Mortgage Market Trend Outlook 2012

Mortgage Market Trend Outlook 2012

We are pleased to debut our annual forecast for the Mortgage market here on Every year we try to look into our very broken crystal ball and determine what might come next. This year we have some interesting thoughts (whether they come true is another matter!).

  1. We have finally hit rock bottom (in terms of lending), and we will see a larger number of both draw-downs and higher total lending in 2012 (up from current c. €2.4bn for 2011).
  2. That banks will offload some of their tracker loan books to IBRC (formerly known as Anglo) in an attempt to reduce their ‘performing’ loss making loans.
  3. That 20,000+ mortgage accounts will be deemed ‘unsustainable’ and this will result in a large number of voluntary possessions, assisted sales and post ‘standard forbearance’ measures as mentioned in the Keane Report.
  4. Property prices are likely to continue downwards but we may be close to bottom in Dublin, in particular the non-apartment second hand sector of the market.
  5. Rates may come down for new borrowers, the ECB may hit an all time low, deposit prices will drop too.

You can read this and much more in the report (here) or click on the image, and we look forward to your agreement or disagreement on it. In the spirit of proving how falable we are we also reviewed the quality of the calls we made for 2011 in late 2010 – if you want a laugh just skip to that part (ouch!).

There has been a host of big reports out this week, here at the Property Barometer was released on Tuesday, and coming soon we’ll also have a ‘Rent or Buy’ calculator in conjunction with Irish Mortgage Brokers and it will help you to determine whether it makes sense to buy a house or not.

2012 is bound to be a really exciting year in the mortgage and property business, we’ll be here with you every Friday to navigate it! We hope you enjoy the report and please readers, do yourselves justice (as you always do) and critique the hell out of it!

Karl Deeter (@karldeeter)

Operations Manager

Irish Mortgage Brokers

Dublin 2

There are 24 comments for this article
  1. Karl Deeter Author at 9:13 pm

    @Brendan try it! I heard Kim Jong Un just created 1,200,000 jobs in a day (after playing two rounds of golf in 80 shots)

  2. Brendan at 6:04 pm

    I am thinking of moving to North Korea.

  3. Owen at 11:16 pm

    Are we looking at average mortgage terms of twenty years going forward?

  4. Karl Deeter Author at 1:54 pm

    @Damien even as a mortgage broker it’s a low blow to suggest politics! 🙂

    What I am talking about is the cylcical nature of property busts and that they tend to come with considerable regularity in developed economies. It may be hard to believe that prices rebound when you have high unemployment and are in a corner the way we are now, but that effectively happened in the UK during the mid 70’s when the IMF had to save them, 15 years later they had gone through another boom bust and they repeated this in 2006 yet again. In looking at future trends I use cases like that as a precedent – and I may well be totally wrong, but that will take time to prove or disprove.

    Property values tend to over correct, in the UK, Sweden and Finland this happened after their 90’s bust, which in some cases also accompanied a banking crisis (as did Japans, although I don’t think we’ll turn Japanese), the same will probably happen here, in terms of the time it takes you need 5-7 years on average but our price drops have been impressive and fast so I think the worst of it is over.

    In terms of Brokers accused of doing bad lending or allowing it to occur you are absolutely correct, and it has been documented in the papers (see link below), I can’t speak for every player in the industry, and I am sure the Central Bank are doing a competent job with those that break rules.

    Making people pay bigger deposits may be part of a solution – banks are doing that anyway – but in aggregate lending Regulation is a vital tool that was missing in the last boom/bust – the central bank/financial regulator failed to do the job they were paid to perform. There have been boom/busts in countries with very little credit (although lashings of credit really help!), Canada had a property crisis in the early 90’s and used that exact rule.

    The point I’m trying to make (and thus sign off the introduction with) is that we haven’t solved an age old problem and are probably going to repeat it – my call would be by the mid 20’s.

    For the investigation you refer to see link

  5. Damien at 1:31 pm

    Karl, you’d make a great politician. You responded to my letter but said nothing of value. I mean, just look at this:

    “That property was not worth the price it achieved in the boom is a statement that answers itself, hence it was called ‘the boom’. But if you think this country is somehow special and won’t enter another boom bust then you have a historical precedent to debunk.”

    What on earth has that got to do with the points I was making? Why are you talking about ANOTHER boom when we are still in a downward spiral? Secondly, I doubt there has ever been a boom like the one which ruined the Irish economy. The London boom and bust was nothing like this one because it was not accompanied by financial meltdown. Here’s my forecast. The next property boom and bust will be a long time in the future.

    Controlling mortgage is not a singular issue? Well, who am I to argue this point with a mortgage broker? I’m sure you know far more about this than us contributors. Mind you, I understand there were allegations that some mortgage brokers encouraged clients when applying for mortgages to lie about their financial status to enable them to get larger mortgages – thus actually fuelling the house price boom. Is that true, do you know?

    However, I can’t find fault with the following logic, though I’m open to correction. If people can’t get mortgages then they won’t be able to buy property. If people have to save 20% of the cost of a house and can only get mortgages of say 3.5 multiples of their salary payable over a shorter timeframe of about 20 years, then developers and secondhand home sellers won’t be able to ask absurdly high prices for residential property. As for renters and those with more money, they will always be around regardless.

    However, right now, the Irish economy is in ruins. Businesses are closing. People are out of work. Emigration is at its highest in years. Those with jobs have taken massive cuts in salary. Many are in serious arrears with their mortgage payments. Banks are very reluctant to lend. In the face of all this how can property prices have reached bottom yet?

  6. bernie at 12:59 am

    To all cash buyers waiting for house prices to bottom, be careful! You may miss the boat! There is very good value out there now. If you wait too long the house you are hoping will fall further in value may be taken off the market. Are you being greedy?

  7. Eugene reilly at 5:01 pm

    The lucky people are the ones who left the country because what the last government and the current government are doing to the Irish people is the greatest scandal.we need to get rid of the government as soon as possible,because what has come and is coming will bring the wrong section of this country to it’s nees so wake up and protest now.

  8. Danny at 2:53 pm


    All you are doing is lording your superior knowledge of English over the actual research presented.

    And furthermore, you have yet to point out the actual mistakes to allow correcting, your contribution is therefore pointless – who ever moderates this should just block him.

  9. Karl Deeter Author at 2:45 pm

    @ronan excellent critique of the research, thus far you only point is on grammar. Good luck.

  10. Ronan at 2:34 pm

    “your a twat”
    Delicious. It works on so many levels.

  11. Ronan at 2:29 pm

    @Karl Deeter
    Thanks Karl. I don’t need your pity however. I can spell.

  12. Colm at 1:49 pm

    Tend to agree that house prices will continue to fall due to lack of buyers in the market and general uncertainty over employment. I do not think we are anywhere near the bottom yet and emigration of those who would have been looking for a starter home is a significant factor in assessing the outlook.
    What is needed is an acceptance by lenders that we cannot afford the mortgages given out when property prices reached ludicrous levels either as individuals or as a State. If existing mortgages were marked to market and repayments reduced accordingly the market would start to recover though there would be a major loss to lenders. However given that there is a declining likelihood of recovery of arrears this would represent a reality check and a brake on further decline.

  13. Gerry at 1:21 pm

    Ronan, I share your view on the poor use of language and find it a pity that your valid criticism was met with such unpleasantness.

  14. Karl Deeter Author at 11:59 am

    @Sean I typically get total lending wrong, it is consistently the one area that doesn’t work out – so odds are in your favour! But if you take the targets banks are setting for themselves then it may work out, couple that with TRS extension, NAMA Mortgages (I don’t agree with those but still think that it could create drawdowns) and ECB rates it is a well and truly primed up credit market – confidence is the key I figure.

  15. Karl Deeter Author at 11:57 am

    @Ronan I feel bad for you, so you read the title page, say that ‘I can’t read this due to grammatical errors’ (for the sake of fun please point them out – and I hope they are grammar and not syntax), and then you come back to justify your position – meaning you are only checking in to see if people are responding to it or not… that is so odd.

  16. John at 11:51 am

    Ronan regardless or not of the grammatical errors I have just come on here to advise you that your a twat.

    Good day to you.

  17. Sean at 11:48 am

    I just can’t see the banks lending more money this year Karl. Bar BOI and AIB everyone else is as good as closed and nobody in government seems to care. AIB and BOI will continue to cherry pick only the small percentage of good quality mortgage applicants in the market to buy.


  18. Ronan at 11:30 am

    @Karl Deeter
    No. First (title) page.
    I wouldn’t consider pointing out two grammatical errors in large font on a page with only around 30 words to be pedantry.

  19. padraig at 11:10 am

    The banks gave 100% mortgages to investors in the boom on variable rates on interest only for 5 years and have now moved these rates up and with interest only now coming off this leaves a lot of these loans in trouble ,as rents have dropped by 35% .
    If the banks push on these loans they will have a large amount of propety to dispose off with large losses and will need to work with the investors.
    The banks did a lot of leanding to investors in this sector and most own one or two houses which were to be a pension for them in the future .

    The plus side rates are stable in Dublin for the last two years (houses)rents on appartments continue to fall as a lot were built in bad areas .

  20. Karl Deeter Author at 10:54 am

    @Ronan While you are being such a pedant I must suspect that you meant the second page rather than the first (title) page?

  21. karl deeter at 10:50 am

    @Damien After 5 years of price drops and the amount that they fell (c.50%+) is the reason. In the UK, Finland and Sweden it was not dissimilar after their property crashes. Non apartment homes in cities are the type of stock we are talking about.

    That property was not worth the price it achieved in the boom is a statement that answers itself, hence it was called ‘the boom’. But if you think this country is somehow special and won’t enter another boom bust then you have a historical precedent to debunk.

    The UK went through their property cycle again (just as we did) after the boom/bust of the early 90’s, the USA did, and Ireland has had a few boom busts too (1970’s farmland is a good example).

    Controlling mortgage lending is not a singular solution, the issue is to control speculation via a site value tax or the like. Otherwise it just makes property accessible to those with more money and they become the new rentier class (which is the underlying problem with property to begin with).

  22. Ronan at 10:46 am

    Oh dear. Two grammatical errors on the first page, I couldn’t read any further.

  23. Colm at 10:23 am

    I agree that the Trackers will be off loaded by the banks. They are crippling the ability of the banks to function. Take them out of the day to day banking system and things will free up and the economy would get a significant benefit.

    I’m not sure Rates will fall much more. It is now clear that Germany have their heel on the neck of the ECB and Germany don’t want low rates.

  24. Damien at 10:05 am

    “Property prices are likely to continue downwards but we may be close to bottom in Dublin.”

    I’m sorry but I get tired of seeing this nonsense regurgitated time and time again. Where on earth is your evidence for this? Look at the realities. Ireland is in serious economic difficulties. It may yet default on loans. Unemployment is at a massive high. People are emmigrating in search of work. People are in arrears with their mortgage payments. Banks are not lending and on the face of it who would blame them. Can they be sure that the person applying for a mortgage will still have a job in a year’s time?

    Isn’t it about time that you stopped trying to talk up a market which is still patently overpriced? Property in Dublin and elsewhere was never worth the price it reached at the height of the boom and it is not worth the price sellers hope to get for it now.

    What is needed is realistic rules for mortgage lending. The buyer must have a minimum of 20% of the value of the property saved. The loan should me limited to a maximum of 80% of the value and repayable over a maximum of 20 years and not 30 or 35 years. There should be capital gains penalties for those who sell within say 5 years of buying. After all, a house is a home and not an investment.

    Property prices in Dublin close to bottom? Not a chance.