The contents of this presentation were accurate on the ... · Euro Zone –Mortgage Rates Q1 2020 Levels of Capital €50 for every €1,000 of mortgage lending –Ireland €20 for

The contents of this presentation were accurate on the date of presenting - 20th April 2020 - and should be used a s a reference only by those in attendance for the full presentation.

LIA PRESENTATION

DUBLIN REGION

20TH April 2020

MORTGAGE MARKET UPDATE

Introduction

Michael Dowling

Dowling Financial

QFA, PIP,CUA, CUC,CUG

APA (Debt Mgt, Per Gen Ins)

M.Inst.D

Background

❑ Bank of Ireland 10 Years

❑ Eagle Star 2 Years

❑ Gunne Financial Services 10 Years

❑ Dowling Financial 15 Years

Background

➢ Founding Member of IMAF

➢ President of IMAF – 7 years

➢ Chairman IBA Mortgage Committee

➢ Brokers Ireland, Financial Services Committee

➢ Vice Chair, Malahide Credit Union - 10 yrs

➢ Chair of Credit Committee/Investment Committee

➢ Mediator

But first,

The World Economy and Politics

explained by…

…two cows

Mortgage Market

Year BN Volume

2017 7.3 28% 34,793 18%

2018 8.7 20% 40,209 15%

2019 9.5 9% 42,787 6%

Mortgage Market

YEAR €BN

2020 (f)* 10.7

2021 (f)* 12.1 *Davys

First Time Buyers - FTB

Year €BN

2017 3.6 38%

2018 4.2 17%

2019 4.9 17%

Average Loan €229,264

Second Subsequent Buyer - SSB

Year €BN

2017 2.7 22%

2018 2.8 4%

2019 2.9 4%


Switcher

Year €MN

2017 704 36%

2018 1.2 (Bn) 70%

2019 1.3(Bn) 10%


Buy to Let

Year €MN

2017 179 13%

2018 216 21%

2019 184 (15%)


Mortgage Market Breakdown

82%

14%

2%

2%

Lending to FTB and SSB

Switcher

Buy to Let

Top Up

Interest Rates

AIB/Haven 3.15

EBS 3.70

KBC 4.05 *

Ulster Bank 4.30

ptsb/Bank of Ireland 4.50

Finance Ireland n/a

Dilosk n/a

*Current Account

SVR Standard Variable Rate

Variable Interest Rates

LTV 50% 50-80% 80-90%

Dilosk 2.70 2.95 3.15

Finance Ireland 2.75 2.95 3.15

AIB/Haven 2.75 2.95 3.15

KBC* 3.00 3.05 3.30

Ulster Bank* 3.10 3.20 3.60

EBS 3.30 3.50 3.70

ptsb 3.70 4.00 4.20

Bank of Ireland 3.90 4.20 4.50

*Current Account

3 Year Fixed Interest Rates

LTV <60% 60-80% 80-90%

KBC* 2.25 2.30 2.35


Dilosk 2.45 2.50 2.60

AIB/Haven 2.55 2.55 2.55

ptsb** 2.65 2.70 2.90

EBS 2.90 2.90 2.90


Ulster Bank N/A N/A N/A

*Current Account

** > €250K


LTV <60% 60-80% 80-90%

Ulster Bank*** 2.20 2.20 2.60

KBC* 2.40 2.45 2.50

Dilosk 2.40 2.45 2.60


AIB/Haven 2.55 2.55 2.55

ptsb** 2.75 2.80 3.00

EBS 2.90 2.90 2.90


*Current Account

** > €250K

***> €300k


LTV <60% 60-80% 80-90%

ptsb 2.9 3.00 3.15

Ulster Bank* 2.99 2.99 2.99


AIB/Haven 3.15 3.15 3.15

*Current Account


LTV <60% 60-80% 80-90%

KBC* 2.85 2.99 3.20

Ulster Bank 2.95 2.95 3.15

AIB/Haven 3.30 3.30 3.30


*Current Account

75% Fixed Rates Ireland Q1 2020

85% Fixed Rates Europe

10% Fixed Rates Ireland 2014

BTL Interest Rates

Variable Fixed

LTV <50% 50-70% 3 Year 5 Year

Dilosk 3.75 3.95

Finance Ireland 3.75 3.95

KBC* 4.50 4.80 5.25 5.25

Ulster Bank* 4.50 4.95 5.40


AIB 4.85 4.85 5.95 6.35

ptsb** 4.80 5.05 4.65 4.85

NIM (Net Interest Margin)2019

AIB

Bank of Ireland

ptsb

2.37%

2.14%

1.85%

Ulster Bank 1.59%

Market Share

2019 2018 2017

❑ AIB/EBS/Haven 31% 31% 33%

❑ Bank of Ireland 24% 23% 27%

❑ Ulster Bank 15% 16% 14%

❑ ptsb 15% 15% 13%

❑ KBC 12% 12% 12%

❑ Finance Ireland/Dilosk 3% 3% N/A

New Lending CriteriaExceptions

❑ 20% of New Lending LTI > 3.5 Gross Salary FTB only

❑ 5% of New Lending < 90% LTV FTB only

❑ 20% of New Lending LTV > 80% SSB’s only

❑ 10% of New Lending LTI > 3.5 Gross Salary SSB’s only

❑ 10% of New Lending LTV (BTL) above 70%

❑ 2% of lending had both exceptions - 2019

Euro Zone – Mortgage Rates Q1 2020

❑ Ireland 2.91%

❑ Average 1.35%

❑ 30 Year Mtg €180 PM - €2,160 PA - €64,800

❑ WHY???

❑ Average Loan FTB €229,264

Euro Zone – Mortgage Rates Q1 2020

❑ Levels of Capital

€50 for every €1,000 of mortgage lending – Ireland

€20 for every €1,000 of mortgage lending – Europe

❑ Level of Mortgage Arrears

❑ Length of Time of Court Repossession *

42 months Ireland

18 months UK, Denmark, Norway & Sweden

24 months Holland & Finland

30 months Germany & Austria

*Standard & Poor’s

Euro Zone – Deposit RatesQ1 2020

❑ Ireland 0.02%

❑ Average 0.26%

❑ Household Deposits - €112Bn

Median Deposits - FTB

Average Deposit Q4 2019

Dublin €50,000

Cork/Limerick/Galway €34,000

Nationwide €37,500

Source: Banking & Payments Federation Ireland (BPFI)

Median Deposits - SSB

Average Deposit Q4 2019

Dublin €136,000

Cork/Limerick/Galway €73,000

Nationwide €95,000

BPFI HOUSING MARKET MONITOR Q2/2019MORTGAGES

www.bpfi.iewww.bpfi.ie

http://www.bpfi.ie/

http://www.bpfi.ie/

FTB Borrowers Income

BPFI HOUSING MARKET MONITOR Q2/2019MORTGAGES

www.bpfi.iewww.bpfi.ie

http://www.bpfi.ie/

http://www.bpfi.ie/

STRESS TESTING

€250,000 30 year term

Repayment @ 3.25% €1,088

Stressed @ 5.25% €1,381

Exemption €1,381 x 25% €1,726

New Lending Criteria

Exemptions

Loan to Value & Loan to Income do not apply to

➢ Switcher Mortgages

➢ Negative Equity Mortgages

➢ Arrears Resolution

➢ Lifetime Mortgages

New Lending Criteria

❑ FIRST TIME BUYER (FTB) - SINGLE NO ISSUE

❑ ONE FTB, SECOND NOT - MAX 80%

❑ BOTH DEFINED AS NON FTB

Lending Criteria

TERM OF MORTGAGE AGE

AIB/EBS/HAVEN/ULSTER BANK*

Finance Ireland

KBC

Bank of Ireland/ptsb/Dilosk

68

67

68

70

SELF EMPLOYED* 70

BOMAD DAC

LONG ESTABLISHED, UNREGULATED

BANK

50% AUDIENCE ARE

SHAREHOLDERS

NO RETURN ON INVESTMENT

Bank of Mam & Dad

43% EXPECT A GIFT

€30,000 -€40,000

€1 million OUR

HIGHEST

Tilda Project

❑ Survey – 4,000 people (age 54+)

❑ 48% provide financial assistance to their children

Rebuilding Ireland – Home Loan

❑ Launched 1st February 2018

❑ €200m Fund over 3 years

❑ €210m Used by 2018

❑ €363m Additional Funds - August 2019

❑ New Purchase or Build and Second Hand Homes

❑ Must be FTB

❑ Single applicant €50,000 max salary

❑ Joint applicants €75,000 max salary


❑ First applicant – PAYE, continuous employment for 2 years (not

permanent)

❑ Second applicant – PAYE, continuous employment 1 year

❑ Self Employed – 2 years Certified Accounts

❑ Declined by 2 Banks or offered “insufficient finance”


❑ 90% Purchase Price – Max Loan

❑ Max Purchase Price €320,000 – Dublin , Cork, Galway,

Kildare, Louth, Meath & Wicklow

❑ Max Purchase Price €250,000 - rest of country


❑ “side step” Central Bank Macro Prudential Rules

❑ Ability to service debt

❑ Max 30% of income to service mortgage

❑ Local Authorities – Unregulated Financial Providers


Single Applicant €40,000 Salary

Bank

❑ Qualify for €140,000

❑ Equates to 3.5 times Gross

Salary

RI – Home Loan


❑ Equates to 5 times Gross

Salary


Joint Applicants €75,000 Salary

Bank



Salary

RI – Home Loan



Salary

Rebuilding Ireland – Home LoanInterest Rates

❑ 25 Year Term 2.745% Fixed

❑ 30 Year Term 2.995% Fixed

Rebuilding Ireland – Home Loan€198,000 @ 2.745% Fixed - 25 Year Term

RI Home Loan

❑ Repayment €913 per

month

Bank


month

❑ (10 Year Fixed)

Rebuilding Ireland – Home Loan€198,000 @ 2.995% - Fixed 30 Year Term

RI Home Loan


month

❑ HELP TO BUY GRANT

AVAILABLE AS WELL

Bank


month

❑ (10 Year Fixed)

COVID 19 MORTGAGES

❑ WILL BANKS STOP TAKING APPLICATIONS – UK, YES

❑ EXCEPTIONS WITHDRAWN BY ULSTER BANK, PTSB & EBS

ALL MAY FOLLOW

❑ LTV IMPACTED – DILOSK 80% MAX

❑ INCOME/EMPLOYMENT SUSTAINABILITY

❑ SELF EMPLOYED – WAIT 12 MONTHS ?

❑ VALUATION REPORTS – 10% OFF SALE AGREED PRICES

COVID 19 MORTGAGES

❑ ALL BANKS ADDED COVID 19 EMPLOYMENT CLAUSE:

Subject to confirmation from the employer prior to drawdown that

the income, including variable income (bonus, commission,

overtime) is not affected in anyway and confirmation that terms and

conditions will not be adversely affected going forward (please

consider this before signing contracts as we may withdraw this offer

if it cannot be fulfilled)

Housing Market Q4 2020

Average Prices

•Nationwide €256,338

•Dublin City €327,379

•Dublin South €578,776

•Dublin North €317,420

•Cork City €278,993

•Galway City €290,812

•Limerick €201,778

COVID – PROPERTY MARKET

❑ UK GOVERNMENT MINISTER SAID NO SALES SHOULD TAKE PLACE

❑ VIEWINGS NOT POSSIBLE

❑ VALUATION REPORTS NOT POSSIBLE

❑ STRUCTURAL SURVEY NOT POSSIBLE


❑ PRAI – PROPERTY REGISGRATION AUTHORITY OF IRELAND

OFFICE CLOSED 27TH MARCH

❑ TITLE REGISTRATION SERVICES TEMPORARILY SUSPENDED

❑ SOLICITORS ( ESSENTIAL SERVICE) ??


❑ DAVYS 20% FALL IN PRICES NEW HOMES

❑ UP TO 20% FALL IN SECOND HAND PRICES POSSIBLE

❑ NEW HOMES CONSTRUCTION

❑ 25,000 EXPECTED 2020

❑ 16,000 REALITY, 35% REDUCTION

HELP TO BUY SCHEME

New Properties

First Time Buyers Both

if joint application

Capped at €20,000 or 5% of Purchase

Price

Purchase Price €200,000

Max Rebate €10,000

Min Mortgage 70% of Purchase Price

Max Claim €20,000

€400-€500k Price

Max Purchase Price €500,000

HELP TO BUY SCHEMEFeb 2020

❑ Based on Income Tax paid in the previous four years

❑ 39,330 applications July 2016 – February 2020

❑ €275 Million

❑ Average claim €14,812

❑ 18,566 claims paid

❑ 10,587 (57%) – Dublin, Meath, Kildare & Wicklow

❑ Applications equal to 50% of FTB who took out mortgage

❑ Extended to December, 2021

Non Performing Loans (NPL)

2019 2018 2017

❑ KBC 16% 25% 35%

❑ Ulster Bank 10% 12% 16%

❑ PTSB 6% 16% 26%

❑ AIB 5% 9% 16%

❑ Bank of Ireland 4% 5% 8%

❑ EU Average 4%

Mortgage Arrears – Q4 2019 PDH

Number Balance €BN Arrears € BN

88% Bank

12% Non Bank

751,708 98,149,886

>90 days

22% Bank

78% Non Bank

42,065 - 6.0% 7,924,138 – 8.1% 2,612,660

>720 days

27% Bank

73% Non Bank

27,085 - 4% 5,746,011 6% 2,363,539

Properties Repossessed2010 - 2019

9,200

0.5% Housing Stock

66%

Voluntary Surrender

Q4 2019 768 Banks

253 Non Bank

Alternative options

Icare

€100m fund – AIB

MTR (Mortgage to Rent) 8,000 Potential

Home for Life

€100m fund - ptsb

MTR (Mortgage to Rent)

Vulture Funds – PDH & BTL

Voluntary surrender /refinance less than balance/residual debt written off.

Mortgage Arrears – Q2 2019Buy to Let

Number Balance €BN Arrears € BN

75% Bank

24% Non Bank

103,678 17,008,549

>90 days

24% Bank

76% Non Bank

13,901 – 13.4% 3,624,530– 21% 1,563,765

>720 days

28% Bank

72% Non Bank

10,365 - 10% 2,898,015 - 17% 1,400,934

Properties Repossessed2010 - 2019

3,60032%

voluntary surrender

Q4 2019 - 1,053 in Possession - 476 Bank – 577 Non Bank

5,164 in Receivership

COVID – PAYMENT BREAK

❑ BPFI & NON BANK RETAIL & CREDIT SERVICING FORMS

❑ INITIAL 3 MONTH MORATORIUM

❑ OR

❑ INTERST ONLY

❑ APPLIES TO PDH & BTL


❑ IF IN ARREARS OR NOT UP TO DATE IN REPAYMENTS – CASE BY CASE

❑ BTL – TENANT NOT PAYING RENT

❑ AIB & KBC OFFERING UP TO 6 MONTH MORATORIUM


❑ €100,000 MORTGAGE

3% INTEREST RATE

10 YEAR TERM

€965 – €994

25 YEAR TERM

€474 - €481

❑ AT 10TH APRIL – 45,000 MORTGAGE HOLDERS AVAILED OF THE PAYMENT BREAK (5%)

Positive News

❑ NTMA raised €6Bn 7th April

❑ Over Subscribed by 5.5 times

❑ Demand €33Bn - 84% Overseas Investors

❑ 7 Year Bond

❑ 0.24% Coupon

❑ Annual Cost €48m

❑ GFC Annual Cost €1.Bn

Positive News

❑ FSPO Annual Report 2019

❑ 5,275 Complaints Received

❑ 322 (6%) Against Intermediaries

❑ 17 (5%) Were Upheld, Upheld Substanially or Partially Upheld

❑ Ulster Bank 21

❑ Irish Life 20

❑ Bank of Ireland 16

❑ AIB 15

IS THERE A FUTURE FOR THE MORTGAGE BROKER? YES…

Market Share

27% 2019

30% 2020

Opportunity – 2020-2021

❑Oireachtas Finance Committee – April 2019

❑ ptsb – 57,000 SVR – 4.5%

❑ Bank of Ireland – 44,000 SVR – 4.5%

❑ KBC – 36,000 SVR – 4.25%

❑ “How many can you switch?”

❑ AIB & Ulster Bank 200,000

137,000

Documents

The contents of this presentation were accurate on the ... · Euro Zone –Mortgage Rates Q1 2020 Levels of Capital €50 for every €1,000 of mortgage lending –Ireland €20 for