Am I the only one still getting used to the clocks going back? I mean, really, that extra hour in bed has knocked me back a lot more than sixty minutes.
“How far back?” you ask.
Over a decade, I reckon.
I remember when, in 2005, I, yes me, was running a bank branch that trial-launched the first 100% mortgage into the Irish market. In those heady days, I was defending these loans as financially responsible due to “enhanced underwriting, stronger credit criteria and robust loan stress testing”. We offered these loans to “help people who meet strict criteria”. Verbal gymnastics and well-meaning soundbites that helped to hide the real motivation; greed.
Imagine my confusion when I read this mornings Central Bank Briefing that Irish Lenders are again offering 100% Mortgages! This little nugget was revealed in the report that also told how nearly 20% of total new mortgages are not inline with the Central Banks Mortgage Lending Rules.
Not only are the CBI Rules selectively applied, but some of these are now getting 100% finance. I’m forever blowing bubbles…
Perhaps this shocking blast from the past could be rationalised and explained if it was only a Mid 2005 coincidence. But it’s not. No, it’s not even the most shocking development of the day.
No, that privilege belongs to Pepper Ireland, who this morning have announced they are entering the Irish Mortgage Market. The free market brigade will tell you that this is great. The government will say that this is proof that their “strategy” of not having a mortgage strategy is working. It’s none of these things.
Pepper is a Subprime Lender. It will lend to people who cannot meet the (20% broken) Central Bank Rules. Pepper will charge a premium for the additional risk. Then, Pepper will repatriate it’s over-inflated profits to it’s Vulture Fund Overlord.
In short, this added competition is not going to drive down the highest mortgage rates in the EU. It will actually lift our blended rate nationally. This will trigger the debt bundling that was the main driver of the Mid 2005 Mortgage Switcher Market.
People, under financial pressure, will bundle short term debt with their mortgage and think they are better off. Short term gain for long term pain. This is where we are going. Back to the Future…
Neil Hannon wrote it better than I ever could:
“Well that’s just me, the Complete Banker
In a black Bentley, Margaret Thatcher, right here next to me
Oh, how I hanker for the good old days
When I was free and a complete banker
I’m a conscience free, malignant cancer on society
And one day you’ll let your guard down
And I’ll come ’round again”
Tony Groves November 2016