Talking Property

 

The banks are not open for business, says ISABEL MORTON

MY BRIEF is to talk about property. My editor reminds me of that fact virtually every week, when somehow the banks sneak their way back into the Talking Property column.

But, these days it is virtually impossible to discuss anything at all – let alone property – without talking about the banks. The subjects are inextricably interlinked.

Unfortunately we need bank accounts and credit cards to facilitate our day-to-day lives. And without bank mortgages and loans of one sort or another, we are unable to buy and sell property. Few of us have hundreds of thousands, let alone millions of euro, tucked under our mattresses!

The trouble is that none of us actually knows where we stand with the banks at the moment (whether we realise it or not), because the banks, quite simply, don’t know where they stand themselves.

We may think we have our financial affairs in order and those of us who are lucky enough to have any cash at all may now feel relaxed since the Government has guaranteed our savings.

But, given that the Government can’t even afford to run the country at the moment – let alone save our banks – how good is their guarantee? Or is the Government relying on the IMF (International Monetary Fund) to step in and save us all from financial melt-down?

If, as I suspect, we are to be officially declared the number one (EFE) “European Financial Embarrassment”, having gone from nouveau bling to nearly bust in record time, then we should not drag out the march of mortification any longer than absolutely necessary, but get it over and done with as soon as possible.

Last week, full page advertisements from AIB and Bank of Ireland announced the fact that they are “open for business” – particularly for first-time buyers looking for a mortgage.

Curious that the banks should now feel it necessary to tell us that they are “open for business” when, in fact, they have been claiming that it’s been “business as usual” all along.

Somehow, you get the feeling that the banks are obeying orders from the Government to promote the idea that all is well within the financial sector and to pacify the angry Irish tax-paying public.

Somehow, you just don’t believe a single word they utter.

Given that I do nothing else all day every day but deal in property and talk about property, I am acutely aware of the fact that the Irish banks are just not lending money for property transactions at the moment.

Nor have they been for at least six months. Despite what they say, it is just not happening.

Stories abound about first-time buyers with good jobs whose mortgage applications have been sitting for months gathering dust. When enquiries are made regarding the delays, their banks tell them that they are snowed under with applications.

Obviously, bankers are working their fingers to the bone these days because the same excuse is being dished out to everybody.

A client of mine was cleared last November for development funds for a small building project, but he has had to delay the start date because his bankers are so hectically busy that they don’t have time to finalise his mortgage details. In the meanwhile, his building crew are unemployed and on the dole.

Banks are not actually refusing the mortgage applications but they are managing to string people along for months on end.

So, who are the banks trying to fool with their “open for business” advertising? They are certainly not fooling the average Irish person, who is making every effort to get on with their lives.

Property prices have dropped, interest rates are dropping, yet there is no real volume of movement in the property market because the Irish banks are thwarting potential activity at ever turn.

If I am worn out listening to stories of people who have been trying unsuccessfully to secure a mortgage to buy Irish property, then I can only assume that the problem is nationwide and the stories I hear are just the tip of the iceberg.

The word on the street is that many Irish people are selling off their property abroad in order to fund their Irish-based mortgages, as they are unable to release any equity via selling property at home.

A friend of mine recently joked that the only feasible way to protect your money these days is to spread your eggs in as many baskets as possible.

He suggested opening a number of accounts in different banks around the planet and buying property in as many different jurisdictions as possible.

That way, you have covered your rear end in the event that one bank, or indeed one country, goes bust and can pack your bags and move to where the sun is still shining.

Perhaps he wasn’t joking.