much anticipated Personal Insolvency bill.

At least it’s a less dramatic title than the We’re Economically F**ked bill.

This has been done at the behest of the Troika so as to bring our bankruptcy laws more up to date with other countries. At present it takes 12 years to exit bankruptcy in Ireland.

People who are in arrears with their mortgages or other personal debt are stuck between a rock and a hard place. There has been a lot of speculation in the media about what effects this new Bill will have when it is eventually enacted by the Government.

Some of the Banks report that the number of mortgages in arrears by 90 days or more are still increasing, even five years into this crisis.

It is unlikely that the Banks will want to see a large proportion of the people with mortgage arrears opt for bankruptcy. This would entail the banks taking possession of lots of houses and thereby crystallising the loss for the bank. If large numbers of houses and apartments come onto the market it will further depress prices and consequently have a negative effect on the Banks balance sheet, as it will put more people in negative equity.

So it is to be anticipated that the Banks will play a slow game, of trying to get people to stay in their homes by various options, such as splitting the mortgage and parking a section of the loan. This will allow reduced payments in the short to medium term. Other options will be interest only payments. It will be interesting to see how much of its loans that the Banks are ready to write off.

In the meantime most of the large builders have gone to England to get through bankruptcy which only takes two years in the UK.

Will Proposed Personal Insolvency Bill Help Mortgage Arrears?

From Primetime on RTE to Question Time on the BBC, public anger is coming through loud and clear.

We bailed out the banks because we were told they were “too big to fail” but nothing has changed. 

An investigation by regulators in both the US and the UK, have found that several banks including the UK giant Barclays have been manipulating the LIBOR rate.

The Libor is the London Interbank operational rate which is the rate that Banks lend to one another.

This Libor rate can cover up to 300 trillion of funds worldwide.

Barclays have been fined $92 million by regulators in the FSA, and $160 million by the US Department of Justice.

As this is the rate that banks lend to one another, it has an effect on the cost of loans and mortgages to customers. Barclays were manipulating the figures at the behest of their derivative traders in order for that section of the Bank to make gains and avoid losses on the derivative markets.

So much for the ordinary man in the street trying to pay his mortgage and other loans.

In the banking industry the man or woman in the street would be seen as collateral damage, just one of those things that happen. As long that the traders make big paper profits and secure their annual bonuses and enjoy the good life, too bad about the collateral damage.

There was a time when Banks were looked upon as staid, old fashioned and boring places but with a reputation for integrity and honesty. That image has now well and truly been shattered, and been replaced by an image of greed and self aggrandisement on a massive scale.

The problem is that there will be no real retribution in relation to the banking industry.

There will be some hand wringing after the fine is paid and business will go on as usual. How can anyone, including governments, deal with companies that are spread across the globe. Eventually organisations that are “too big to fail” will be brought to heal, but not any time soon.

It may take the end of the Euro and a depression of historical proportions to achieve such an outcome.

In the meantime, what alternatives do we have?

We Bailed Them Out. Nothing Has Changed.

Back in 2008 I remember reading an article by an economist who said if we want to see what happens in the aftermath of a property bubble, look at Japan.

In Japan, they had a lost decade with very little economic growth after their bubble burst.

The Great Recession Decade

Well, we are now in our fifth year of hardship so arguably we are half way through our lost decade. Prices of property have come down by 50% and even more in some places.

In this cycle, Greece was the first country in Europe to experience financial problems. Next it was the turn of Ireland and since then we have been joined by Portugal, Spain, and with Italy threatening (PIIGS). There have been meetings of the EU Ministers every few weeks but no big announcement to solve the debt problem in Europe. The economies of Europe have been in and out of recession now for five years, and things might even get worse. The idea that Europe is muddling through does not provide much comfort.

The problem with the PIIGS is too much debt.

Dealing With Debt 

In the case of Ireland, it was the Sovereign or Government taking on the debt of private banks who had bet the house on ever rising property prices, giving out long term mortgages with money that had been borrowed short term on the Interbank market. So the Government in the now famous night of “the Bank guarantee” agreed to guarantee private bank debt, so as to keep the ATM’s working, or so we were told.

To get out of recession, we need growth in our economy. But as a small open economy we depend on the major trading blocks of the EU, US, and Japan etc., to be growing and so buy our products and services. The major EU countries and the US, China etc are struggling at present, which impacts back on our small economy.

So how do we get out of recession – that is the 6 billion dollar question. How do you get growth when the Government has to implement an austerity programme in order to get the debt levels back in line? In the meantime we are muddling through and no doubt it will take a few more years before this problem is solved. By then we will have done our decade of economic pain and suffering.

No doubt economists in years to come writing books on the era, will refer to our great recession decade and how the problems should have been solved.

Lord of the PIIGS: the Great Recession Decade

Retro warning! The following blogpost describes how getting an Irish mortgage has changed over the years.

Any dodgy hairstyles and clothing have been replaced by actors to protect the innocent.

Figures from the Central Bank show that the average mortgage rate is around 3 percent in Ireland today. This got me thinking about current affairs programmes on RTE, before the days of TV3 and Vincent Brown.

Irish people looked with envy at interest rates in Germany of around 2 or 3 percent while we were paying mortgage rates in the region of 11 to 12 percent.

Of course back then we had our own Punt and were linked to Sterling. We had financial independence of sorts, but paid dearly for it.

Many hours of discussion on RTE would take place about the reasons for our interest rates and why Germany could operate with such low interest rates. That was one of the attractions for Ireland when we looked at joining the single currency. The incentive that we would have low interest rates, like the rest of Europe, and not be tied to Sterling.

Has it really worked out the way we expected?

We have the low interest rates alright, but we also have banks that are on life support from the Government via the taxpayer, and hundreds of thousands of people in ongoing financial difficulty.

Back then in the long-haired and flared 1970’s, the Banks were not in the home mortgage market, it was left to the Building Societies to provide home loans. With hindsight, maybe the Banks should have stayed out of home mortgages and consequently would not be sitting on their present predicament. Then again, the senior bank staff would have missed out on all those bonuses.

Applying For A Mortgage In 1970s Ireland

To apply for a mortgage back then in the 70’s, you had to have the 15 per cent of the mortgage required on deposit with a Building Society for 6 months. Then you could fill in an application form and wait for a few weeks before word came if you had been granted a mortgage.

Living in rural Ireland back them, I remember having to travel 40 miles to the nearest Building Society in order to qualify for a mortgage. Back then, there was no suggestion that maybe you should borrow an extra few thousand to change the car as well. That was an idea that came in the boom.

After getting a mortgage sanctioned by your Building Society, you then had to go to the Bank and get a bridging loan for the amount to build your house. The Building Society would only release the money when you were actually living in the house, when their surveyor confirmed it all was in order.

When the house was completed, which used up all the loan money I went to visit my friendly bank manager telling him that the house was now complete, but I needed a furniture loan before I could move in.

This is when I hit the brick wall.

In a stern voice, I was told there would be no furniture loan until the bridging loan had been paid off. That finished me with that branch. So I had to go to another bank to get the necessary loan, in order to complete the transaction.
If we were half as quick to remember our financial history as we are when it comes to our political history, perhaps we would be less inclined to take things for granted.

Today’s impatient, always-on society means we’re often too busy and in a rush to take a step back and see the big picture.

All these years later, have we really made it any less stressful to go about having your own home?
The last word on the global economic crisis will be left to Stewart Lee…

How Getting An Irish Mortgage Has Changed

Mortgage Lending Is Falling

If laughter truly is the best medicine then today’s blogpost lies somewhere between snake oil and the fountain of youth. It’s just a question of who to believe…

We kick off with the latest quarterly figures from the Banking Federation. They show that mortgage lending is falling for Q1 2012 compared to the previous quarter, and Q1 in 2011. One of the reasons for this may be that mortgage arrears are rising with 15 percent of all mortgages either restructured or in arrears by 90 days.

The figures show that another 6,000 mortgages went into arrears in Q1 2012, though the pace of increase in arrears is slowing.  One in every 13 mortgages is over 6 months in arrears, and this is length of time when it is considered that a mortgage will not be recovered.

Unemployment is one of the reasons for the mortgage arrears problems and there is no sign yet of any pickup in the economy in general. In fact, we may be in for another year or two of running along on the bottom before things start to pick up again.

Construction of Houses at an all-time low

The indications of a bottoming out of house prices in Dublin in the last two months will be of little comfort for the construction industry. The construction industry federation recently stated that it expects only about 7,000 homes to be completed this year. This figure is well down on the 10,000 units that were completed in 2011.

Most of the homes being built are of the “one off” variety for a person building their own home. A good proportion of these houses will be in rural Ireland where traditionally people get their home built to their own design.

It looks like the Government will have to wait longer before there is any sign of improvement for the construction industry unless it undertakes some large construction projects. Perhaps the building of a Children’s hospital would be a small start, if the experts can agree on a suitable site.

Are the Vested Interests starting to talk up the Property Market?

As Miley Byrne from Glenroe would have said, “Well Holy God!” The recent stats from the Central Statistics Office of house prices show that prices in Dublin are starting to increase slightly. This will be welcome news to people trying to sell property in the Dublin region, and mean nothing to everyone else.

The question is how will vested interests involved in the Irish property business spin it to their advantage? Would it even be remotely possible for them to (now don’t laugh)…hype up the market? Once the Banks and Building Societies start to provide funds for mortgages, there is a possibility that we could see a steep increase in property prices, like what happened in the 90’s and the years following.

OK you can laugh now.

If something as out of the blue as that did happen, it would be beneficial for the sellers and for the auctioneers who work off a percentage of the price. However, for the economy as a whole and the need to keep costs including wages low in order to keep the country competitive, there is a balance to achieve and maintain.

There is no doubt that a functioning property market is necessary for a healthy economy, but we must not have price increases of more than two or three percent per annum if we are to make a sound recovery. It is imperative for the economy in general that property prices remain affordable for the average industrial wage, otherwise wage demands from workers will threaten the recovery.

People who talk of very cheap prices now and who keep relating to 2007 prices are missing the point. Those prices were astonishingly dumb as we were on a fast-track to financial ruin. Going from one extreme tom another in decade-long cycles is a bad habit to get into. But some things never change.

If the good times suddenly arrived tomorrow, how many of us would have learned our lesson?

Irish Property Market in 2012? You’ll Die Laughing.

In the rush to be first with a story online, some websites fail to provide the full picture of what is happening.

A month has passed, so what do we really think of NAMA’s deferred mortgage scheme?

To recap, last month NAMA announced a pilot scheme involving 115 houses and apartments for a deferred payment of the final 20 per cent.

The scheme has been set up to sell some of the properties by NAMA using an 80/20 scheme. It is designed to get people to purchase who are unsure if the market has reached bottom, and this protects the buyer from further falls. At time of writing in early June, the bottom may still be some way off yet.

This scheme will operate where the buyer is eligible for the full credit price and can get a mortgage of 90 per cent of the value, from a recognised mortgage lender.

The buyer pays 80 per cent of the price to NAMA and then in five years time the value of the property will be independently assessed and if the price has not decreased then the remaining 20 per cent will be paid.

This guarantees the purchaser against falling prices, and gets some movement in the housing market.

Let us know what you think by leaving a comment below.

What Do We Think Now Of NAMA Deferred Mortgage Scheme?

Let’s face it, a headline such as ‘Property Prices Continue To Fall In April 2012‘ is pretty gloomy. But there’s just no getting around the facts. Post-economic meltdown momentum continues to affect us like a Crash Test Dummy. 

Figures from the Central Statistics Offices show that property prices are continuing to fall after a brief pause in March. There are several reasons why the market has not yet reached bottom, but the level of unemployment coupled with the stringent lending criteria by the Banks are two of the main reasons.

Property prices on average have fallen by FIFTY PER CENT since the peak in 2007, with apartments down by up to 60 per cent.

The pick up when it comes will begin in Dublin and the larger cities, with the rest of the country lagging behind.

There is an oversupply of housing particularly outside the main cities, which is going to take several years to work through, consequently prices for property outside the main cities will remain depressed for some time.

So let’s end on a more positive note from 1990.

Take A Parachute With Something Happens

There is a strong possibility that the ECB will increase interest rates soon, due to inflationary pressures caused by rises in oil prices and other commodities.

This will have an impact on the depressed property market, which is struggling due to lack for mortgage funds from the Banks and the reduced incomes suffered by people in general due to the economic downturn and the government cutbacks.

There is no indication yet that the property market has reached the bottom, with some estimates that property prices have fallen by up to sixty per cent from the boom in 2007, in certain areas.

This in itself has been the main reason for the Banking collapse, with developers and property speculators unable to service their loans and consequently the Banks needing the government to come to their rescue and put in tax payers money into the Banks. Otherwise, the Banks would have gone into liquidation and people with money in deposits with the Banks would have lost their savings.

Most people are not happy with the Government having to put tax payers money into the Banks in order to save them from going bust, but what were the options open to the Minister for Finance at the time. The way capitalism works is that people take a risk when they invest in order to try and make a return, but if the venture fails then people loose the money they put into the venture.

But the Banks were not allowed to go bust, they were seen as central to the survival of the economy and so the government stepped in with a government guarantee to allow the Banks to continue in operation.

This turns capitalism on its head. If a small business is allowed to go bust, but Banks are seen as ‘too big to fail’ where is the fairness in all this.

On top of this the Banks are now increasing their fees and charges on their customers, who are the very tax payers who helped bail them out in the first place.

So much for the idea of protecting the small man from big business.

ECB Interest Rates May Increase Cost Of Mortgages