Scramble to stem panic after new bailout gaffe…

Alarm after Varadkar claims State will need further loans.

THE Government last night scrambled to allay fears that a second bailout is on the cards, following damaging comments by a cabinet minister.

Transport Minister Leo Varadkar sparked alarm and confusion when he said the Government may need to get new loans from the European Union and IMF next year.

Ahead of an anticipated backlash from investors this morning, Finance Minister Michael Noonan’s officials insisted the Coalition’s firm plan was still to return to borrowing on the bond markets in 2012.

The Department of Finance stressed there was no change in the Government’s plans, as Mr Varadkar’s comments were reported around the world.

Mr Varadkar was also left backpedalling after he was reported as saying: “I think it’s very unlikely we’ll be able to go back (to borrowing on the bond markets) next year. I think it might take a bit longer… 2013 might be possible but who knows?

“It would mean a second programme (of loans from the EU/IMF). Either an extension of the existing programme or a second programme. I think that would generally be most people’s view.”

Another bailout would involve even deeper spending cuts and more increases in taxation — leading to further contraction in the economy. That would mean hopes of a return to growth and possible erosion of the unemployment queues would be dashed.

However, Mr Varadkar will not be reprimanded, senior government sources stressed, despite breaking ranks on the sensitive economic issue.

Other ministers have previously said the country’s debts will be unsustainable unless the interest rate charged by the EU is reduced. But no minister has gone so far in saying it is “very unlikely” that the country will be unable to resume borrowing next year.

Ironically, most independent economists agree with Mr Varadkar’s comments, with many predicting that Ireland is unlikely to resume borrowing until 2014.

That would force the Government to borrow from the EU’s permanent rescue fund, which will come into operation in 2013.

But his comments immediately caused a problem for the Government, implying that there was a view within Government that a second bailout would be needed.

The remarks were later picked up by international news organisations and are likely to alarm some investors when markets open this morning.

But a Department of Finance spokesman insisted last night: “The policy is to return to the bond markets next year.”

The spokesman added that the situation would have to be reviewed closer to the time, and advice sought from the National Treasury Management Agency.

Last night Mr Varadkar attempted to play down the significance of his comments.

“My quote was in response to a hypothetical scenario,” he told the Irish Independent. “I am basing my spending plans, prudently I believe, on the more pessimistic scenario.

Hypothetical

“Nobody really knows and there are no crystal balls.”

A government spokesman also attempted to reduce the impact of his remarks, which were made during a recent briefing about transport issues, describing the comments as a “hypothetical answer to a hypothetical question”.

Mr Varadkar’s suggestion that Ireland will fail to meet its targets comes as investors are already panicking about the possibility that Greece will default this summer because its government is not committed to its targets.

As the euro crisis deepens, the Government has so far been very careful to dismiss any suggestions that Ireland is in further difficulties.

Mr Kenny last week categorically ruled out seeking more time or trying to get a write-off of part of the debt.

“We will repay our loans. We will not restructure our debt. We’re not looking for any further time, we are going to meet this challenge,” he said.

Report by Thomas Molloy – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Repossessions to surge as mortgage crisis deepens…

25,000 families now more than a year behind on their repayments.

MORE than 25,000 families in Ireland are in turmoil this weekend, living with the terror of being more than a year behind on their mortgages and past the point where they can ever hope to pay back the money they owe.

The shocking finding follows an analysis of figures compiled by the Central Bank of Ireland and released without fanfare during the high profile visit of Queen Elizabeth and on the day that former Taoiseach Dr Garret FitzGerald died.

The figures show that more than 35,000 people are now over six months in arrears on mortgages worth more than €7bn.

But leading mortgage expert Ciaran Phelan of the Irish Brokers’ Association has analysed the figures and says the situation is even worse than that portrayed by the regulatory authority.

He says even a “back-of-the-envelope” assessment of the latest statistics indicates that 25,000 of those families in long-term arrears must now be between 12 and 24 months behind on their mortgages.

“Unfortunately, that is the point of no return and way beyond the scope of the current forbearance measures,” he says.

While repossessions in Ireland are rare, the official statistics show that more than 600 residential properties have been repossessed since the downturn began — 49 homes in the first three months of this year alone.

Lawyers acting for troubled mortgage holders who face losing their homes have mounted a fresh legal challenge to repossessions.

They are questioning a section of legislation upon which financial institutions rely when they apply to the courts for repossession orders.

The relevant section was repealed in 2009 but lenders are still using it to apply to the courts for orders to repossess family homes.

The legal advocacy group New Beginning is questioning the legality of house repossessions that are enforced on the back of a law that is no longer on the statute books.

The group of volunteer lawyers acts for families in repossession cases.

David Hall, its spokesman, said the alleged anomaly was a “significant legal issue” that could have implications for repossession orders granted since then.

“This issue has come to light through the volunteer lawyers who undertake this work for clients on behalf of New Beginning,” he said.

“A significant number of repossession cases have been adjourned at the request of the lenders in recent weeks. I believe this is directly related to the lack of clarity that now exists over this issue.”

The matter has been raised in the High Court with Ms Justice Elizabeth Dunne. She is due to give a decision on June 22.

Meanwhile, Trevor Grant, managing director of Select Finance Group, one of the largest mortgage intermediary services providers, said thousands of householders were now coming under unbearable pressure.

“The mental stress experienced by those homeowners who are currently in arrears and those only a few pay cheques away from it is enormous and the implications and repercussions for their family life are horrendous,” he said.

Mr Grant said that the number of homeowners currently in arrears was highly disconcerting.

“This is particularly so in light of the fact that a number of these homeowners are currently on relatively low interest rates, which are only set to rise, or interest-only repayment structures which will have to expire,” Mr Grant said

He also pointed out that the Central Bank figures appeared to relate only to those in arrears of 90 days or more and therefore did not include those in arrears of one or two months.

“It is unclear whether they include those customers who are technically in arrears but are adhering to a revised and reduced repayment schedule.

“Nor do the figures include customers with investment property or holiday-home mortgages. The arrears problem is much greater than these already distressing figures illustrate,” he warned.

The Central Bank figures suggest that a tsunami of home repossessions is building up across the country.

Mr Phelan said the numbers revealed a significant rise of 55 per cent in the level of long-term arrears in the last nine months.

“The figures would appear to indicate that once families enter the ‘long-term arrears club’, there is little chance of solving the issue using forbearance alone.

“The lack of any meaningful political intervention to date and a general tendency for consumers to service non-mortgage debt are exacerbating the problem,” he said.

“Those unfortunate to be in this group will typically be 12-18 months behind in their mortgages and have to be suffering from huge stress — regardless of the temporary forbearance being offered by the banks.”

Mr Phelan said that while there is a slowdown in the number of new people falling into arrears for the first time, the problem of long-term arrears is accelerating — ballooning by a record 4,000 in the last quarter.

“There is clearly a solid group of 25,000-plus individuals who haven’t been able to meet their mortgage payments for 12 months or more and are therefore largely outside the protection of various consumer codes,” he said.

Mr Phelan argued that the figures showed that some form of debt restructuring or debt forgiveness was now inevitable because of the sheer numbers involved.

“Assuming that the banks will ultimately choose to enforce the mortgage contract at some stage, the Government will need to co-ordinate a debt solution, unless the State has 25,000 social homes lying empty somewhere.

“Whether the solution is called ‘debt forgiveness’ or ‘debt restructure’, it will ultimately happen as the vast majority of these people will never be able to repay these mortgages,” he concluded.

The Director of Consumer Protection, Bernard Sheridan, has urged people struggling with mortgage repayments or who are at risk of falling into difficulty to contact their lender as early as possible, so they can benefit from the protection offered by the Central Bank’s revised Code of Conduct on Mortgage arrears.

In all there are 782,429 private residential mortgage accounts held in Ireland, with a value of €116bn. Of these, 49,609 accounts or 6.3 per cent are more than 90 days in arrears. Perhaps the most telling figure is that 62,936 residential mortgage accounts have been restructured.

Report by JEROME REILLY and MAEVE SHEEHAN – SundayIndependent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Distressed property auction by Savills…

AROUND 100 distressed investment properties, mainly in the greater Dublin area, are to be auctioned on a single day in September. The move by Savills Ireland to kick-start both the residential and commercial investment markets is expected to generate sales of over €20 million.

Ronan O’Driscoll, of Savills Ireland, said most buyers at the September 29th auction were likely to be cash-rich investors happy to put their money into property now that values had fallen sharply.

In the past, investors banked on capital appreciation but it was now all about rental return and in many cases buyers could expect yields of 9 to 10 per cent compared to 3.5 per cent on bank deposits.

The announcement that Savills will be staging Ireland’s “biggest ever property auction” comes after last month’s successful auction of distressed properties in Dublin by British auctioneer Allsops and its Irish affiliate Space. They sold 80 of the 81 lots in a packed Shelbourne Hotel where turnover hit €15 million. They will hold another auction on July 7th.

Senior executives from Savills are in touch with banks, receivers and others who need to sell properties because of a loan default, over-investment or because of an unmanageable repayment schedule following the ending of interest-only payments.

Early indications are that about 80 per cent of the properties going to auction will be residential, including many city centre apartments; some with tenants. One-beds are expected to sell from €100,000 while two-beds are likely to cost €140,000 upwards. Some are also expected to appeal to first-time buyers who have managed to raise mortgages. There will also be three and four-bedroom semi-Ds that will appeal to investors and families. Investors will also have the option of buying mainly small retail buildings, industrial units and office suites.

O’Driscoll said that after a two-year standoff in auctions there was pent-up demand for well located residential and commercial properties. Ronan O’Hara of Savills, who is to handle some of the auctions with colleague Pat O’Hagan, said: “Once the reserves are were set relatively low these auctions help to set a price floor which will be noted by the market.”

Report by JACK FAGAN – Irish Times

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Nama’s equity plan ‘is doomed by ECB rates’…

Hobbs rubbishes scheme to protect homeowners, insisting any progress would be wiped out by a few interest hikes.

A proposal by Nama to protect homebuyers from negative equity has been dismissed as an attempt to “manipulate property prices” and will not work in the face of rising interest rates imposed by the ECB, leading economic adviser Eddie Hobbs says.

“They’re trying to put a floor on the market. You would have to say that it’s a positive attempt, but the history of economics is littered with various attempts to manipulate property prices. If interest rates rise, it doesn’t matter what kind of floor you try to put on the market, because you’ll be overwhelmed by it.

“I’m in Germany at the moment and the place is absolutely hopping. The German economy is booming and inflation is rising in Europe. The Central Bank in Frankfurt is going to raise interest rates to protect the German economy, so that is the problem that needs to be addressed,” Mr Hobbs told the Sunday Independent.

Asked what he thinks should be done to make Nama’s negative-equity proposal work, he added: “Nama needs to talk to the Government, to talk to the ECB and to talk to the Irish banks and get together to offer 20- and 30-year fixed rates, not just for people coming into the market right now, but people who are already in the market. If you go to somebody who is in negative equity and offer them a 20- or 30-year fixed rate, that’s going to provide the floor for property prices, because it’s about affordability now. It’s not about price anymore.”

A spokesman for Nama, meanwhile, defended the agency’s proposal, which is currently under discussion with the Bank of Ireland and the AIB.

“Nama is open to different suggestions and is exploring a number of options. The agency will also consider other proposals from the banks or other interested parties and is keen not to be ‘prescriptive’ on this issue,” the spokesman said.

Asked for comment on Eddie Hobbs’ view that the 20 per cent negative equity protection currently being mooted by Nama would be quickly wiped out by a succession of ECB interest rate hikes, the spokesman insisted the agency was not trying to put a floor on property prices.

“The market will set the price, not the developer or the seller. The value of a property is what people are prepared to pay,” he said.

And while Nama’s chief executive Brendan McDonagh and its chairman Frank Daly intimated last Thursday that their discussions on negative equity protection with the AIB and Bank of Ireland had progressed to the point where the innovative scheme could be in place by this autumn, other sources close to the discussions have told this newspaper that the banks were at best “lukewarm” on the proposals.

“They’re not as enthusiastic as you might think. There is a nervousness there; and it would appear at this point that they are looking for Nama to take on more of the risk,” one informed source said.

Chief executive of the Irish Brokers’ Association Ciaran Phelan was more receptive to Nama’s proposal, describing it as “a logical and welcome idea”. “If enough people take up the offer and re-engage with the property market, then the risk of further price erosion will be significantly diminished,” Mr Phelan said.

The Department of Finance, for its part, refused to give any indication as to whether Finance Minister Michael Noonan would give his endorsement to the negative equity protection scheme, saying simply: “Nama is carrying out its functions in line with its establishing legislation. The minister met with Nama recently to set out his policies and objectives.”

Report by RONALD QUINLAN – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Number of homeowners in arrears soars to 50,000…

THE number of homeowners in arrears on their mortgages has jumped by 5,100 to almost 50,000 in the first three months of the year.

The arrears figure represents 6.3pc of the 782,429 residential mortgage accounts, according to the Central Bank.

Meanwhile, another 36,600 homeowners, who are not in arrears, have made arrangements with their lender to reduce their repayments.

This means that a total of 86,211 homeowners — 11pc of all mortgage-holders — were struggling to meet their repayments in March, the Central Bank said.

While the trend is worrying, eight out of every nine mortgage holders are still meeting their original repayment commitments.

Frank Conway of personal finance website MoneyCoach added that although the growth in the arrears was unfortunate, there was no rapid deterioration in the rise in rate of arrears.

“These latest statistics largely include the effects of the introduction of the universal social charge in January, as well as the various rate increase announcement by a number of lenders on their standard variable rate customers during the first quarter.”

Figures released yesterday by Irish Nationwide showed that more than one in five, of its residential mortgage holders are now in arrears.

This was attributed to the burden of personal debt, higher taxes, rising food and energy prices and increased interest rates.

Across all lenders, 63,000 people have gone to the lender and had their mortgages restructured, but more than 26,000 of these are still in arrears.

Around 25,000 of these mortgage holders were now at least a year behind on their payments, Ciaran Phelan of the Irish Brokers Association calculated.

Solution

“There is clearly a solid group of 25,000-plus individuals who haven’t been able to meet their mortgage payment for 12 months or more and are therefore are largely outside the protection of various consumer codes,” he said.

He added that the Government will need to co-ordinate a debt solution for these people, unless it has 25,000 social homes lying empty.

“Whether the solution is called debt forgiveness or debt restructure, it will ultimately have to happen, as the vast majority of these people will never be able to repay these mortgages.”

Analysts calculated that the average owed by those who are a year or more behind on their payments was €21,500.

The figures also show that 140 homes were repossessed in the first three months of the year, up from the 106 repossessions that took place in the final quarter of 2010.

During the first three months of the year 231 court proceedings were conclude. Courts granted repossession orders in 136 cases, while in 111 cases the courts made orders to enforce the security on the mortgage.

Report by Charlie Weston and Laura Noonan – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Barack Obama and the Queen to visit Ireland during its time of despair…

The financial rescue package for Ireland has been a national shame – so why are there no barricades on the streets of Dublin?

Strange times in Ireland; a British queen and an American president staging back-to-back visits this week and next. But what is everybody talking about? It’s the economy, stupid.

Yes, the economy is really the only topic on the front pages, on the TV, on the lips of the subdued window-shoppers up and down Dublin’s Grafton Street in turbulent May sunshine and showers.

The Queen, who is said to love facts and figures, may or may not learn on her visit that Ireland has 14% unemployment, that its economy will grow by only 0.6% this year, that house prices have fallen 12% this year and 40% since the 2007 peak, with the decline accelerating. She may or may not discover that Ireland has suffered the biggest decline in educational standards of any developed nation in the last decade or that it has the highest-paid civil servants in Europe.

Ireland’s rollercoaster ride from brash Celtic tiger prosperity to bankruptcy has created an officer class of economic commentators whose status is akin to that of celebrity chefs. Unlike Jamie, Gordon and Heston, however, their recipes can be hard to swallow, induce nausea and create bitter arguments over the ingredients. Chief of this tribe is Morgan Kelly, an academic who specialises in the impact of the plague on 14th-century Europe and was virtually a lone voice in identifying Ireland’s property bubble in the last decade. He has just delivered a devastating summary of Ireland’s future.

“With the Irish government on track to owe a quarter of a trillion euros by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable,” he wrote in the Irish Times. “By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed. Ireland is facing economic ruin.” He bewailed Ireland’s “credit-fuelled Ponzi scheme” economy of the last decade and accused fellow economist Patrick Honohan, the central bank governor, of committing “the costliest mistake ever made by an Irish person”. This was his “miscalculation” of the losses of six privately owned Irish banks, which led to the “suicidal” policy of taxpayers repaying the banks’ €100bn-plus debts.

Kelly’s recipe for recovery is to walk away from the European Union-International Monetary Fund bailout and for the government to bring its budget into balance immediately, necessitating a 30% cut in government spending.

Strong medicine, home truths and compelling argument written with passion and anger but most of the leading economists surveyed by the Irish Times broadly agreed with his arguments.

The debate rages on. You wouldn’t think that an historic milestone in Anglo-Irish relations was about to be reached, with the first state visit of a British monarch to Ireland since its independence. Eoghan Harris, a former senator in the Irish parliament and one of Ireland’s leading opinion formers, says the arrival of the Queen, followed by that of Barack Obama, will provide some “distraction from the misery”, but not enough.

“The country is so preoccupied with the financial crisis. I don’t know anyone who isn’t suffering,” he said. “There’s no passion about the Queen’s visit, but there’s a benign affability. She is regarded like an eccentric aunt who should have called in a long time ago but didn’t because of a family row, the origins of which have been long forgotten. There’ll be a bit more passion about Obama, but not much. There’d be more interest in Angela Merkel arriving with a bailout.”

Writer Colm Tóibín is preoccupied with his new play when we meet in a cafe near his Georgian townhouse. The award-winning novelist may not live in an ivory tower, but there is a sense of detachment from his country’s troubles. Perhaps that’s just his professional, coolly appraising eye. Maybe a feeling, too, that he has earned his success honestly.

Apart from the house in central Dublin, – an object of almost pornographic desire in the boom years – there is a holiday home down the coast and a place in Spain. He recalls that when he bought the townhouse he was initially refused a mortgage by the staid Bank of Ireland – one of the now infamous zombie banks dragging the country over the precipice – because they were afraid he might develop writer’s block. Six years later when he bought his holiday retreat, “I had no problem at all getting the money – there had been a change in attitude. There are people responsible for that change of attitude. They are sitting in the European Central Bank and they should be fired.”

Tóibín is a writer, not an economist, but his decision to blame others for Ireland’s ills is common. Blaming the people who lent you the money rather than yourself for taking the money, even though you knew you probably couldn’t afford to, is a popular refuge. “It’s an old peasant thing,” Tóibín winks. “You fool the bank manager to get the money to buy a holiday home. Here or in Bulgaria. And ‘Maybe I’ll not use it that much but I will own it for ever’, that’s why buying shares was never as popular as property. That idea arose in a society that never had much before. There’s something slightly Russian about it. If you have a country that is so incredibly poor, what are you going to do with money? So you do have an element of shame about what’s happened; this country is not as developed in its bourgeois habits as some of its European neighbours are.”

Equally, the character of Ireland has stalled any violent reaction to the meltdown. It would be hard to imagine the French, for example, meekly accepting terms dictated by foreigners to pay off massive bank debts. Yet Ireland’s protests so far amount to little more than a pensioner throwing an egg during a bank’s shareholder meeting. “Nobody wants to get involved in a conflict with the guards [police], the country’s too small,” says Tóibín. “The guard would be somebody’s brother-in-law. They are not armed and there’s a very close relationship to them. It’s the same with the banks. My relationship with my bank is very warm. I know them at my bank, I like them. Those things are very intimate here. Someone asks in James Joyce’s Ulysses, ‘What’s a nation?’ And the answer comes back, ‘A nation’s the same people in the same place.’ There’s very much a sense of that. So because the country’s so small you have to be careful who you throw a stone at.”

On a recent book-reading tour of Germany Tóibín couldn’t resist asking people what they thought of Ireland’s predicament. “They would say, ‘We are not going to pay for your party.’ That was the phrase they used, over and over again,” he laughs. “They think Ireland is innocent and fun and we are always drinking. The thought of bailing out feckless Catholic countries is too much for them.”

If Ireland is serious about making amends, Stephen Donnelly gives a glimpse of the future. He is one of 19 independent TDs – members of the Dáil – elected in February’s general election. That is the same number of seats now held by Fianna Fáil, the party that has been in charge for most of this young country’s history.

“I don’t know why there isn’t more anger about what’s happened and what’s going on, but this is what I’ve done: I’ve come here to fight it,” says Donnelly, who quit his job as a management consultant for politics. It is a measure of the political upheaval that a 36-year-old with no party machine behind him won a Dáil seat.

“It boils down to this: for every euro being spent on job creation, €250 is going to failed investors in banks registered in Ireland. I would challenge anyone to call that fair,” he adds. “I had just had enough. My country was being flushed down the toilet by incompetent leadership. And it’s going to get worse.”

He accuses European leaders of bullying Ireland down a path “which is disastrously, morally and politically wrong” and condemning taxpayers to carry the burden of a “total systemic failure”. He wants the new coalition government to toughen up, to recognise it has a strong bargaining position and to negotiate a new deal. He thrusts a copy of the memorandum of understanding that forms part of the bailout plan into my hands. It spells out in painstaking detail the steps the Irish government must follow if it is to receive “quarterly disbursement of financial assistance from the European Financial Stabilisation Mechanism”.

The memorandum was presented on the same day Donnelly and fellow TDs were celebrating mass at the gravesides of the leaders of the 1916 Easter Rising, who were executed by the British. “Imagine in one day going from their graves to having to read that,” says Donnelly. “Can you imagine the reaction in your country if Cameron had signed that? If the French were told to pay €80,000 per household of private sector, mainly foreign, losses, wouldn’t they burn down the Champs Elysées?”

For his part, Tóibín thinks that all economists are mad. But he can agree with Philip Lane, professor of international macroeconomics at Trinity College Dublin. The two certainly share an explanation of the public mood, this sense of confusion and despair that is not being converted into street protests. According to Lane, shame is at the root of the Irish reaction. “There was sufficiently wide participation in the property market for there to be a collective shame for what went on,” he said. “A hangover follows a big party.” Hungover people do not go out and riot.

Report by David Sharrock – The Observer

Ireland Property – Daft Property – http://daftproperty.blogspot.com

EU loan is no bailout, it’s financial bullying.

Should we be taking our case on the EC’s extortionate profit margin to the Court of Justice…

SOME members of the European Council are exploiting our crisis in order to profit at our expense. If the interest rates on the EU loans are not reduced, the Irish public will suffer unnecessarily while our European partners profit from these loans.

Last January, the European Financial Stabilisation Mechanism charged Ireland an interest rate of 5.51 per cent for money that it borrowed at 2.59 per cent. A month later, the European Financial Stabilisation Fund charged Ireland an interest rate of 5.9 per cent for money that it borrowed at 2.89 per cent. On this basis, the EFSF earns a profit margin of 3.01 per cent and the EFSM earns a profit margin of 2.93 per cent.

These margins are draconian. The majority of the interest that Ireland pays is not used to pay for the EU’s borrowing costs. It is excessive profit for the countries that are lending us money. For every €1m that Ireland pays in interest costs, Ireland must pay another €1.08m so that our EU partners make a profit. This, clearly, is not a bailout. It is exploiting our vulnerability. It is financial bullying.

The IMF is dreaded because of its reputation of treating countries harshly. Nevertheless, the IMF is charging Ireland an interest rate of 4.34 per cent. This rate is far lower than that being charged by our European partners.

The IMF loans are partially in euro, sterling, dollars and yen. The cost of hedging against exchange rate risks has brought the effective interest rate up to 5.2 per cent but there are no such costs associated with loans from the EU as all loans are in euro.

Therefore, the interest rate on the loans from the EU should be compared with the 4.34 per cent rate being charged by the IMF.

By contrast, it is plain to see that the interest rates being charged on loans from the European Union are unjust and unfair. They will add unnecessary hardship onto the Irish people in order to enrich our partners in Europe.

When the loans are fully drawn down, the profit margin charged to Ireland will be €1.3bn per annum.

Put another way, in addition to paying for the EU’s borrowing costs, Ireland will be paying a further €1.3bn of pure profit to our partners in Europe.

Let’s translate the misery that this €1.3bn bill will inflict on the Irish people. Ireland’s austerity measures have been the most severe in any advanced economy during a recession in the past 30 years. Tax increases and social welfare cuts have squeezing families’ incomes to the point where a third of the population now has a disposable income of less than €70 a month.

An annual transfer of €1.3bn from Irish taxpayers to European governments is a huge additional burden for a country already stretch on the rack.

€1.3 billion equates to:

- Three times the €420m raised by the changes to the Universal Social Charge introduced in December’s Budget.

- A third higher than the €1bn saved by reducing public sector wages in Budget 2010.

- Three times the €370m reduction in child benefit in Budget 2010 and Budget 2011.

- One and a half times the €822mn reduction in social welfare payments in Budget 2010 and Budget 2011.

- Almost the €1.4bin saved from the introduction of the public sector pension levy.

€1.3bn is in excess of one per cent of Ireland’s national income.

To put this into scale, it would be the equivalent of charging Germany a profit margin of €26bn per annum and the equivalent of charging France a profit margin of €21bn per annum.

The European Financial Stabilisation Mechanism was established under Article 122 of the Lisbon Treaty. This allows the European Council to grant financial assistance to member-states in difficulty “in a spirit of solidarity”. Charging such an extortionate profit margin on top of the interest rate is stretching this principle to breaking point.

There is no solidarity in charging Ireland over €2m for every €1m it costs Europe to borrow money.

There is no solidarity in insisting on earning a profit of €1.3bn annually from Ireland after we have been hit with the greatest financial crisis in Europe’s history.

There is no solidarity in forcing Ireland to raise taxes, slash wages and cut social welfare in order to pay billions of euro in profit to the rest of Europe.

There is no solidarity in profiteering from Ireland’s misfortune and hardship.

Should we be asking the Attorney General on the legal status of this issue? Is the European Council in breach of the Lisbon Treaty? If so, then the next logical step would be to present our case to the European Court of Justice.

Article by Peter Mathews (Fine Gael TD) – Sunday Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

Market hasn’t hit bottom despite 40pc drop in four years, say economists…

HOUSE prices are likely to continue to fall for another two years, analysts predicted yesterday.

It came as a new, official index of residential property prices from the Central Statistics Office showed a 12pc fall in the past year.

It also found that the pace of decrease has picked up in the past two months

Prices are down 40pc from their peak level in 2007.

Dublin has suffered much higher losses in value, with the crash cutting prices almost in half. In the rest of the country they are down by a third.

The fall of 47pc in the capital contrasts with a plunge of 35pc elsewhere. Sharp drops in prices were recorded in February and March. The fall of 1.7pc in each month was the highest since July 2009.

However, these decreases mainly reflect sales agreed last November when the €85bn IMF/EU bailout was agreed.

The fact that the country was being bailed out meant that the only property transactions being completed at that time were distressed sales, analysts said.

The CSO index shows that in the year to March, house prices fell by 12pc countrywide.

This compared with an annual rate of decline of 11pc in February and a fall of 15pc recorded in the 12 months to March 2010.

In Dublin, residential property prices fell by 1.8pc in March, and were 13pc lower than this time last year.

Apartment prices have collapsed by half since the peak in early 2007, Economists warned that prices could continue to fall for another two years.

A lack of bank lending and high unemployment meant it could be two years before there is a pick-up, Bloxham Stockbrokers economist Alan McQuaid said. He predicted falls of another 8pc this year.

Economist Dermot O’Leary, of Goodbody Stockbrokers, said prices could plunge by up to 20pc outside Dublin. He said the price correction was almost complete in the capital.

Overall prices were likely to fall by between 55pc and 60pc before the market stabilised.

Mr O’Leary estimated that there were between 100,000 and 140,000 vacant homes .

The CSO defended its index, standing by its decision to only look at percentage declines, and not euro values.

It said actual euro prices were too unreliable.

The new monthly index has been criticised as it only covers prices for houses on which mortgages have been issued. Cash sales, which could account for up to four out of 10 sales, are excluded.

Yesterday, Permanent TSB and the Economic and Social Research Institute said they would no longer issue an index now that the CSO one is being published.

Report by Charlie Weston – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com

In the last few years self employed persons were kind of left out from the loan options market.  But, that slowly changed the market calmed down.  Self employed persons can get home loans.

With a 20% down payment, a self employed borrower can qualify for a mortgage using just their 2010 federal tax return with some lenders.

FHA, VA, and Conventional loans with less than 20% down will always require 2 years of federal tax returns. 

Page 1 of the 1040 federal tax return is the starting point for evaluating self employed income, but there are certain line items that can increase or decrease a borrowers qualifying income.  Depreciation (both business and real estate) and Loss Carryovers can both be added back into the borrowers income. 

Un-reimbursed business expenses and Notes payable in less than 1 year will decrease the qualifying income. 

Mind you, these are not ‘stated income’ loan programs that allow only statements and bank deposits to prove self employed income.  We’re not back to those days and hopefully we won’t go there ever.  The new options simply give self employed persons more loan options, but still require appropriate documentation.

Loan programs change often as do the terms so you’ll  need to consult with a lender at time of application for current requirements.  You can start with a list of real estate service providers and lenders here: real estate service providers.

Home Loan Options For Self Employed Home Buyers In Phoenix is a post from: Phoenix Market Trends

Apartments built on banks of famed river lie in ruin…

AN apartment block built on the banks of a famed river at the height of the Celtic Tiger frenzy, has fallen into a state of dangerous neglect.

Locals in the village of Ballisodare, Co Sligo, are demanding action to make safe the derelict building that stands in the heart of the village.

They say it’s a tragic relic of the building boom and is a haunt for late night drinking and anti-social behaviour.

The Mill Apartments, a colossal 74-unit complex on the site of an old mill, was developed by Michael Fitzgerald Construction Ltd, at an estimated cost of €12m and promoted as “a property that simply has it all”.

Close-by is the location on the banks of the Owenmore River where poet WB Yeats is widely believed to have penned ‘The Sally Gardens’.

When the state-of-the-art apartments first came on the market in 2006, two-bedroom units were selling from €320,000.

But before most were even occupied, tenants and would-be purchasers were informed there was a “problem with the building” that had to be addressed.

Since then the building has lain idle and has fallen into a state of disrepair.

When first completed, the apartments boasted ash- veneered doors, granite kitchen worktops, first-class tiling and intercom systems.

Each apartment was fitted for broadband and state-of-the-art entertainment systems.

Today, windows are smashed and glass is strewn throughout. Partition walls are kicked in, doors have been removed from their hinges and fitted kitchens and bathrooms are stripped.

Concerned local residents fear an accident in the unsecured building, which is used for late night drink and drug parties.

The local Ballisodare Community Council has made contact with the developer, the county council and the gardai in a bid to tackle the problem.

Attempts by the Irish Independent to contact the developers of the property yesterday were unsuccessful.

Report by Anita Guidera – Irish Independent

Ireland Property – Daft Property – http://daftproperty.blogspot.com