John, it is a figure specific to BKIR and to its residential mortgage book only. It is the number BKIR put out at the interim stage. The decision to keep the 55% is a BKIR Board decision. Interestingly, BKIR said that peak to-date decline for house prices at a national level has been about 43% since 2007, so a reduction to 52% following AIB would not be aggressive. Scope for further reductions as the house price recovery gains hold.
Found this in a February 14 report from Merrion. It backs up Roxbury's figures on right backs. Short of 700mm available on residential property but there must surely be write backs available from other sources as well especially with the amount of provisions they have made.
BoI currently assumes PTT Irish house price falls of 55% (compared 47% at Q4 2013). The bank has previously indicated that Irish mortgage provisioning would increase by €75-80m for every 2% decline in property prices beyond the 55% level. Assuming the opposite also holdts, we estimate that BoI could release c. €320m of mortgage provisions from moving to an actual house price measure. Based on a stress test simulation factoring PTT house price falls of 60% for the Irish economy (equates to a further drop of c. 26% from current levels), we estimate that BoI would have to increase its mortgage losses by c. €200m. Based on our numbers this would still leave a capital buffer of c. €3.2bn to deal with other non-mortgage losses and other overlays in the adverse scenario of the stress test.
actually the media were incredibly slow getting out the story of the property market recovery in dublin , the market bottomed in early 2011 and was on the rise across all dublin by early 2012 , the media has only begun seriously reporting price rises in the past year or so
The figure for house prices is most likely true. Whether or not it has been manipulated to that level is a different question. There are many beneficiaries of prices rising, none of them first time buyers though. The media were complicate in driving prices duering the boom first time around. No reason to believe anything has changed today.
Allmoyne there is a book just out that you would like. Its an interesting look at how all the irish media behaved in the lead up to the boom and the crash. Plenty of ammunition in it for you. Your unlikely to see much discussion about it in today's media I suspect so I'll link it for you if I can.
Each 1% reduction in residential mortgage provisions, should release between €35 million and €40 million. So a reduction from 55% to 52% post the comprehensive risk assessment will release c. €120m of provisions back to the income statement (roughly 27bps CET1).
8no. tr1`s in 6weeks hasn`t been this much shuffling of major shareholder feet in nearly 2yrs.
Wouldn`t like to comment too much on the property price increases because it is based on very limited sales.The truth is most under 30`s are completely priced out of the market ,which can't be sustainable ,unless we are going to get massive pay hikes and continued low rates!
Again Johnmc ,I love media but it certainly pulls its own agenda!(ref;property boom pumping)
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