Mortgage threshold for bailed out banks

H0wdo

Is there a govt scheme in place where one of the irish bailed out banks cannot refuse a mortgage application to a person/couple with an income of over 47K per annum (unless there is a very good reason for the refusal) and if the bank does refuse then the applicant can appeal the decision to a government body?,

I vaguely remember hearing about this scheme a while back but cant find any details of it

chris85

Ok so OP your income is €47k but what price is the property and what deposit you have? Also is €47k gross income or net income?

There is something in place for small businesses to appeal to but not that I know of for personal mortgages. I would be against it also to be honest, I know the government has a large stake in the banks but I do think the banks need to get back on their feet themselves and state should not be intervening on their decisions, expect at a board level where they would need an input due to the large stake they own.

H0wdo

I am just wondering if anyone has heard of the scheme, I rang the consumer agency and they havent heard of it so my memory must be faulty.

With regard to your other point the banks will only get back on their feet when the economy recovers, the economy can only recover when the banks start lending again which will allow the property market, businesses and other areas to start performing

The banks have gone from a gung-ho lending policy to a completely risk adverse leading policy neither policies will lead to a functioning economy or recovery for the banks. The banks do not appear to want to give mortgages because interest rates are so low at the moment that they do not make any money from the loans, they seem to prefer short term loans where there is a higher margin.

I would imagine there is more risk in lending to a small business given the current climate and trading conditions than with home mortgages where the loan is backed by the asset as house prices seem to have bottomed out (or are close to the bottom)

BuffyBot

I'm afraid it's your memory. AFAIK, such lending is still at the bank's discretion.

chris85

H0wdo wrote: »

I am just wondering if anyone has heard of the scheme, I rang the consumer agency and they havent heard of it so my memory must be faulty.

With regard to your other point the banks will only get back on their feet when the economy recovers, the economy can only recover when the banks start lending again which will allow the property market, businesses and other areas to start performing

The banks have gone from a gung-ho lending policy to a completely risk adverse leading policy neither policies will lead to a functioning economy or recovery for the banks. The banks do not appear to want to give mortgages because interest rates are so low at the moment that they do not make any money from the loans, they seem to prefer short term loans where there is a higher margin.

I would imagine there is more risk in lending to a small business given the current climate and trading conditions than with home mortgages where the loan is backed by the asset as house prices seem to have bottomed out (or are close to the bottom)

Interest rates are low, but so are the rate they borrow at (i.e. ECB rate). The banks are giving out mortgage, I know a few people that have got them in the last few months, but only to the right applicants.

I suggest maybe talking to the bank and see how you could improve your application. Your joint income of €46k is below average wages in Ireland, obviously this will have an impact on the application dependant on the property price.

Liam D Ferguson

I suspect that the office mentioned above is the Credit Review Office - they only look at applications by SMEs and farms.

You can ask the bank to give you their reasons for refusing the application in writing but a bank cannot be forced to offer a home loan to anyone.

If you want to post the following details here, we can probably give you an idea as to whether or not it's worth your while applying to any other lender: -

• Basic salary of both applicants
• Ages of both applicants
• Number of kids (if any)
• Any existing loans? If so, amount outstanding and monthly repayment?
• Any previous arrears or late payments on any previous loans?
• Amount of mortgage applied for?
• Amount of rent currently being paid?
• Amount of regular monthly savings?
• Total amount of savings?

H0wdo

chris85 wrote: »

The banks are giving out mortgage, I know a few people that have got them in the last few months, but only to the right applicants.

Thank you, you have highlighted the issue I have outlined - the banks have become risk adverse to a point where they are disfunctional, only lending to the "right applicants" i.e. guaranteed income such as public servants, wealthy etc a functioning economy is one where anyone who has a good credit rating should be able to access credit

I spoke to auctioneers about selling our house and they all say that the main market is cash buyers at the moment.

chris85

H0wdo wrote: »

Thank you, you have highlighted the issue I have outlined - the banks have become risk adverse to a point where they are disfunctional, only lending to the "right applicants" i.e. guaranteed income such as public servants, wealthy etc a functioning economy is one where anyone who has a good credit rating should be able to access credit

I spoke to auctioneers about selling our house and they all say that the main market is cash buyers at the moment.

Anyone with a good credit record should be able to get a mortgage you mean? You must be joking. There are many people with an old credit rating but are in contract jobs which could end next month. This uncertainty creates risk. The banks have become more prudent and rightly so. Ability to pay and credit rating are both hugely important is stability of employment

killers1

H0wdo wrote: »

Is there a govt scheme in place where one of the irish bailed out banks cannot refuse a mortgage application to a person/couple with an income of over 47K per annum (unless there is a very good reason for the refusal) and if the bank does refuse then the applicant can appeal the decision to a government body?,

I vaguely remember hearing about this scheme a while back but cant find any details of it

What reason did the bank give you for declining your application? Banks lending criteria is quite straightforward. You need to be in permanent employment for at least 6 months/1 Yr with current employer, your salaries need to be sufficient to qualify to borrow the amount required, You need to be able to demonstrate a proven repayment capacity for the stressed mortgage repayment of the amount requested + any existing loans over at least a 6 month period. You need to have some level of personal savings and a clean credit history. The bank would have declined you because your application fell down on one of the above...

Jim2007

H0wdo wrote: »

Thank you, you have highlighted the issue I have outlined - the banks have become risk adverse to a point where they are disfunctional, only lending to the "right applicants" i.e. guaranteed income such as public servants, wealthy etc a functioning economy is one where anyone who has a good credit rating should be able to access credit

On the contrary, the banks are over exposed to the property market and need to dramatically reduce their exposure by switching to SMEs and other sectors. It does not matter how good a credit risk you are, giving you a mortgage will only increase that exposure.