95% mortgages for FTBers - state backed!

Zamboni

http://www.newstalk.ie/Government-to-assist-first-time-buyers-seeking-mortgages-

First time buyers could be given access to mortgages through a new government-backed scheme.

The government is planning to introduce the scheme, under which a portion of some mortgages for first-time buyers of new houses will be guaranteed by the State, in order to enable banks give out more loans.

Mortgages worth up to 95% of the value of the home will be available to first time buyers, allowing them to buy houses with smaller deposits.

Similar schemes are already in place in Canada, Australia and Britain.

It is hoped the scheme will provide a much-needed boost to the construction sector, since there is a belief that a further increase in demand will drive supply.

Group Political Editor with the Irish Independent, Fionnán Sheahan, told Newstalk's Breakfast it's an attractive option for the banks because they can share the risk:

Can't get a mortgage?
Can't save a deposit on your own steam?
Uncreditworthy?
Don't worry, the morons in the Irish Government are here to sort you out!

I had to check the date and make sure it wasn't April 1st.

If any body was under any illusion that Fine Gael are not Fianna Fail with a different name then surely this will put the nail in the coffin.
Get ready for super propertybubble.V2

Santa Cruz

Zamboni wrote: »

http://www.newstalk.ie/Government-to-assist-first-time-buyers-seeking-mortgages-



Can't get a mortgage?
Can't save a deposit on your own steam?
Uncreditworthy?
Don't worry, the morons in the Irish Government are here to sort you out!

I had to check the date and make sure it wasn't April 1st.

If any body was under any illusion that Fine Gael are not Fianna Fail with a different name then surely this will put the nail in the coffin.
Get ready for super propertybubble.V2

Will this be done before or after FG refund those who lost money buying Eircom shares and buying taxi plates?

seamus

Choo-Choo!

All aboard the Celtic Bubble Mk II!

there is a belief that a further increase in demand will drive supply

Except supply is constricted and property markets are inelastic. So they introduce this, demand goes crazy and it takes 3-4 years for any building projects to get started. In the rush to sell to buyers at inflated prices, small and poorly-constructed units are thrown up wherever anyone can find a scrap of land. 2 years after that, we're pumping out 60,000 units a year, with prices being maintained by an influx of foreign investment money. Suddenly everyone realises that supply is way over demand as rents start to drop, investors flee the market and the construction sector is left finishing 100,000 houses that nobody wants.

If only something like this had happened before so we could predict what might happen...

We need to incentivise supply rather than demand; NAMA needs to release land, now, and offer a partnership scheme for building projects where NAMA invests in the project. This means that banks are less exposed to cowboy developers, and NAMA gets a return on both the sale of the land and the sale of the properties built on it.

Demand is already high, and growing. Pushing it further will lead to exactly the same mistakes that got us into this mess. Incentivising supply is the only way to develop a stable and sustainable property market rather than one that troughs and peaks.

johnnyskeleton

They tried a similar thing with the home choice loan fiasco. Basically FF wanted to bring it in as an incentive scheme for builders. Then the good folks on thepropertypin and politics.ie complained to Europe and, while it was found to breach state aid regulations, was deemed acceptable provided it extended to second hand loans as well (or some similar fudging of the issue). In the end, they have spent millions administering a scheme that has only given out a handful of mortgages.

gaius c

So ftb's can't afford houses and need welfare assistance to buy?

I've a better idea. Let house prices drop to a level ftb's can afford.

snubbleste

But but but..
It is not the intention of this scheme — or of any other Government intervention in the housing sector — to incentivise or entice people into the market. Minister Jan O'Sullivan, June 2012

Mr.McLovin

sweet jesus what have we elected...

The_Conductor

Look at what the scheme is........

10% of the original purchase price of the property is guaranteed by a state backed scheme, which is funded by lender contributions. The maximum level of the guarantee is set at a fixed amount (tentatively 25k- but its not been defined)- which would infer a maximum purchase price of 250k in today's terms (which is probably on the higher side of normal).

The purpose is to lower the deposit needed by the FTBs to a level where they can actually save a deposit- however they still have to comply with all lending terms and criteria- including showing the propensity to save, lending multiples, other debt, history etc etc etc

Its a very basic scheme- and only guaranteeing a very small amount of the portion of a prospective mortgage- so any lender would have to do proper due diligence of prospective borrowers.

Yes- its the government meddling again- however, it really seems to be more smoke and mirrors- than anything else.

_Kaiser_

Yay! Let the good times roll.. I've already know of one person personally who got a call lately from his bank asking if there was anything they could do for him, and our own place here circulated an email from AIB last week where they're advertising 8am slots for mortgage discussions

Well I can tell ya one thing folks! Even if no-one else learned from the last 6 years, I have. This time I will be taking every cent I can get as NOT "going mad" last time round has left me screwed over at every turn anyway to pay for those who did. :rolleyes:

Hmm.. wonder should I change the car while I'm at it?

superman28

This government is committed to re-infalting the property bubble,, as FF did before it..

- FG introduced tax incentives for cash investors to buy property (no CGT if property is bought before December 2014)
- Actively restricts supply through the red tape convoluted planning process that has not been reformed since bubble
- Labour costs for building are still far too high
- Government controlled banks will not lend to property developers
- Land/property hording is widespread (empty property everywhere)
- Appointed minister for housing Jan O'Sullivan is a qualified pre-school teacher with no economic qualifications
- Introducing tax payer funded money for deposits for FTBs (even though demand is through the roof and not the problem)


It is telling that our minister for finance says "claims of a property bubble in Dublin are exaggerated"...

As we roar full steam ahead into another property bubble,, and the housing crisis continues,, why don't you email Jan,, and let her know what you think about it... jan.osullivan@oireachtas.ie

Frank Lee Midere

Utter madness. House prices are being kept up by government intervention, the government guarantees FTB's and the whole bloody shebang starts again. We actually need to make people accountable, that is politicians who inflate booms should be personally responsible for the problems they cause.

AlwaysAnyTime

Kaiser2000 wrote: »

Hmm.. wonder should I change the car while I'm at it?

Don't tell me you're still driving a 2013 reg car? :rolleyes:

ruthlessbich

This policy is misguided. Whilst it is true that some increase in prices is needed to mobilize the construction sector and increase supply, this policy will only serve to further increase demand - without doing anything for supply.

It is also not fair. Why should I as a taxpayer subsidize somebody else to buy a house? I personally saved my money over many years for deposit and to fund some of house purchase. The value of that money is now diluted by this scheme.

I have no doubt that we will all be paying for Enda's cheap election ploy

Shedite27

The_Conductor wrote: »

Yes- its the government meddling again- however, it really seems to be more smoke and mirrors- than anything else

Yeah I agree. Pre-election talk.

superman28 wrote: »

This government is committed to re-infalting the property bubble.

Or helping those voters in negative equity, depending on which side of the fense you're in.

A nothing story this really.

ted1

gaius c wrote: »

So ftb's can't afford houses and need welfare assistance to buy?

I've a better idea. Let house prices drop to a level ftb's can afford.

Or FTB are paying money out each month in rent and can't afford to save a deposit. so buying getting a help out with the deposit they can afford to buy and could actually have more money left.

marco_polo

AlwaysAnyTime wrote: »

Don't tell me you're still driving a 2013 reg car? :rolleyes:

Year doesn't matter if you're only driving a car you're already doing it wrong.

Idbatterim

read a few articles about it in the independent. There are pros and cons to it from what I gather, the thing is, it is very difficult to save if you are renting and the prices increases are currently eroding the savings you are making, you are sprinting to jog or run. This money that everyone is scrimping away, is money that could be spent in the local economy and generating confidence. I agree with the supply side of things and I believe on this front, they are going to tax undeveloped land.

Shedite27

The problem is that there isn't enough houses.

This initiative will increase the amount of people who can buy.

Net result: More people looking for the same number of houses = price rises.

coffee_cake

But... this is a large part of what caused the problem in the first place

PLL

bluewolf wrote: »

But... this is a large part of what caused the problem in the first place

Yes and with the current high rent prices this will be attractive to so many. Oh dear

TimeToShine

It is hoped the scheme will provide a much-needed boost to the construction sector, since there is a belief that a further increase in demand will drive supply.

So by forcing the supply to become more accessible (in an arguably infeasible manner) the demand increases...and the subsequently forced increase in demand will increase supply?

How does this not look like a bubble waiting to pop?

youwhoglue

"Train tracks....bitta ching ching, ya know?"

Ritchi

This whole situation is worse than the boom. House prices are going up, rents are going up, but people's incomes are not.

At least in the boom people were getting salary increases to in some way fund the increase in prices, now they're not, for the most part.

It will only end badly, and a lot quicker than the last time.

Whosthis

AlwaysAnyTime wrote: »

Don't tell me you're still driving a 2013 reg car? :rolleyes:

I think he means from 141 to 142.

Cuddlesworth

Ritchi wrote: »

At least in the boom people were getting salary increases to in some way fund the increase in prices, now they're not, for the most part.

Salaries didn't come close to the rising houses prices then and they won't know. At least this time round, I can get on the ladder and stop paying my mortgage like the rest.

handlemaster

The big problem is a five yr cycle in government short term planning is always a bad idea

who_ru

Borrow from AIB only, they have no future anyway. Plus you can default quickly and they cannot, will not, won't be allowed to repossess.

I mean that borrow from AIB only.

AlwaysAnyTime

Ritchi wrote: »

This whole situation is worse than the boom. House prices are going up, rents are going up, but people's incomes are not.

At least in the boom people were getting salary increases to in some way fund the increase in prices, now they're not, for the most part.

It will only end badly, and a lot quicker than the last time.

It won't end badly, we'll have another "soft landing".

OMD

Shedite27 wrote: »

The problem is that there isn't enough houses.

This initiative will increase the amount of people who can buy.

Net result: More people looking for the same number of houses = price rises.

On what basis are you (and others) saying we haven't enough houses. We had enough 3 years ago. The population has not increased significantly in the last few years, especially as large portions of the property buying age group have emigrated. What has happened that you now believe we don't have enough houses?

The_Conductor

OMD wrote: »

What has happened that you now believe we don't have enough houses?

The big change- as noted in the census, was a massive decrease in the average house size (by this I mean number of occupants- not the size of the property itself- which is also pathetic).

A much larger number of smaller households, need extra properties.

Many people in the 20s and even 30s- are living at home with Mommy and Daddy- because they can't find anywhere else to live- this glut has not been tackled either.

Also- the vast number of people want to live a few limited areas- Dublin and its conurbation, Cork, Galway- and then to a lesser extent the regional towns. These are, by and large, not where we have been constructing dwelling units.

Shedite27

OMD wrote: »

On what basis are you (and others) saying we haven't enough houses. We had enough 3 years ago. The population has not increased significantly in the last few years, especially as large portions of the property buying age group have emigrated. What has happened that you now believe we don't have enough houses?

In the population centers there's a shortage of 3/4 bed houses. Head along to any open house this weekend and you'll see 20/30 couples out looking for that first home. Can't remember the figures off hand, but under noraml circumstances 4% of the houses in an area should be for sale at any one time, whereas at the moment we're below 1%. People holding onto houses through negative equity or dreaming of a blanket default.

There hasn't been that much emmigration to damage housing stats.