Tuesday, May 26, 2009
Banks not open for business
House prices are at their lowest for 5-6 years, while interest rates are lower than seen since the foundation of the State!
Despite innumerable adverts, running almost all day, proclaiming that the “banks are open for business”, it is almost impossible to secure finance on anything.
Since the start of the year, it has not been possible for those wishing to trade-up to get finance.
Now, even first-time buyers cannot get approval.
Banks used to give 3-6 month approval letters to prospective home-buyers.
Where they can now get approval for a much-reduced amount, it runs for only one month.
This is totally impractical.
If you get approval at the start of the month and look at homes in that first week, it would be very unusual for you to reach agreement on the purchase of a property within two weeks.
It will take at least a further two weeks for the solicitors to look at and approve a contract before it will be presented to you for signing.
The month is up before you sign the contract.
You then have to go back to seek approval again.
This can take 2-4 weeks.
If it comes through for you!
In the meantime, the vendor has assumed that you cannot proceed.
Your friends have gone from congratulating you on your intending purchase to planting seeds of doubt in your mind about the house, its location, the price etc.
You end up thinking that this is all way too much hassle and you do not proceed.
Which is what the bank really wants.
While politically, they are supposed to be “open for business” they do not want to do business at all.
Homebuyers get this message.
They are human.
They do not want to suffer rejection.
So they drop out of the buying process.
Just as they are doing now.
Young purchasers are passing up on the chance to buy substantially reduced homes, at substantially reduced interest rates and instead, continue to pay rent to fund a landlords mortgage.
Because the banks are not open for business.