95% mortgages for FTBers - state backed!

the groutch

let the good times roll

https://www.youtube.com/watch?v=T_URy6gEijg

Eldarion

Shedite27 wrote: »

People holding onto houses through negative equity or dreaming of a blanket default.

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

Looks like they're the smart ones as this scheme will definitely increase house prices. The resulting increase could pull quite a lot of people out of negativity equity and back into a position where they'd be willing to trade up or sell.

Personally I think it's an absolute disgrace. We slammed, tarnished and almost lynch mobbed the bankers for doing the exact thing the government is planning on doing now. And their defense is? All the other western governments are doing the same! It's 2007 all over again, it's madness.

That being said I'll probably make out like a bandit if the trend continues but I still think it's an awful idea for the country as a whole.

crackcrack30

Its simple really.... there are about 100,00 homes in negative equity (and mortage arrears) in the capital region ....these people are on paper bankrupt and of no economic benefit to the irish economy (more like a perceived weight around its neck.....)


To change this their property price ,not worth , must rise rise......... hence inflate the market, balance the banks ect ect.

yop

Heard this on the radio this morning, the general jist is that there is a shortage of houses, so we need to build, in order to help the construction industry. So you hand out money to those who can't afford a "real" mortgage. Have we gone back in time or something because we know AGAIN how this story ends dont we?
We inflate the prices, we make builders and auctioneers rich AGAIN, after the bankrupt the place.
We have banks hand out money AGAIN to those who can't afford it, and guess how it will end.
But of course, we increase house prices.... so this then means that they government can then get more money from the LPT.

I can't say I am surprised, we really have elected another bunch of muppets.

seamus

Eldarion wrote: »

Looks like they're the smart ones as this scheme will definitely increase house prices. The resulting increase could pull quite a lot of people out of negativity equity and back into a position where they'd be willing to trade up or sell.

...and make the whole thing even worse. As people get pulled out of negative equity, moving home or trading up becomes a reality and even more pressure is put on demand.

Like you, I rub my hands with glee at the very real prospect of being able to sell my property at a profit possibly before the end of this year (that's without government intervention), but it still leaves me needing a home and jumping back into a property market where rents and asking prices are potentially way above their true value.

The only difference this time as is Cuddlesworth points out - the last time, salaries came nowhere near meeting asking prices. Prices rose because lenders relaxed their policies and made ridiculous decisions. I know of a couple of people who borrowed their deposit (and legal fees, etc) from the same bank as they got their mortgage. One person practically did it all in the same transaction.
As reckless as banks tend to be, I can't see the same thing happening this time. Possibly this time an influx of foreign money will start locking normal people out of the market in Dublin, which will result in the same proliferation of housing in the backarse of nowhere "Just an hour from Dublin".

GavMan

Money would be better spent incentivising people to develop land banks for housing. Penalise them via taxation for not building and give them a tax break for developing.

There is already sufficient demand there.

The key is in planners controlling the number of units built, doing so through restrictions in planning permissions granted.

gaius c

GavMan wrote: »

Money would be better spent incentivising people to develop land banks for housing. Penalise them via taxation for not building and give them a tax break for developing.

There is already sufficient demand there.

The key is in planners controlling the number of units built, doing so through restrictions in planning permissions granted.

We had a golden opportunity to do that via the LPT by making it a site valuation tax dependent on the value of the land the house was built on (thus giving us a chance to penalise land bankers) but no, they caved in to vested interests and made it a plain house valuation tax instead.

Idbatterim

if its houses only and "only" up to 250k, where the hell would that buy you in Dublin county? Certainly nowhere I would want to live... There is effectively no land where the real demand is, if you look at my area Dublin 14, there are 2 massive golf clubs, Churchtown and Rathfarnham, the lands could provide thousands of units, should land in critical areas, not be taxed so that the use of it is efficient? I.e price golf courses etc outside of the m50 circle...

riclad

IT should be limited to house,s under 170k.

IN a normal market there should be 20 thousand houses for sale in dublin,
theres way less than that on the market.

Plenty of houses for sale in clonsilla,under 150k.
i,d regard that as a good place to live.
quote ;

if its houses only and "only" up to 250k, where the hell would that buy you in Dublin county? Certainly nowhere I would want to live... There is effectively no land where the real demand is, if you look at my area Dublin 14, there are 2 massive golf clubs, Churchtown and Rathfarnham, the lands could provide thousands of units, should land in critical areas, not be taxed so that the use of it is efficient? I.e price golf courses etc outside of the m50 circle...

end quote .

Most of the big building companys are bankrupt,

its hard for a builder to get finance to build a large estate .

I Think its a bit snobbish to say,
the only good place to live is dublin south.

IF you drive around dublin ,theres acres of empty land to build on .

Alot of people want a house, will not bother looking at apartments for sale.

MisterAnarchy

There were enough houses built during the bubble to last until 2020 ,its a myth that there is a shortage of houses.

Anyone who cant save at least 15% of the value of a house has absolutely no business buying a house ,full stop.

Idbatterim

Most of the big building companys are bankrupt,

its hard for a builder to get finance to build a large estate .

I Think its a bit snobbish to say,
the only good place to live is dublin south.

IF you drive around dublin ,theres acres of empty land to build on .

Alot of people want a house, will not bother looking at apartments for sale.

so is it that the banks wont extend credit to the builders or as some builders claim, the figures still dont stack up to recommence building? Probablya combination of the two. Because if its that the banks wont lend, they should either be forced to or the government should set aside a fund let them draw it down from that...

riclad

Yes there s plenty of houses, but many are in the wrong place.
The days of people who work in dublin buying a house in cavan is gone.
EG long distance commuting is a waste of time.fuel is expensive.
eg ghost estates = houses built where theres no demand for them.
Banks look at your savings rate,salary , is your job safe, permanent .

Not just how much you have saved.
People in negative equity need to get permission to sell from the bank.
People on tracker mortgages maybe afraid to sell ,as they,ll lose their tracker low rate loan.

maybe builders are waiting for prices to rise,
Then their potential profits will rise.

RedPandaDan

Prices are getting too high because of a supply shortage, solution is to boost demand, genius!

Shedite27

MisterAnarchy wrote: »

There were enough houses built during the bubble to last until 2020 ,its a myth that there is a shortage of houses

If there are then they are in the wrong place! Huge shortage in the Cities where the jobs are unfortunately

MisterAnarchy wrote: »

Anyone who cant save at least 15% of the value of a house has absolutely no business buying a house, full stop.

Agreed

riclad

IN the short term, this may increase house prices in citys ,
Will it increase the no of houses being built?
OR the no of houses for sale?

Cuddlesworth

RedPandaDan wrote: »

Prices are getting too high because of a supply shortage, solution is to boost demand, genius!

Every single step the government has taken in the last 12 years has been to increase house prices. Why does this surprise you?

seamus

Idbatterim wrote: »

if its houses only and "only" up to 250k, where the hell would that buy you in Dublin county? Certainly nowhere I would want to live... There is effectively no land where the real demand is, if you look at my area Dublin 14, there are 2 massive golf clubs, Churchtown and Rathfarnham, the lands could provide thousands of units, should land in critical areas, not be taxed so that the use of it is efficient? I.e price golf courses etc outside of the m50 circle...

Recreational facilities are efficient use of land

Besides, we're not short of land in Dublin that we need to start CPO-ing private land. There are acres and acres and unused land within the M50 belt, and of course the elephant in the room: high-rise. Dublin has to grow up. Literally. We have massive infrastructural costs because we refuse to go skywards. The most efficient use of land is big blocks. We should be building 10+ storey blocks in the docklands.

riclad

prices have Gone down by 40-50 per cent since 2008 in most areas.
Stopping mortgage tax credits, property house tax,does not put up house prices.

Idbatterim

Recreational facilities are efficient use of land

Seamus that why I said golf courses, not parks or greens etc. What percent of the population of the population in these areas use these? and would it hurt for their members, who must have more than enough time on their hands, to drive a few kilometers further?

seamus

Idbatterim wrote: »

Seamus that why I said golf courses, not parks or greens etc. What percent of the population of the population in these areas use these? and would it hurt for their members, who must have more than enough time on their hands, to drive a few kilometers further?

You could ask the same questions of football pitches, or tennis courts or skateparks.

The fact is that there is no shortage of land to build and housing density in Dublin is very low by urban standards means that there's no need to take over golf courses just to build houses.

Villa05

The people who cant/wont pay in future are going to be laughing all the way to the bank. Currently it was the bank that forced me to take out the loan, in a few years it will be the government that forced me to take out the loan. The whole fiasco will spawn a new political party that waste countless amounts of money and we will ask ourselves who could have predicted it when we finally break the back of the country

Ireland: an experiment in reverse evolution

Villa05

The people who cant/wont pay in future are going to be laughing all the way to the bank. Currently it was the bank that forced me to take out the loan, in a few years it will be the government that forced me to take out the loan. The whole fiasco will spawn a new political party that waste countless amounts of money and we will ask ourselves who could have predicted it when we finally break the back of the country

Ireland: an experiment in reverse evolution

Idbatterim

The fact is that there is no shortage of land to build and housing density in Dublin is very low by urban standards means that there's no need to take over golf courses just to build houses.

but there is where people really want to live, hence the prices in these areas have gone extra crazy! Football pitches, skate parks or a tennis court take up very little land in comparison to a golf course... I also agree that housing density is pretty low, both my parents current house and my granny who lived in up the road, were normal houses, but had stupidly big gardens. If hypothetically they were CPO'd you could build god knows how many times the units, but that wont happen

The proposal being put forward is just for houses, why not apply it to apartments, but ones that are properly sized and built? At least with them, you could get big hubs of developments, like in sanyford business park, the docklands, out towards cherrywood...

newbie2013

All this moaning and groaning. Listen people, we live in a capitalist world, did you honestly expect anything else! There will be more property booms and there will be more busts. It's just the way it is ffs. Just make sure you can read the signs so you can get out while you can and don't end up being a fool with a massive mortgage around your knock for life lol

The_Conductor

MisterAnarchy wrote: »

There were enough houses built during the bubble to last until 2020 ,its a myth that there is a shortage of houses.

Very true.
Its a pity we don't all want to live in Leitrim though.
I hear various parts of Cavan also have vast numbers of vacant properties.
Or if you don't like to live in rural locations- Portlaoise has a remarkable number of properties too.

If you want to use them- you have to use a mixture of carrots and sticks to force people from Dublin/Cork/Galway- the sunny South East- to use them.

Oh- suggesting Leitrim is only an hour away from Dublin- isn't true either.

GCU Flexible Demeanour

crackcrack30 wrote: »

Its simple really.... there are about 100,00 homes in negative equity (and mortage arrears) in the capital region ....these people are on paper bankrupt and of no economic benefit to the irish economy (more like a perceived weight around its neck.....)

To change this their property price ,not worth , must rise rise......... hence inflate the market, balance the banks ect ect.

There's a germ of truth to what you say. However, the fact of being in negative equity does not imply someone is bankrupt. They just owe a lot of money, which is a different thing altogether.

But, yes, this measure is a blatant attempt to keep house prices high. The logic is ludicrous. How do we increase the supply of housing in Dublin while keeping prices high? Why, by allowing people to borrow too much, so we can charge them an excessive price!

What's interesting is just how many people are not fooled at all by this proposal.

riclad

by having strict rules on lending You can avoid a housing boom bust.
EG you need at least 10 per cent of a loan saved up,
you can only borrow 5x max of your salary on a mortgage.
Also we need banking regulators that do their job.

Employ qualified people in the dept of finance ,
not arts graduates.
This is not rocket science ,other countrys do this .

IF you your house is worth 100k,
mortgage is 70k, its not a big deal, if you are happy to live there.

GCU Flexible Demeanour

riclad wrote: »

you can only borrow 5x max of your salary on a mortgage.

There was a time when the standard multiple for a couple was two and a half times the larger salary, plus the second. And the repayment period was typically twenty years. That's probably quite a reasonable level, but getting back to that requires a huge recalibration of property values in the minds of all of us.

riclad wrote: »

Employ qualified people in the dept of finance ,
not arts graduates.

But, sure, wouldn't the banks have had all the qualified people you'd expect? And Patrick Neary was a qualified accountant, and the regulator who he replaced (who oversaw the period when the seeds of destruction were laid) had a Phd in Econometrics.

riclad wrote: »

This is not rocket science ,other countrys do this

Also worth recalling that the regulatory standards used in Ireland were defined in EU legislation, and covered all European banks. It's not necessariliy rocket science, but it does require a capacity for open discussion that seems to be harder than it should be.

The evidence of that is the fact that this proposal even exists. It shouldn't last ten seconds in any company, yet here it is being floated in public.

desertcircus

If a government was serious about improving supply, it would institute a new minimum-storeys rule. Building in an area in the top 10% population density wise? Fifteen floors minimum. Top 20%? Twelve floors minimum. Building four-and five-storey apartment blocks right in the middle of Dublin is a pointless, destructive pissing away of all the potential value of the city's amenities.

Zamboni

People against this proposal


Us lot (Most importantly)


Colm McCarthy

Economist Colm McCarthy said the scheme is reminiscent of the 100% mortgages that caused debt problems for many borrowers during the boom.

Speaking on RTÉ's News at One, Mr McCarthy said the proposal seems to suggest that the 15% deposit required by many banks from mortgage applicants is too much.

Instead, he said the Government is potentially proposing a loan-to-value ratio of 95% with "the taxpayer on the hook" for part of the deposit.

He said: "Until 15 or 20 years ago people were expected to save up 15% or 20% of the purchase price and then take out a mortgage for the balance.

"Going back to this idea that you don't need any money down, or you need very little money to put down, seems to me to be revisiting the errors of the recent past."

Mr McCarthy said supply of houses remains the bigger issue and zoning needs to be looked at.

http://www.rte.ie/news/2014/0514/617155-construction/


Karl Dieter

The idea of getting more people credit in an easier fashion in order to afford more homes is questionable. A good analogy is if it was decided that the Leaving Cert should be marked easier in order to help more people get into college.

What would likely happen is that the limited college places would still be taken up but that the points required for any one course would go up, it doesn’t resolve any shortage of college spaces (for instance), and in this respect more credit will probably do the same to housing, it won’t fix anything other than if by ‘fix’ you mean ‘make prices rise’

http://www.mortgagebrokers.ie/blog/mortgage-rates/midlands-radio-will-faulkener-talks-to-karl-deeter-on-government-mortgages/

Ronan Lyons

“If you want housing to be affordable, increase supply – it’s no more complicated than that. If supply is not forthcoming we need to understand why, rather than push the price of housing further up.”

http://www.irishtimes.com/news/politics/economists-say-first-time-buyers-scheme-may-drive-up-prices-even-further-1.1795821


Chris Johns

Mortgage demand
So why then introduce a mortgage insurance scheme? Why act on mortgage demand rather than housing supply?

The examples of the UK and Canada are cited, with apparent approval, of countries that have done this already.

No mention is made of their current and very obvious housing bubbles. Canada looks as overvalued as Ireland did about 2007.

http://www.irishtimes.com/news/politics/government-document-littered-with-promises-but-can-they-deliver-1.1795859

Lucinda Creighton and all opposition parties - Not that it matters because it's expected.



People for this proposal

• Fine Gael
• Construction Federation Industry