End of road for soaring property market

The_Conductor

indiewindy wrote:

How many interest rate rises will it take to cool off this demand?

Not that many more I dare say. The current rises have knocked over 100,000 off my own personal borrowing capacity. NIB have said they are in negotiations to rise the salary multiple to 7 +2 (from 5+2) just to keep their lending facilities online. Things are changing.....

Calina

smccarrick wrote:

Not that many more I dare say. The current rises have knocked over 100,000 off my own personal borrowing capacity. NIB have said they are in negotiations to rise the salarty multiple to 7 +2 (from 5+2) just to keep their lending facilities online. Things are changing.....

I hope to God they are not permitted to do this.

Afuera

smccarrick wrote:

NIB have said they are in negotiations to rise the salary multiple to 7 +2 (from 5+2) just to keep their lending facilities online.

Who are they in negotiations with to make this happen? And when will they find out if they're allowed to do this not?

If the financial regulators let this go through and people are later drowning in debt, then a lot of the blame could be layed squarely on the financial regulators shoulders.

What'll they try next? They'll soon have to start scrapping that silly 2pc 'stress test'!

अधिनायक

What does a salary multiple of 5 + 2 mean? Is it 5 times the first salary plus twice the second salary? Surely not?

miju

5 +2 means 5 times your salary plus measuring you repayment ability if the current interest rate rises by 2%

अधिनायक

NIB's web site says it lends on a multiple of 3.8. Is this just not true?

The_Conductor

Combination of both actually- 5 Times the higher salary, twice the second salary and stress testing of 2%.

NIB have requested the permission of the central bank to change its guidelines to 7 times the higher salary, twice the lower salary (and god alone knows how they plan to stress test the resulting mess)........

The_Conductor

अधिनाय&#2325 wrote:

NIB's web site says it lends on a multiple of 3.8. Is this just not true?

It probably is true for some borrowers.
Providing you are *NOT* looking for a 100% mortgage, they are willing to offer a much higher multiple at present.
The LTV ratio is included in this with points of .92, .6, and less than .4. The lower the LTV ratio, the higher the salary multiple they will lend you (as you are far less a default risk than other borrowers).

If you ring up a mortgage advisor with hypothetical data saying you wish to remortgage a house valued at 500k with a 160k mortgage and your current salary is 30k, your significant other having a similar salary. They will give you 200-210k (5+2) and a very good interest rate in recognition of your low credit risk and to attract your business. Its worth phoning around and telling a few porkies to get the best possible rates out of banks......

chump

I'd imagine that the early August ECB meeting will see a rate rise of .25% and that the data arriving in July isn't actually going to affect this decision but instead give Trichet an opportunity to drop the necessary hints if they are going for another rate rise at the end of August.

whizzbang

smccarrick wrote:

NIB have requested the permission of the central bank to change its guidelines to 7 times the higher salary, twice the lower salary (and god alone knows how they plan to stress test the resulting mess)........

do they have to ask permission to change this? are they not just guide lines rather than rules?

shoegirl

FillSpectre wrote:

I have yet to hear any landlords come out saying they are having trouble. ...

How interesting.

I just left my last tenancy (to share with a friend whose just purchased) 3 weeks ago. When we gave our month's notice the estate agent (who in fact IS the landlord as his wife owns the house!) asked us if we minded if they could let prospective tenants in to view, we said yes, as long as they phoned in advance to give us notice.

In exactly a month not one prospective tenant arrived to view what is a very cheap rental in a nice area, in a reasonably nice 6 year old house in good order, owned by the EA himself.

Suggests to me that the rental market here isn't as "bouyant" if an EA cannot even drum up interest for a house he has a beneficial interest in himself.

faceman

shoegirl wrote:

How interesting.

I just left my last tenancy (to share with a friend whose just purchased) 3 weeks ago. When we gave our month's notice the estate agent (who in fact IS the landlord as his wife owns the house!) asked us if we minded if they could let prospective tenants in to view, we said yes, as long as they phoned in advance to give us notice.

In exactly a month not one prospective tenant arrived to view what is a very cheap rental in a nice area, in a reasonably nice 6 year old house in good order, owned by the EA himself.

Suggests to me that the rental market here isn't as "bouyant" if an EA cannot even drum up interest for a house he has a beneficial interest in himself.

not sure where you are living but i disagree. I have experienced high demand in the rental even thought there is plenty of choice out there. I cant see why people think there suddenly isnt demand for rental accommodation. Have foreign nationals and students suddenly evaporated?

As a landlord myself and friends in a similar position I can assure you there will always be plenty of willing tenants, its naive to think there wont be. Rents will fluctuate but intelligent property investment will not fail.

I own a 3 properties and my tip to prospective buyers if you want to be fussy about buying, then buy in the summer. Although its still a seller's market, the summer has less demand for obvious reasons. although im still experiencing a 10% bump up on asking price so i still see no lull in demand.

Another thing buyers need to consider is why are you buying? Is it purely investment? If so in current market conditions you need to be realistic and consider a longer term return on investment.

There will be no property crash. People seem to think that at a hint of slowdown in prices that punters are going to jump ship and sell up. Thats a rather foolish assumption. Why would you do that? Maybe interest rates are eating into disposable income. As long as you can make ends meet then theres no probs. Rent a room if you have to. Property is an excellent long term investment, irish people have just got too used to abnormal return on investment (e.g. 100k in one year, my bro the lucky swine!)

Glenbhoy

smccarrick wrote:

Not that many more I dare say. The current rises have knocked over 100,000 off my own personal borrowing capacity. NIB have said they are in negotiations to rise the salary multiple to 7 +2 (from 5+2) just to keep their lending facilities online. Things are changing.....

I'm not 100% sure on this, but i think that the central bank have no control over what multiples banks lend. They may recommend levels, but that doesn't mean much.
What they do have to do is maintain a certain level of reserves proportional to their overall lending. Eg. they lend 200m (if the central bank say you must have reserves of 20% of lending), they would have to have 40m in reserve. No idea what the reserve percentage is, but probably 30% (really no idea though).