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David Duffy – Negative Equity in the Irish Housing Market

An important contribution to the economic debate by David Duffy of the ESRI. The paper estimates approximately 196,000 households in negative equity consequent on anticipated house price declines next year. Its main policy conclusion is the advocacy of policies that allow delaying of mortgage payments rather than write-downs.

link here

66 replies on “David Duffy – Negative Equity in the Irish Housing Market”

The most depressing thing about David’s paper and indeed Ronan’s analysis is the lack of data to do serious econometric research on these types of relationships. Neither author would have problems crunching out the proper numbers on these issues but the current state of micro-data in Economics in Ireland means that you have to put all sorts of data-sets together in ways that don’t quite fit to come to conclusions that don’t necessarily follow from the data.

I dont have time to look up the word “cavail” Brian but I would want to know a lot more about how mortgage delay deals actually work in practice in Ireland before signing up fully to this idea. People in negative equity for the most part are facing a monopsonist in terms of bargaining mortgage changes as switching your mortgage to another provider when you are in negative equity is practically impossible (someone correct me if I am wrong) in Ireland. Financial regulation should, in my view, look closely at what is a fair deal in terms of negotiating delayed mortgages in the Irish context.

Either way, the conclusions follow more from the literature than the data and I don’t think the author would disagree that having to combine data-sets in the manner necessary in Ireland to look at these relationships is not optimal in any sense.

It’s an excellent paper in terms of risk, but I disagree with some of the numbers based on a much more simplistic calculation:
Peak home price 332k
Dwellings 1.5 mn (let’s assume it remains static)
Total equity: 490 bn
Equity of those with mortgages (40%): 199 bn
Residential mortgage debt outstanding: 131.8 bn

Now let’s factor in a 30% drop from peak, can we all agree that that has happened?

Total equity: 348.6 bn
Equity of those with mortgages: 139.4 bn
Residential mortgage debt outstanding: 148.2 bn

So, on average, every house in Ireland with a mortgage is in negative equity.

Should the drop in prices from peak reach 71%, the total equity will be 144.4 bn and with a constant level of gross mortgage debt, Ireland’s residential housing stock will be in negative equity.

Now, I don’t dispute that there are people with very small mortgages. I don’t dispute that there are people with plenty of LTV. But there are either some people with massive negative equity (if we take a figure of 19% of people with mortgages having negative equity, some 114k people, we get an average of 76+k per mortgage) or the LTV figures at time of loan don’t tell the whole story… perhaps the home equity ATM needs to be looked at?

Hold on a second. This is the same David Duffy who extrapolated a requirement of 350,000 extra units (didn’t specify type of housing stock or location) within the republic necessary up to 2020 or thereabouts.

1 of 2 things follow… Either David has totally forgotten to account for specuvestors in his analysis of demand for housing stock or alot more serious structural negative equity is on the cards for these folks.

Ironic also that a government thinktank like ESRI would advocate no writedowns for mortgage holders, yet the grand old gubbermint have been prepared to write down in excess of 30 billion based on LTEV.

What’s wrong with Long Term Economic Value for the people?

“Policies should only allow borrowers to delay rather than avoid repaying their mortgage in full, to avoid the moral hazard problem of assisting those who do not need it.”

What about long term economic value, eh??? No moral hazard there then?

Perhaps Brian meant “cavil” in which case (“to raise irritating and trivial objections”) perhaps a bit harsh?
Anyway, to be devil’s advocate, why is negative equity such a big issue? In a small country like Ireland, geographical mobility is not so pressing & the labour market consequences are probably small.

@Kevin Denny
You assume that labour mobility is just within Ireland. Historical experience might argue that is a parochial view…

“The research suggests that policies that lower mortgage repayments, thereby making default less attractive, are preferable.”

Preferable to whom? Measures to alleviate default are per force measures which make the downward adjustment in the property market slower and stickier.

Eh, no I don’t: like most people ( & certainly most economists & even more certainly those of who have worked abroad) I am aware of migration. I think I saw a movie about it once. Nonetheless I think its a fact that when most workers in Ireland change jobs they change to other jobs in Ireland, probably not too far away. Call it “parochial” if you like, I call it “accurate”. A lot of the recent immigrants may not have bought houses to boot so they are not trapped either.
The question is does NE matter? Negative equity has been seen as this spectre haunting the UK where you have big differences in unemployment rates across the country where the distances would not be commutable. I am not convinced that here it has consequences for the labour market in the absence of any evidence to the contrary. But I might be wrong.

David’s senstivity analysis Table 4 shows that the key variable, not surprisingly, is the % fall in house prices. At 50%, there is a huge increase in nos. in neg equity. He does not give a size distribution of neg eguity for the 50% drop scenario, which would be interesting.

Dealing in averages tends to understate tails of distributions. At average drop of say 30%, assuming it is uniform, the nos. in ‘serious’ neg equity can be ground out. But if the 30% holds on average but is not uniform, the tail exceeding any threshold for % neg equity will be bigger. The bigger the dispersion about the assumed average drop, the bigger the problem. My impression from Daft is that there is already a dispersion, and it could get bigger.

Finally David’s sectoral analysis seems to suggest that the neg equity is relatively concentrated in sectors where job losses have been least.

@yoganmahew

No idea where you got this figure from

Total equity: 490 bn

But I keep on being surprised by the relationships between figures in this crisis… Thats very similar to the bank guarantee….

@Kevin Denny

Does the phrase: “property ladder” have any resonance with you?

People were sold short on a dream and yes, I can see you come from the school of you pays your money you take your chances but opportunity cost was a foreign concept to the majority in the land where the Financial Regulator and other authorities were out to lunch (with the developers) and we had a TeaShop advocating people to throw hundreds of thousands away whilst blithely stating that anyone preaching a modicum of restraint should commit sepuku.

It’s quite simple, people want recovery (whatever that means), 2007 repayments based on 2007 principles with likely interest rate increases once the old EU engine economies get moving again is going to tie up alot of disposable income (and maybe not so disposable, you did hear about that 450k unemployed, right?) that could be either used within the domestic economy or even eliminated from the equation altogether at the grand altar of competitiveness.

Negative equity does matter for an FTB living in a shoebox without a job who was loaned 100% on an interest only back in 2007.

Thankfully, I’m not one of them.

@TUG

“Ironic also that a government thinktank like ESRI would advocate no writedowns for mortgage holders, yet the grand old gubbermint have been prepared to write down in excess of 30 billion based on LTEV.”

According to the Government the developers will continue to owe the full value of the loans to NAMA – so we’ll all be quids in when they pay off in full.

The line is that there is no, repeat no, bailout for developers – so why should there be one for mortgage-holders in negative equity?

And the Vision Statement for the ESRI:
“To be an internationally recognised, independent, multi-disciplinary centre for team-based policy focused, empirically driven research in the social sciences.”

@Paul Hunt

Key phrase: “according to the Government”

I’m well aware of the vision statement, I think their GDP projections over the past three years put paid to that internationally recognised bit…

@Garry
Average home price x number of homes = total equity, or, I should say, total gross equity.

@Kevin Denny
🙂 Very droll.

Sorry, I wasn’t accusing you of being parochial, more that Irish workers are no longer parochial. There are two large bodies of recent immigrants – returning Irish and others. I am in the former category. Both are well aware of employment, living conditions and opportunities in other states. In addition, emigration is no longer the life-long break from friends and family that it once was.

In economic terms, would the state benefit in the short-term if the unemployed were free to leave to seek opportunities elsewhere? After all, we can’t all live on this small island…

Its interesting that in the UK in Nationwide Building Soceity they’re offering 125% LTV’s to existing customers who want to move home but are in negative equity. I can only assume this is done with BoE/FSA/Treasury approval and is designed to make sure that people aren’t stuck in one place due to neg equity, possible due to the mobility factors Kevin noted. I think Fannie Mae is offering something similar in the US.

125% LTV’s were reasonably common in the UK up until the property market tanked, which makes our lenders look positively prudent in comparison.

@Zhou
nah…we arent allowed to publish trinnerisims….have to keep some mystery doncha know.

Do we have any handle on what proportion of houses in negative equity are in fact peoples second, third etc houses? Or equivalently on the number of people as opposed to houses facing negative equity on their house?

I would imagine the policy response towards a person in negative equity on their third house should be very different to that towards a first time buyer. There is also an issue where a household/investor is in negative equity for one house but perhaps not so for houses bought earlier in the boom.

@BL

It’s too late now to try to trick me into not using “cavail” during my interview for chair of international financial economics and devt.!

I smugpine the job is in the bag (occupying the space left by your cat.)

@Zhou
“I smugpine the job is in the bag (occupying the space left by your cat.)”
This chair will not be filled. It was a funded chair for the holder ( same funder also funded a few others with the intent being for the term of the holder)

@yoganmahew

Good Lenihanism there: (The Elder, RIP)

“After all, we can’t all live on this small island…”

Interviewed in Oct. 1987, Newsweek

Q. “Isn’t emigration a defeat for the Irish people?

A. “I don’t look on the type of emigration we have today as being of the same category as the terrible emigration in the last century. What we now have is a very literate emigrant who thinks nothing of coming to the United States and going back to Ireland again. The younger people in Ireland today are very much in that mode. And it’s very refreshing to see it. If future legislation in the Congress will acknowledge the skills and the capacities of Irish emigrants and grant legal status to allow entry to qualified jobs, we will have a mobile labour market stretching from the US to Ireland to the European Community where we can participate and contribute fully…”

Q. “What can these emigrants offer Ireland?”

A. “They should do what they have to do. The world is now one world and they can always return to Ireland with the skills they have developed. We regard them as part of a global generation of Irish people. We shouldn’t be defeated or pessimistic about it. We should be proud of it. After all, we can’t all live on a small island”.

Neg Eq is a real problem: think Recourse Mortgages!!!! Sounds like Debt Slavery to me.

Several consequences I can think of. Lots of foreclosures (incomes no match for payments) – ie. you are paying more than 28% of your THP to service your housing. Mortgage holders can (those Recourse Loans again, and will, sell you out into a falling market for whatever they can get. Prop. prices further depressed. The financials write off no loss – they still have you by the testicles.

Lower wages and salaries (the cut, cut, cut Brigade – no offence Colm – its the just the current mantra of Bus-as-Usual gombeens), means less purchases. Hence more price decreases. Sound like a deflation spiral?

The only politically correct solution, (as opposed to the accounting one), is default without recourse: A Debt Jubilee. Another might be a simplified short-term personal bankrupcy plan. The idea of ‘rolling up’ interest or deferring principle repayments shows a blind spot about the real seriousness of the current economic disaster in this country.

You need ‘Smithian growth’ on steroids to have sufficient disposable income to repay what you owe. Its the maths. Exponential growth always rises above linear! The 2002-2008 ‘growth’ was money driven, not production driven. You can issues all the virtual electronic credit and leverage your spreadsheet cells will accomodate – but finding the real cash to repay those real debts! Well, that another story altogether.

Brian P

the live situation on mortgage arrears (in dealing with collections dept’s and clients) is basically a sham at the moment, interest roll ups & the rest, its all a waiting game.

The forebearance for the banks almost seems harsh in comparison, basically there are a few key policy changes which will put off all the information until H2 of 2010.

1. recap deal of AIB/BOI (9 feb 09′ reported- 12 month stay for people in arrears [originally state wanted 24 months])
2. new code of conduct for mortgage arrears (regulator feb 2009)
3. IBF/MABS protocol (june 2009)
4. Changes to court system (registrars can grant repo orders in some cases via circuit court).

so not only are we putting things off, but we don’t have the ability to collate the information, LiamD hit the nail on the head, we don’t even have meaningful datasets and while that doesn’t undermine the effort or work of the researcher, it means the best we can get are guestimations based on asking prices, the actual price set is now so small it isn’t reflective, and the only company that was collecting actual sales prices was told by the Data Comm to stop doing it!

Even the comm. on taxation pointed out in part 6.1 of the report the dire need for this information.

Esperian in the US have done some interesting research on 24m mortgage cases and they are seeing a big uplift in strategic default – the people who can afford to pay but won’t.

Good Lenihanism there: (The Elder, RIP)

“After all, we can’t all live on this small island…”

Interviewed in Oct. 1987, Newsweek

If that is what Brian Lenihan the elder (RIP) said in October 1987 (and I seem to recall that he did indeed say that), it shows just how utterly he failed to foresee the future. In October 1987, the economy was allready well out of recession and growing by 4 per cent, the start of 21 years of the fastest economic growth ever recorded in a developed country. In the following 20 years, far from net emigration, there was approximately half a million net immigration. Yet, he doesn’t seem to have had the slightest inkling of what was about to occur. Not a personal criticism of him, as neither did any other politician or economist. The prevailing mood was one of extreme pessimism. Deja vu. I wonder, if Irisheconomy.ie had been around in October 1987, how many posters on it would have accurately predicted what occurred in the following 20 years. Precious few, I’d say.

There is, of course, one major difference between Oct 1987 abd Oct 2009. In Oct 1987, GNI per capita in Ireland was 60 per cent of the EU15 average, and the quality of life in Ireland was one of the lowest in the developed world. In Oct 2009, its 110 per cent of the EU15 average, and, just today, the UN Human Development Report ranked Ireland 5th in the world for quality of life and 1st in the EU. So, if the decades following Oct 1987 didn’t have net emigration, I don’t see why the decades following Oct 2009 should have.

@Zhou/Brian
Regardless of whether there is a chair or not, dead people need not apply.

@Liam
There is indeed a serious lack of data on wealth in Ireland. We know what people earn, but we don’t know what they own and owe. It’s hard to do much more than David did in this paper.

Richard – i hope I made it clear in my comments that I am criticising the lack of data rather than David Duffy’s non-use of (the non-existent!) data. Collecting data on wealth and debt at micro-level is not without difficulties. It is something we need to talk about seriously though as we are caught embarrassingly short by not being able to put numbers on some of the things being discussed above.

@Liam
Did anyone else ever wonder ….in whose interest is it that we have shag all data on this as well as on many other areas of interest/importance?
I mean, if there is no data, then evidence of failure is hard to produce and so assertion/bluster/lying a hole in a pot can proceed as per normal…..
Or am I cynical?

my kingdom for an edit function…..sigh

I recall at one stage in my brief sojurn on floor 5 of the central bank pointing out to my boss that the data we had from the banks would relativly easily allow us to calculate equity release mortgage levels. Oh, the laugh we had…..when they picked themselves off the floor it was pointed out
a) i wasnt in research so had no business suggesting such things.
b) the research dept hadnt asked for it anyhow
c) even if they did, what would they do with it, sure nobody was doing that (this was 1990)
d) even if they were, the information would have to be processed, and by whom, given that as it was i could hardly do the job I was supposed to do and
e) the role of the bank economic staff was to support policy not infer that due to the lack of same we had none.

Official Ireland : we dont need no steenken data senor…

Brian – these are just anecdotes from years ago. It would be better if there were some threads actually constructively laying down what’s missing. Morgan Kelly made some suggestions. I have been making suggestions through the last few years at various groups and I will attempt to condense this in a later post. The SPAR (statistical potential of administrative records) group also looked at many issues. There is also of course the national statistics board. I don’t think it is honestly in anyone’s interest not to have workable microdata given that we already spend a lot of money collecting this stuff. A lot of work has been done making things like the Household Budget Survey, QNHS, SILC and so on available for researchers but the fact remains that these data-sets as currently set-up and disseminated leave us mostly powerless to provide solid answers to what is happening now and also are really difficult to use to estimate the state-of-the-art models in the academic literature. It is, of course, perhaps the case that people are mining through excellent data in backrooms and keeping policymakers completely up-to-date but they would struggle to use the current questionairres for this purpose.

@Liam
You original post was clear. Having searched for the data for a different purpose, I just reiterated what I agree is one of the key conclusions of David’s paper: We wish we knew.

@Brian
I would suspect incompetence rather than conspiracy in this case.

@TUG
While I am sure people don’t like being in negative equity ( & in that sense yes it matters) what I am trying to understand is what are the implications of the extent of the problem. In other words, will it effect many people’s behavour & in what way? My guess is, not a lot ( & in that sense it doesn’t matter) but that is only a guess.
@Liam: we are caught embarrassingly short of data on lots of economic variables. This is nothing new and the prospects of the government investing in new data and new research are not good. Of course the economics profession has to do its bit too: as well as criticizing policy we need to try establish a dialogue with policy makers on issues such as data collection, policy evaluation & analysis.

Liam
Im not suggesting that deep in the bowels of Merrion St there are hordes of econometric models using “secret” data. If only.
I firmly believe that official Ireland, the elected and permanent govt, are fundamentally disinterested in accurate data. Hell, we deferred a census once and started the state by burning the archives.
As for interests – Is it in the interest of the state at present to be able to poo-poo the issue of negative equity? Or to be able to say “sure nobody knows where house prices are, they could be down 10% for all ye know” As frinstances.
Most of my research is in finance where there is good data. To a great extent thats looking where the light is and I applaud anyone brave enough to look at irish macro data. But, as I say, I am deeply cynical.

@Richard
there was a lot of that too. But it can be strategic – we have nelsonian attitudes to statistics and I do not mean steering straight at em.

@ John: Prediction is best left to historians. They are always 100% correct.

Ireland has never experienced a Neg E slow-motion tsunami which is engulfing us. Anyhow, if your up to your nostrils in liquid, its the ripple that drowns you!

No amount of modern macro is going to deal with the problem we face. I know it appears as a financial problem, but its actually a political problem. Now, never, ever, underestimate the depth of treachery that a political party in power is capable of if they sense that they will be banished to the back benches for a long time.

If FF is consistently behind FG in the opinion polls, say by more than 5% – they may very well pull a stroke: a snap election with a promise to allow indebted persons to write off at least 50% of their mortgages!! Bunreacht Na hEireann does not provide absolute protection to private property (ie. debts owed) – the protection is provisional! So a Supreme Court challenge is not likely to succeed. Be very interesting to watch.

I have several times mentioned the connection between energy inputs (fossil fuels) and economic output. Some research is indicating that we may be up against the infinite wall of the second law of thermodynamics – we are only increasing our relative production output marginally, whilst the real improvement has been in our quality of life. If this is in fact true, and who knows at the present, it bodes ill for our future, as fossil fuel resources become scarcer and we process toward a Hobbesian state of nature.

Hence, all who confidently predict that Smithian growth will resume and we will be ok – well, they had better do some research and some reading. The math and entropy say we have a problem. This is good enough for me.

Brian P

BL: I think the destruction of the records in the Four Courts was an accident, yes they did aim at the building but they had other things in their sights than Public Records (& it was the Free-Staters who attacked it remember).
I think its easy to demonize the elected and permanent government, many of whom [in my fairly limited experience] are a decent bunch of people, well motivated, hard working but not well trained. To a large extent they simply don’t know what they are missing.
I think it is also useful to distinguish between having data (the Census, GDP & all that) and analysing it. I suspect that economists are regarded as a pretty pesky bunch, perhaps more so than ever. Its certainly a tendency that we don’t want to enourage.
The IEA, for example, could do something useful by organizing some thinking about the future of the profession in Ireland after the current crisis [it will end, by the way] and what we can do to prevent another one. For example, what are we doing to improve economic literacy? I invite you to look at the Leaving Certificate Economics papers (& marking schemes) which are online, depressing stuff. This is something that professional economists should take more interest in.

Am I being obtuse, or is the proposal to facilitate mortgage repayment holidays non-sequitur?

The salient point that immediately jump out at me are:

1. Beyond the mobility points, well accepted, the key issue impact here is distributional. Default and bank shareholders (or Irish taxpayers 😉 ) take the hit, or muddle through and householders take the hit. This is just an extention of the broader Irish issue. There has been a loss, we can not make it dissappear, but only shift the burden from one place to another.

2. There is no repeal for these people from a potential “market rebound”. Those people in negative equity are in that state because they have capitalised their lifetime rental costs at some remarkably low discount rates. The went long rental and and stuck with the position. Whether they keep paying or get a holiday, the effect is wealth neutral.

So all in all I think the best policies will simply try to facilitate mobility

– perhaps some form of transportable debt under reduced exposure for the banks (i.e. allow borrowers to trade down and reduce the scale of bank uncovered exposure).

while avoiding potential aggrevation to moral hazard

@R. Tol

Many great men have increased their reputations andadded to their achievements after death. The fact that none have made themselves available to fill posts at TCD previous to now explains their non-appointment. In short, quit cavailing.

@Brian Lucey

All the data is with the Stamps Office of the Revenue Commissioners. Perhaps some underemployed stamping officials could be deployed to collate the data for the current year to date and the data for August 2006 to March 2007.

all the info we need is in dublin castle (stamp) or revenue, and if the law society were aptly directed they could be asked to supply figures to a central source when sales go through, its not a case that the data isn’t available, nobody collates it and when they try to the data protection commissioner stops them because of private treaty laws.

the actual information in broad form shouldn’t be protected (ie: figures for a township/parish are not ‘intrusive’ whereas they may be seen that way for individual properties). its just a lack of foresight playing out in practice, half of our properties aren’t even registered correctly and are held in boxes in the reg of deeds. there is quite a bit of work to do on this one.

@ Brian O’ Hanlon
“Alternatively, the lead given by the public sector pay cut of 7% could be followed in the private sector, preparing the economy for a more rapid lift off from 2010 onwards.”

This seems to implicitly assume that while wages are sticky, prices aren’t so if we drop wages all will be fine. However if the cost of living does not adjust quickly then we are placing a squeeze on households already burdened by debt. I think there is an implicit belief that prices increased due to general wage increae and will fall accordinlgy. I would imagine the causation works both ways to some degree but with stickiness when it comes to reductions in prices.

While in some sectors wage reductions may improve competitiveness, in many others I suspect they will help very little. If shops reduce wages, they are unlikely to significantly lower prices (not sure demand would significantly increase for many products in the short term) but rather would use a significant portion to meet unsustainable rental costs. Rents as a residual should be falling quickly but if they did we would be straight into a banking crisis.

Really we should be focusing on the question – how can we lower workers costs of living in order that they can afford to work for lower wages? Asking it in this way alleviates the risk of squeezing household to the point that we bring on the private debt crisis which may be hanging over us.

Rather than focus on wage levels I would rather that we pick 3-4 major areas of expenditure e.g. food, energy, clothing and ask why are prices at the level they are for such goods, what are the contributing costs and is their scope to reduce these costs?

Returning to the original quote this seems to ignore the fact that in some jobs people are now doing work which previously would have been classified as overtime as part of their ‘regular’ duties – an unobserved wage drop.

According to a recent report on Risks on the Mortgage Market from our Dutch National Bank, DNB, in 2008 about 13 % of the househoulds with mortgage was in negative equity. That word, negative equity, is not mentioned in the report. It refers to negative equity with the words: there would be a mortgage debt left after selling the house. Crazy it may seem, but while the whole report is about negative equity, these words are not mentioned in the text.
How is the situation now, we are almost at the end of 2009? The report doesn´t say that. What is the prognosis for the future? No prognosis given. So, this Irish report from ESRI is better than the Dutch report from DNB (and AFM)? Yes and no. What I miss is the term ¨near negative equity¨. That includes both negative equity and the situation that after selling the house and paying off the mortgage debt, there is still some money left, but it is so little that you cannot make a deposit to buy a new house. In the USA a margin of 5% positive equity is still considered to be near negative equity. Near negative equity prevents people from selling their houses in order to move to different location when there are not enough suitable houses to rent available. The money that is left after selling the house and paying off the mortgage can be so little that banks will refuse them a loan because they cannot make a reasonable deposit. What I miss is also the prognosis of Kelly, who thought house prices in Ireland could fall down by 80 %, because of the many holiday houses available in the market, for which there are no tourists to rent them. I am curious to know what other readers think of this.

@Karl Deeter
I was speaking with someone in the revenue previously and they indicated that the stamp duty receipts data would be released by area or county under an FOI request.

The problem was the cost…
It was going to run into the thousands so I dropped the idea.

Maybe someone else could pick up the idea with revenue again.

@ Brian,
I think the spelling is ‘Cavil’, but I’m not sure it quite means “quibble, but not very much”.

From http://www.dictionary.com :

“cavil – 3 dictionary results

–verb (used without object) 1. to raise irritating and trivial objections; find fault with unnecessarily (usually fol. by at or about): He finds something to cavil at in everything I say.

–verb (used with object) 2. to oppose by inconsequential, frivolous, or sham objections: to cavil each item of a proposed agenda.

–noun 3. a trivial and annoying objection.
4. the raising of such objections.

——————————————————————————–

Origin:
1540–50; < L cavillārī to jeer, scoff, quibble, v. deriv. of cavilla jesting, banter

Synonyms:
1. carp, complain, criticize. “

The best dataset in the world does not get you round the fact that it’s very hard to build a house price index in a country without postcodes.

Karl says:

“all the info we need is in dublin castle (stamp) or revenue, and if the law society were aptly directed they could be asked to supply figures to a central source when sales go through, its not a case that the data isn’t available, nobody collates it and when they try to the data protection commissioner stops them because of private treaty laws.”

Interesting point Karl, tanx.

@ Tony:

“This seems to implicitly assume that while wages are sticky, prices aren’t so if we drop wages all will be fine. However if the cost of living does not adjust quickly then we are placing a squeeze on households already burdened by debt.”

Fair point Tony.

Anyone read Fintan O’Toole’s piece in today’s IT?

Re Microeconomic Data.

I’m doing a PhD on credit scoring and the low default portfolio problem. My specialty area is Machine Learning (Artificial Intelligence). We’re looking at alternatives to logistic regression. I’ve asked a few Irish banks for datasets detailing individual mortgage applications and whether or not the loan was repaid. Not a chance. CSO, Irish Bankers Federation, Irish Credit Bureau: “We don’t supply that sort of data”.

Does anyone on the forum have any such data? Or an idea of where to get some such from?

Thank you,
Ken.

I noticed an interesting article in the Sunday Tribune last Sunday about BOSI charging a much higher rate for mortgages in order to price themselves out of the market basically.

Even though the same UK banks are offering a competitive mortgage rate in the UK.

@ Brian

read Fintan’s piece. Usual mush. He lives in a world where apparently there are hundreds of thousands of private sector workers capable of paying another 50k each in income tax without too much trouble, and that therefore this is the simple way to close the budget deficit. Even if this were true (which it really really aint…) it misses the glaring obviousness that we shouldn’t have a large amount of middle ranking public sector officials being paid 60-70k a year, on strict working practices, without almost 100% job security, and a massively beneficial state guaranteed pension at the end of it all.

@ Brian

the BOSI story is accurate. Seems like they don’t want any new business here really. They have an SVR for existing customers of 2.43%, and an 50-80% LTV variable for new customers of 4.3%. So essentially they’re putting a premium of 190bps on new customers.

@Ken
We have some such data from Permanent TSB, but there are major issues with confidentiality.

If your interest is methodological, you are probably better off using Swedish data.

@ Eoin,

All I can say Eoin is that perhaps it might come out in the wash now. That is one of the few silver linings I can see from the present turmoil to be honest.

I few people who deserved to feel the heat, are finally getting some.

Didn’t BOSI do a large proportion of the commercial lending to businesses etc also over the past number of years? I heard a percentage mentioned somewhere recently and I was surprised at how large it was.

I know they waded in pretty deep with Zoe developments – but Zoe did seem like a good bet at one point. They were very business like in how they went about the exercise of building. Compared to many developers out there, Zoe were more focussed on business than many others were. Still, Zoe managed to be proven poor recipients for finance in the final shake down. But for a long time, Zoe were a company favoured by the big lending institutions for sure. I am not sure any company in Ireland will enjoy that much ‘favour’ any time soon in this country.

What is annoying for the business community in general in Ireland, is the pendulum has swung much too far now in the opposite direction, away from companies that were considered candidates for credit in the past – to a situation where we depend on the ‘grass roots’ greens to instruct us what to do.

I could only happen in Ireland I suppose.

@Brian Woods “If FF is consistently behind FG in the opinion polls, say by more than 5% – they may very well pull a stroke: a snap election with a promise to allow indebted persons to write off at least 50% of their mortgages!! “.

If they do that Brian then for the first time in my life, I will be voting FF!

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