Self-employed may feel chill from Covid-19 for some time
The self-employed face mortgage struggles.
All business owners are weighing up the effect of the Covid-19 closures on their trade at present, with many trying to take an optimistic view by planning for reopening. Social distancing in offices, new shift patterns, deep cleaning and perspex screens are all in the mix as managers imagine a return to some form of normality.
One significant segment of the economy which may take some time to return to anything approaching normal is the self-employed.
If we look back to the last recession, we can see that the economic crash cast a long shadow over that sector, as evidenced in the income tax take for the self-employed.
In 2007, that tax take was €2bn. By 2010, it had plunged to €800m and it took five years to recover to its pre-crash level.
On a practical level, a fall in income for the self-employed may well have a longer impact than on PAYE workers.
As the Sunday Independent has been reporting, the mortgage market is becoming more restricted for borrowers.
On the one hand, the banks are wise to take a prudent approach to lending given the uncertainty being faced by many would-be homeowners.
It is in no one’s interest that people take on debt that they cannot repay.
On the other hand, it is close to impossible for many workers and their employers to give guarantees about long-term job security and pay levels.
The obvious exception to this is public sector workers.
The self-employed are likely to face the greatest challenges when it comes to mortgages – possibly for some time to come.
It has always been more difficult for the self-employed to get a mortgage, largely due to the fact a bank can easily get an up-to-date picture of a PAYE worker’s income.
For someone who is self-employed, typically a bank will want to see three years of accounts, as well as paperwork filed with Revenue.
Tax returns always trail a trading year. For example, accounts for 2019 are not expected to be filed until October 2020. Banks are currently asking for up-to-date bank statements and for many self-employed people, they will not paint a pretty picture.
Assuming their businesses get back to normal in a few months’ time, the current dip in business could hang over the self-employed for some several months.
Banks will want to see a longer-term trend that it’s back to business as usual.
Mortgage broker Michael Dowling told me: “Unfortunately, it is going to be very, very difficult for a self-employed person to get a mortgage over the next 12 months, because every self-employed person – unless contracted by the HSE or another public agency – will have suffered a fall in income for at least three months and probably more.”
Banks like to have three years’ worth of accounts so they can average out income. This average figure is the basis for how much they are willing to lend.
Based on how long it took self-employed income tax to recover from the jolts of 2008, normal is further away for some than others.
Retail to endure long recovery
Fashion chains Oasis and Warehouse went into administration last week, while provisional liquidators were appointed to Debenhams.
It doesn’t bode well for a post-coronavirus retail environment. Empty units do little to encourage shoppers to whip out their credit cards.
Back during the last recession, there were lots of articles counting just how many shop units were left vacant on Dublin’s premier shopping thoroughfare, Grafton Street. It doesn’t happen overnight but as we saw over the last decade, vacated shops will fill up. However, it does take time to get shopping centres and city streets buzzing once again.
Of more immediate concern for retailers will be consumer behaviour when things do edge back to normal. Some of the early reports from China aren’t too encouraging.
According to a recent report in Nikkei’s Asian Review headlined ‘China’s retailers face hard truth: If you reopen, they won’t come’, shoppers have been slower to come back than shop owners.
Electronics retailer Suning.com said some of its bricks-and-mortar stores were attracting around half the usual customer volume.
No doubt consumers here will be initially nervous about getting back into bustling shops, while others will have little or no discretionary income for some time. And some will just have got used to shopping online.
News by independent.ie, edited by Dowling Financial.
Things worth noting
Think long and hard before surrendering your tracker mortgage rate
Your tracker margin, how long is left on the loan, whether it’s your home or an investment and your personal financial circumstances will all influence […]
We need a minimum of two more lenders in Ireland
A relaxation of mortgage rules will be countered by the increase in rates The new year will begin with good news for mortgage customers who […]
The experts’ view – what will happen to house prices, mortgage rates, health insurance and more in 2023
The year just gone will go down as a rough one for our wallets and purses. We were hit by extraordinary increases in the cost […]
What will happen to Ireland’s mortgage holders in 2023? Five experts on fixed and tracker mortgage outlook
Homeowners will have to absorb interest rises amid the cost of living squeeze, according to five experts Five of Ireland’s leading mortgage experts told The […]
Trackers on €300k mortgage face €7,000 payments pain
The warnings come after market participants said on Friday that the ECB could hike interest rates much higher than once thought. Tracker mortgage households could […]
Explainer: What is a lifetime loan and how do they work?
Many older people will consider themselves asset rich, cash poor. This means most of their money is locked up in assets, like their home. Equity […]
Borrowers should prepare for a new cycle of mortgage hikes by the main banks
Banks are poised to embark on a cycle of fresh mortgage rate rises, borrowers have been warned. Bank of Ireland announced yesterday it was increasing its […]
Mortgage rates drop to lowest level in years – but warning variable rate customers now in ‘last-chance saloon’
MORTGAGE rates have fallen to their lowest level in years. This has prompted warnings to people on expensive variables to grab their last opportunity to […]
Irish homeowners need to act fast for decent fixed rate mortgage
Anyone attempting to weigh up their mortgage options lately would have been kept on their toes, with barely a week passing without a big change […]
ECB hikes could drive Irish mortgage rates to 5% by next summer
From this year, a household on a tracker mortgage of €300k could see its repayments rise by almost €450 a month. The European Central Bank […]
Mortgage delays: thousands risk being forced onto higher interest rates as banks too slow on switcher applications
Completing a move to another lender is now taking up to four months due to logjam as customers rush for alternative loans. Thousands of homeowners […]
Buyers struggle to get mortgages as rising prices limit loan offers
The surge in the cost of living is making it harder for prospective homebuyers to get approval for a mortgage. Would-be borrowers have less money […]
Consumer watchdog puts focus on hidden costs of cashback mortgages
Competition and Consumer Protection Commission addresses deals that cost first-time buyers large sums of money over the lifetime of their loans. The State’s competition watchdog […]
Financial pain for mortgage holders as ECB increases interest rates by 0.5%
The European Central Bank has raised interest rates by 0.5% to combat surging inflation, which is approximately 9% across the euro area. This is the […]
Michael Dowling: Irish banks to benefit from ECB rate hike
Irish mainstream banks will benefit more than their European counterparts by higher interest rates as net interest income accounts for 80% of Irish retail banks’ […]
Mortgage holders in rush to lock in fixed rates ahead of ECB increases
Large numbers of homeowners who are exposed to interest rate rises are rushing to lock in to good-value fixed rates, it has emerged. In a […]
Mortgage repayments could rise by €300 per month
Hundreds of thousands of mortgage holders could face a hike of up to €300 a month in their repayments as interest rates begin to rise […]
Mortgage borrowers should fix at truly long rates to beat ECB hikes
Most of us cannot hedge against rises in groceries, utilities, or fuel — but there is an opportunity to cushion ourselves against rising interest rates […]
Locking into fixed rate ahead of interest rate rises could save you tens of thousands
A first-time buyer (FTB) could save tens of thousands in the first ten years of their mortgage by locking into a fixed rate mortgage ahead […]
Mortgage rates in Ireland rise at highest amount in five years
MORTGAGE interest rates in Ireland have gone up by the largest amount in almost five years. This is despite the European Central Bank holding back […]
Fresh start – new proposals to treat divorced and separated couples as first-time buyers
Divorced people will get a second chance to be home owners after a relationship breakdown under measures designed to recognise how “Ireland has changed”. Housing […]
Why Ireland has limited fixed interest mortgage rates
This newspaper has flagged the strong likelihood of the European Central Bank (ECB) increasing interest rates by the fourth quarter of 2022 with more increases […]
Triple inflation shock as fuel and groceries surge in price — and home loans are set to follow suit
Consumers have been hit with three further cost hikes as petrol and diesel hit 30-year highs and grocery prices rose again, as well as the […]
‘Psychological shock’ for Irish mortgage holders as ECB tipped to hike rates
The potential for two interest rate increases this year will for the first time in a decade affect hundreds of thousands of Irish mortgage borrowers, […]
Hard-pressed homebuyers being charged €2,000 more than Eurozone average for mortgages
IRELAND is one of the most expensive countries in Europe for mortgages. Only Greece is dearer for new home loans in the countries that make […]
Q&A: Can I get a State-backed mortgage under the new rules?
Housing Minister Darragh O’Brien has announced a newly expanded local authority home loan scheme, increasing the eligibility of those who can apply. The new regulations […]
How to fix Ireland’s mortgage market
With mortgage completions to finish 2021 at €10.5bn and set to rise to €14bn in 2023 and €17bn in 2025, one could suggest there is […]
Parents gifting children €1bn from Bank of Mum and Dad fuelling house price rises
Parents are gifting their children an estimated €1bn a year from the ‘Bank of Mum and Dad’, dangerously fuelling house price inflation, a leading mortgage […]
Is the Bank of Mum & Dad still in line for a tax hit?
It’s a lender that’s been around for decades, giving low cost (mainly free) loans to its select customer base. Its financial firepower appears to have […]
Is it time for the Central Bank to change its rules so house hunters have a shot?
COULD A CHANGE TO RULES PUSH UP HOUSE PRICES? The Central Bank’s lending rules – which prevent first-time buyers from borrowing more than three-and-a-half times […]
Michael Dowling: Benefits of fixing your mortgage for the very long term
My advice for first-time buyers is to take out long-term fixed rates for 20 years or more. There is something of a revolution going on […]
Mark Keenan: Spare a thought this Father’s Day for the separated dads trapped in a soul-destroying housing limbo
A joke I’ve heard more than once from separated dads goes as follows: If two gay men get divorced in Ireland, who gets the house? […]
Spanish bank to shake up mortgage market here with 30-year fixed-rate loans
Spanish-owned mortgage provider Avant Money has upped the ante on its rivals by offering a range of new long-term fixed rates. The provider is the […]
The real problem is ministers don’t actually believe there is a housing crisis
If the Government can’t come up with a radical housing solution, the Coalition parties will find themselves redundant. It is telling that what lit a […]
Calls for cashback mortgages probe before State uses money to back Ulster Bank loans sale
The Government has placed its State-owned Permanent TSB as well as AIB, which owns the EBS mortgage lender, in the lead positions to buy large […]
Irish banking sinks deeper into crisis as KBC follows Ulster out the door
Commentators sound alarm bells as the ‘two big boys’ look set to control 70% of the Irish mortgage market The shock decision by KBC Bank, […]
Michael Dowling: Banks are misleading customers with costly cashback mortgage incentives
Irish mortgage interest rates have gone back to being the dearest in the eurozone and we need to focus on immediate changes that can be […]
Broker says lenders are using wage subsidy scheme to refuse mortgages
Lenders have been accused of using the State wage subsidy scheme to “blackball” mortgage applicants. It comes after it emerged that lenders are now turning […]
Calls for cashback mortgages probe before State uses money to back Ulster Bank loans sale
The Government will need to launch an investigation into “the exploitation” of first-time homebuyers lured by cashback incentives before it commits taxpayers’ money into State-owned […]
“We nearly lost dream home because bank got jitters over wage subsidy”
A leading bank was set to deny a couple a mortgage to buy their dream home, just as they were about to draw down the […]
Mortgage lenders push back against automatic payment breaks during lockdown
Mortgage lenders have pushed back against a call by a leading broker to re-introduce automatic payment breaks for people who will be unable to work […]
Demand for mortgage exemptions expected to surge this year
APPLICATIONS for mortgage exceptions are expected to surge to record levels in January as lenders respond to pent-up demand from borrowers. Exemptions to the strict […]
Controversial equity release loans for older people are back
An equity release provider is reopening in this market years after the banking crash closed off the availability of these loans. Equity release involves older […]
Experts cautious about 2021 property market
Property prices are predicted to take a minor dip in 2021 before recovering to current levels by the end of next year, according to two […]
Borrowers here paying €2,000 more a year than European counterparts
This was down 14 basis points on the same month last year. But the average across the euro area is less than half of this […]
Ulster Bank ‘self-inflicted review will mean Irish mortgages will remain costliest in Europe’
The uncertainty over the future of Ulster Bank is already helping the big two mortgage lenders, AIB and Bank of Ireland tighten further their grip […]
Home loan limbo – the growing number of buyers struggling to get their mortgages
Many housebuyers who’ve been directly or indirectly affected by the Covid crisis are experiencing issues with banks and accessing mortgages. Those who will struggle to […]
Average Irish person now ‘worth’ €166k
The impact of Covid-19 has been to make households wealthier while the State sunk €14bn deeper into debt, according to the Central Bank’s Quarterly Financial […]
Lenders told to be upfront with mortgage applicants on impact of wage supports
BANKS and other lenders have been told to be upfront with mortgage applicants whose employers are using the State wage subsidy scheme. It comes after […]
Mortgage holders leaving thousands of euro on the table by failing to switch home loan providers – CBI research
Some mortgages could save more than €1000 in the first year and more than €10,000 over the remaining term of the loan. Mortgage holders are […]
What the loss of Ulster Bank would mean for consumers
When news broke on Friday that NatWest, parent of Ulster Bank was considering the winding down of the Bank, the market was surprised. It had […]
Your money: Seven things you must know on the new mortgage playing field
Cheaper home loans will be up for grabs for house hunters and homeowners in the coming weeks and months following the entry of a new […]
Spanish giant to rattle the cages of big firms who have Irish market cornered
You would be forgiven for thinking that competition in the mortgage market had gone by the wayside, like many things during the pandemic. Banks are […]
Interest rate war brews as new bank joins market
A Spanish banking giant is to enter the Irish mortgage market in a move sure to put massive pressure on existing lenders to slash their […]
Banks block drawdowns until end of pay subsidy
Builders and brokers say hundreds of agreed home sales are being placed in jeopardy because of an unintended consequence of the State’s emergency wage subsidies. […]
Banks have yet to heal the €60bn bailout wounds of a decade ago
A decade after a €60bn taxpayer bailout of the country’s main banks, we still have a problem with trust when it comes to how they […]
Ireland faces second mortgage arrears crisis when payment breaks end this autumn, leading financial advisers warn
A leading debt adviser has warned that 30,000 households — or around half of the 62,480 currently on home loan payment breaks — will fail […]
House prices due to fall sharply in wake of pandemic
House prices are likely to fall sharply over the next year, a leading think tank has predicted. The Economic and Social Research Institute (ESRI) has […]
Central Bank boss defends banks withdrawing mortgage offers
Central Bank Governor Gabriel Makhlouf has defended banks that are withdrawing mortgage offers to people whose incomes are hit by the fall-out from the pandemic. […]
Irish Banks Again Europe’s Worst Performer as Crashes Add Up
Once again, Irish banks are at the sharp edge of a global crisis. In 2008, it was the melting away of liquidity. Just over a […]
Mortgage borrowers hit by Covid-19 jobs slump ‘facing problems securing mortgage breaks’
Mortgage borrowers previously in arrears but who are now up to date with their monthly payments have had difficulties in automatically accessing the three-month mortgage […]
Banks add Covid-19 income conditions to mortgage offers
Raft of assurances are sought over bonuses, overtime and future job security Several Irish banks and lenders are adding new conditions to mortgage loan offers, […]
House valuations are being reduced by 10pc during the mortgage process due to Covid 19 according to brokers
Some bank valuations are lower than agreed sale prices due to Covid-19 “The valuations are coming in at less than what the agreed purchase prices […]
Family with €1m house would be ‘better off trading down’ as judge rejects personal insolvency deal
A High Court judge has refused to approve proposed personal insolvency arrangements for a couple aimed at allowing their family to remain in a five-bedroom […]
Home truths: Covid’s duration will determine its impact on values
Speculation about where house prices and the property market will end up in the aftermath of Covid-19 has already started, with the publication during the […]
Doubts raised over Covid-19 wage subsidy scheme after lawyers warn the initiative is unworkable
The crucial wage subsidy scheme aimed at keeping hundreds of thousands of people in jobs has been thrown into doubt after lawyers warned it was […]
Those who test positive likely to struggle to get life and mortgage protection cover
Concerns: Michael Dowling fears some people will be unable to take out life cover People who test positive for Covid-19 may struggle to get life […]
How to navigate the property market during the pandemic
These are testing times. Covid-19 has reached into every sector, including the property market, and everyone is scrambling to adapt to the challenge. For those […]
State may need to ramp up spending to €34bn
Employers’ group Ibec and trade unions have called on the Government to step up payments for workers and companies in response to the economic damage […]
No hit to credit record for those who get mortgage break off bank
A deal is being hammered out between the Central Bank and main lenders so people who avail of a Covid-19 mortgage payment break will not […]
Temporary ban on all evictions is to be introduced for duration of coronavirus crisis
The Government has confirmed that a temporary ban on evictions and rent increases will be introduced for the duration of the Coronavirus crisis. Housing Minister […]
€32m debts written off by court in three days
More than €32m in personal debt has been written off this week under insolvency arrangements approved by the High Court. The huge sum relates to […]
€2m debt write-off for publican approved
The High Court has rejected objections raised by a vulture fund to a personal insolvency arrangement (PIA) writing off €2m in debts owed by a […]
Chasm between values of new and second-hand houses
A growing chasm between the values of new and second hand homes has been highlighted by the banking sector which says loans issued to first-time […]
Dublin’s cool Northside moves ahead of stuffy Southside to hold the housing hotspots
Q Two northsiders are travelling in a car. The music is turned off and the windows are up. Who’s driving? A: The Garda. Q: How […]
AIB drops fee for mortgage customers breaking out of fixed rate
AIB is allowing some customers to break out of fixed mortgages and lock into lower ones at no cost, in a move that is likely […]
Ulster Bank fined €4.6m over data on mortgages
ULSTER Bank has been fined €4.6m by the Central Bank for failings around mortgage data it supplied to the regulator. The fine would have been […]
Pressure now on more banks to cut their rates in mortgage price war
More banks are coming under pressure to reduce their mortgage rates after market leader AIB announced a number of reductions. The focus is now on […]
Mortgage holders here still paying double Euro average
MORTGAGE rates in this country have fallen below 3pc for the first time in years. But there is scope for much deeper cuts, mortgage experts […]
Revolution in fintech keeps the bankers awake at night
Shake-up: Revolut and other fintech firms are forcing banks to increase their tech focus I was more than a little surprised at the response I […]
AIB was always going to lose battle – it’s just a pity it waited so long to concede
AIB was always on to a loser trying to defend its actions in denying 6,000 customers tracker mortgages. The bank tripped itself up and was […]
The changes still needed to tackle the banks’ bad management cultures
Regulation: Unlike the UK authority, the Central Bank of Ireland does not have competitional law enforcement powers, an issue which deserves to be reconsidered Banking […]
Paul Joyce: Mortgage arrears have been ignored but not solved
Housing, homelessness, and healthcare have justifiably dominated the election so far. But one aspect of the housing crisis, however, that has received little attention is […]
Home truths: The story of Eoghan and the home hoovers
The big view on Ireland’s property market Whenever Eoghan Murphy is asked about his unforgettable term as Minister for Housing, one of the first things […]
Typical household wealth has risen to €184,900 – but renters are losing out
The wealth of households has shot up due to rising property values. But renters have very little wealth, according to figures from the Central Statistics […]
Most people unaware about credit card interest rate they are charged
The majority of Irish credit card users are unaware of the interest rate they pay, or how it is applied. And even those who say […]
Fianna Fáil may have just pressed the pause button on the property market
The party’s new SSIA may cause a significant number of housebuyers to put their plans on hold for an unspecified period The man who is […]
Court approves debt for equity swap insolvency arrangement
Decision is first to be approved by High Court involving a debt for equity swap The High Court has approved a personal insolvency arrangement (PIA) for a […]
Record €60m debt write-off for former quarry operator gets High Court approval
A former quarry operator has had a €60m debt write-off approved by the High Court – the largest ever under personal insolvency legislation. Enda Patrick […]
State-backed mortgage scheme hikes interest rates steeply despite bank cuts
The interest rate on the Government’s Rebuilding Ireland Home Loan product has been increased massively. Rates have shot up by up to 0.75pc at a […]
Home truths: Big time housing promises without taxes are hollow
What can you get for €16bn these days? Well €16bn is the total amount estimated that Irish people will spend online this year. The Consumer […]
One in 10 mortgage arrears cases involve separated borrowers – BPFI
Banking lobby group calls for State to introduce measures to help separated borrowers. About one in 10 mortgage arrears cases involve borrowers who are separated, […]
In your pocket: Switching mortgage can bring major savings
Rates are falling and lenders are keen to offer better deals – it’s easier than you think. Up to 160,000 Irish families are out of […]
Mortgage interest rates dip but remain more than double euro-zone average
Central Bank statistics show weighted average interest rates on new mortgages was 2.9% in November. Interest rates on mortgages taken by Irish consumers were lower […]
New buyers pay €2,000 a year more than rest of eurozone
RIP-OFF mortgage rates in this country are costing new home buyers €2,000 a year more than our European neighbours. New figures from the Central Bank […]
Pensions deliver decade-best growth of 20.6% in 2019
Zurich Life tops peers as funds recover from calamitous end to 2018. Irish pension funds delivered bumper returns in 2019, making it the best year for investment returns in […]
Another year of dysfunction ahead for Ireland’s property market
Looming general election and UK-EU trade talks add to uncertainty for developers. With the new year now a week old and a raft of predictions […]
Responsible Homeowners Betrayed
Thousands of responsible homeowners have been betrayed by the sale of their mortgages by PTSB into a bond fund which will be serviced by […]
Revealed: Ireland’s most expensive streets and their €2m plus homes
Daily growth of €15m in value of housing stock fuelled by new supply rather than increasing prices, writes Wayne O’Connor A leafy Dublin street sandwiched […]
Value of residential property in Ireland up by 5.3bn euro in last 12 months
SEVEN HUNDRED AND fifteen properties worth €1 million or more have been sold in Ireland so far this year, according to the latest Wealth Report from […]
Want to start the process?
Let us guide you through the mortgage process