Comments on: Should we bail out fixed rate mortgage holders? I don’t think so!

By: valueireland

valueireland — Sat, 14 Nov 2009 10:14:37 +0000

@Dana – many thanks for your comment.
I think your own post has highlighted where I see the issue here, and why to a greater extent, consumers themselves are to blame.

You talk about people earning between 10 and 50k “deserving” a home.

Deserving a home has nothing to do with anything here as far as I’m concerned – if you’re earning whatever amount of money and you can’t AFFORD a home, then you shouldn’t be entering into borrowing agreements (or be allowed to) where one is borrowing many multiples of an insufficient salary.

If there wasn’t a demand for such products from consumers, then banks wouldn’t have provided them.

Fair enough, banks created a demand by making them available, but if consumers really were responsible when looking at these products, they should actually have said no, rather than taking the cash.

By: Dana Ottwell

Dana Ottwell — Sat, 14 Nov 2009 01:36:34 +0000

I have a hard time swallowing the idea that the people made bad decisions. The truth is that a lot of Americans were seeing the dream of owning a home slipping away, the average American only make between 10.000 to 50.000 a year so when you say that, you are saying that the average Hard working person did not deserve to buy a home, It wasn’t their fault that the fat cats thought it would stimulate the economy by driving up cost of housing and living then only offering sub-prime lending for people in that wage earning range, promising that wages would rise as well as their equity so in a few years they could afford a home, then turn around and start outsourcing jobs over seas. what part of that is the American people fault?

By: valueireland

valueireland — Mon, 18 May 2009 12:24:09 +0000

@Aisling – One of the responsibilities of the banks was to stress test the ability of their customers to make repayments. This was supposed to include what would happen if interest rates went up – and if income went down.

By: Paul Moloney

Paul Moloney — Mon, 18 May 2009 09:31:06 +0000

“What galls me is that the banks made bad decisions (with hindsight) on many of their larger loans, which caused them financial strain.”

You mean such as giving out 100% mortgage at the height of the bubble, something you considered an “excellent idea”?

http://archives.tcm.ie/businesspost/2005/07/31/story6719.asp

By: Aisling

Aisling — Thu, 14 May 2009 11:15:46 +0000

After reading some of the posts here. I understand why some are saying you signed the fixed rate contract, you are still paying the same as you were previously before the rated went down. Fair enough, but I like many others have taken a cut in pay in recent times, more government taxes. Therefore not earning as much as I was when I fixed in the first place. Surely this must be taken into account when looking to get out of your fixed or been allowed to fix at a lower rate without huge penalties. If my pay was still the same I’d have no problems sticking to the contract I originally signed.

By: valueireland

valueireland — Sun, 10 May 2009 22:59:13 +0000

@Carl – I did say it was a guess.

I appreciate the difficulty you’re finding yourself in at the moment, but banks were obliged to stress test any loans. Technically, as far as I’m aware this should look at your ability to pay no matter what the situation is – change in interest rates or change in earning capability.

As far as you taking and following the advice from your bank, if you feel your were mis-advised, then you should take your case to the Financial Services Ombudsman.

By: Carl Sheridan

Carl Sheridan — Sat, 09 May 2009 11:57:50 +0000

You make the stupid comment of “I would hazard a guess that many of those who entered into fixed rate mortgages in the past number of years did so on the basis that such mortgages provided a discount on repayments for the first couple of years. If it were not for this discount, those mortgages that should really have been unaffordable were made affordable” I took out a fixed rate about 8months ago and it WAS NOT at any discount it actually cost me 22EURO more than the variable at the time,i did this because my bank, which i wont name, Told me normally the rate never drops by more than 1%. I was happy to pay the bit more so i could make sure i could pay. I did a budget and getting it fixed even paying 22EURO left enough to pay. With cuts to my wages im now down 190EURO a month and thats just the start. If the banks didnt use dirty back hand tactics to make it look like they were in good shape, i wouldnt have been cut in my wages and i would be happy to pay my fixed rate even if the rate still dropped to what it is now. So dont have such a blinkered few that every should be left to pay a fixed. Some of us wont to but just cant afford it

By: andy

andy — Wed, 29 Apr 2009 14:50:48 +0000

i fixed last october @5.2 for two years,was told by a friend to read my contract about breaking my fixed rate and it says i may be hit with a penalty,this can also mean i may not!!!!!!!!!!!!i was quoted 10,300euro to get out i nearly shit myself,what im hearing is that its six months interest payments to get out,again says nothing in my contract about this,can anyone offer any help as baby on the way, so soon only one wage coming in,i understand people sayin tuff shit they had to pay when rates were rising,but people were not losin their jobs

By: Gill

Gill — Tue, 28 Apr 2009 15:18:04 +0000

OH MY GOD!!! it’s ok for us as taxpayers to be forced to bail out the government and banks that made bad financial decisions over the past 8 years but its not ok to ask that they now return the favour and allow everyone to be on a variable mortgage rate until such time as the economy steadys itself again. Was any normal Jo Soap aware that this crisis was going to occur? NO, but the banks did and we STILL have to go and bail them out!…. I would have at least thought that people would have been sympathetic to those who fixed in early 2008 on the assumption that rates have been climbing for years and allowing them to know at least what the repayments are going to be fluidly for x amount of years. There was no underlying intention into the regular person fixing – just ill advise. But then who was to know……

By: Rumpole

Rumpole — Wed, 22 Apr 2009 20:13:10 +0000

Well its not that simple [ contract law], have you ever asked the bank for a sample costing at the loan offer stage for a redemption. They will not provide this to you, nor will they state expressly that you are liable for a penalty but merely print in on every other page (in small writing, at the bottom or the back of the documents).

I think people would have taken a different decision if the banks had not been so vague.I have helped a few people to wrangle out of fixed penalties, the T&Cs were too vague and the documentation was incomplete, which is just sloppy by the bank but then again who was regulating The spirit of piece is distasteful in that it really says F&CK those who suffer on fixed rates. An attitude which is one of the reasons why we are in the mess we are in. But forward thinking people would realise that fixed rate penalties if waived , would enhance the spending power of those who benefit and in turn the economy. Hell it may even create a few more jobs , I suppose we should also ban the new simpler english for financial instruments , sure if the average Joe gets burned well so what.It will only take a few cases which I believe are on the way to landslide the misrepresentative selling of mortgages by banks to consumers. It reminds me of the guy who went into a strip club in London and ordered a coke, they brought the coke and he drank two bottles and enjoyed some viewing. When the bill came they charged him £250 a bottle but as the author says.

“Just because it’s irresponsible in favour of home owners rather than developers doesn’t make it any irresponsible.” – How can one argue with that logic(hmmmmm).

The use & abuse of the ambiguous redemption fee has had its day , ambiguous terms in a contract for debt are about as useful as tits on a bull.