Archive for February, 2017

Property Market Rise but so is Household Debt

UK Property Market

Across the UK house prices are slowly starting to rise, with average increasing by 8.4% in the in 12 months up to last August.  The main contribution is mainly from England where the increase is 9.2%.  But what is noticeable is that the regions which backed Brexit most strongly have seen the strongest house price growth.

For Northern Ireland the continuing effort to return to the ‘glory days’ has been a rockier road, with a momentous climb to ever get to the prices of pre 2007. Northern Ireland experienced a huge house price bubble in the years leading up to 2007 before the market crashed. Prices more than halved between 2007 and early 2013 but have been increasing gradually since then. Now with an increase of 6% over 2015-2016 Northern Ireland Housing Executive said there has been stability for more than 2 years now even though with warnings of ‘real tests’ in 2017.

Household Debt

All positive news for the Property Market. However, household debt across Britain and Northern Ireland rose sharply last year, with more families having to borrow to supplement their pay, a study reveals. And that means the average household now owes a record amount of £12,887, even before mortgages are taken into account.

It is researched that the majority of borrowers will be able to cope with this extra debt. However, if the economy does indeed suffer in 2017, this borrowing could become more difficult to repay, and some households risk finding themselves exposed to sudden changes in financial circumstances.

So in comparison, as house prices increase, those families living in them are likely struggling with their personal finance. The uncertainty that will arise over the next few years because of Brexit will undoubtedly impact on these matters, but it is much too early to estimate the size of this impact at this stage.

Through no fault of their own, the biggest impact will hit first time buyers. Interests rates are likely to rise and with wages not moving in line with price hikes, it is evident that there is a serious debt bomb waiting to tick.

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If you are in anyway having difficulty with mortgage debt with a home in negative equity, call us today on 02895 217373.

Personal Guarantee Exposure – Savings of £300k

Building Industry Client with Personal Guarantee Exposure

For more information on Personal Guarantee exposure read our recent blog below.

Read more here.

AIB Loan Sale: €1.8bn Purge to Vulture Funds

AIB Plans €1.8bn in Loan Sale to Cerberus and other Vulture Funds

The Irish Times recently reported that the private equity firm Cerberus, ironically named after the mythical three-headed dog guarding the gates of Hades, is moving forward in potentially purchasing some of AIB’s loan book.

AIB is planning a purge of its non-performing €1.8 billion loan book, as it prepares to move out of the hands of Government ownership, triggering fears among borrowers that their loans may be offloaded to vulture funds in advance of the Bank’s privatisation, according to the Sunday Business Post.

Late in 2017 we saw Ulster Bank sell off a similar amount to the vulture fund, with around 14% of the loan book affecting those from Northern Ireland and 1% affecting local farmers and Agri-businesses.

To date Bell & Company have successfully dealt with many cases regarding vulture funds and we encourage those affected to act early.

What’s Next for AIB Loan Sale?

AIB are presently preparing to sell off their non-performing loan book of c€1.8 billion and action is imminent. It is believed that these Non-Performing Loans account for in and around 15.5% of the entire AIB loan book and the starting point will be to sell of hundreds of investment property non-performing loans.

The subject loans will, most likely, be divested to Private Equity companies/Vulture Funds with the likes of Cerberus reported to be one of the most probable buyers.

The aggressive route adopted by AIB of late, has seen more than 60 Summary Proceedings being lodged against borrowers in January alone.

Anyone with a distressed loan with AIB must treat this with a great element of urgency and act now as it would suggest the Defendants in such cases are being ‘lined -up’. A case with a Judgement thereon is a more complete product for a loan sale.

Important To Act Now

Many are of the mistaken belief that the purchasers of these loans will act somewhat as Debt Collectors and be happy to generate any sort of return on their investment. Many people say, ‘what would they take?’.

It is not a case of a standard rate applied as every case is different and any acquiring third party will be out to maximise their return thus a robust approach will be taken by them.

They are not Bankers. They want to maximise quickly their security, make their profit and move on, so be ready.

It is of the utmost importance that anyone who feels that this AIB Loan Sale could affect them, takes advice and acts now to avoid loss of control as well as loss of what is important.

If you, or anyone you know, currently has a distressed loan with AIB, we would strongly urge you to call our Business Relationship Team immediately on 02895 217373.

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