Where do first time buyers on Primetime get 400k? What jobs have they? Is it staged?

gaius c

mathie wrote: »

This.

Money doesn't disappear.
It simply changes hands.

This money is disappearing though. It's going into that black hole labelled debt from where it will never return.

seamus

gaius c wrote: »

You're ignoring the fact that rents are very high again and also the higher taxes that we have been paying for a number of years now.

Rents dropped though for the last 7 years. That's the point. People had more scope to save during the recession.

Utilities are more expensive than ever before.

Nope. Actually the cost of utilities is still lower now than in 2007. I was quite surprised too:
http://www.cso.ie/quicktables/GetQuickTables.aspx?FileName=CPA01C1.asp&TableName=Annual+Figures+2007+to+2013&StatisticalProduct=DB_CP
Taxes haven't actually gone up that much in real terms. It's an extra couple of % for most people.

Cost of living hasn't dropped at all. It's gone up.

I'll give you that, though if you look at the link above, the cost of many essentials has dropped - utilities, clothing. We also saw a massive spike in costs in 2008 followed by a huge dip in costs. This is where people get their scope to save money. Overall cost of living now isn't exceptionally larger than it was in 2007 and in many categories there were 2-4 years where the cost living was down.

Maximus_1

Myself and the missus live in the west on modest salaries of 34 and 28k and bought last year. Both IT workers, private sector. UB approved us for over 200k and we were only looking for less than half of that. We had saved 30k which was also a big plus in getting approved.Hence and therefore I can see couples with 90 or 100k between them in the capital getting approved for those large figures once they have a decent chunk of savings.

The_Conductor

Maximus_1 wrote: »

Myself and the missus live in the west on modest salaries of 34 and 28k and bought last year. Both IT workers, private sector. UB approved us for over 200k and we were only looking for less than half of that. We had saved 30k which was also a big plus in getting approved.Hence and therefore I can see couples with 90 or 100k between them in the capital getting approved for those large figures once they have a decent chunk of savings.

If UB approved you for over 200k- totally aside from the fact that you had a 30k lumpsum saved- they ran roughshod over their own earning multiples calculation. UB have 3 separate criteria they apply to mortgage applications- income multiples, debt service ratio and net income criteria. You have to satisfy all 3 criteria categories.

The national average loan amount approved for First Time Buyers in 2014 (according to the Central Bank) is 204,000- which does not lend itself to supporting those bizarre Dublin valuations.

ionapaul

My wife and I have very recently been approved in principle for €400k, which is bang on 4x our joint income. The scenario looked at buying a €500k house with a €100k deposit and we provided lots of supporting documentation. I doubt we'd actually get very close to that amount if push came to shove at drawdown, in any case I'd never borrow 4x our income in any circumstance as that's financial lunacy. Actively wanted the large approval though, to give us some flexibility if we need to borrow over €300k.

mathie

gaius c wrote: »

This money is disappearing though. It's going into that black hole labelled debt from where it will never return.

Yes but one mans debt in another mans savings

o1s1n

ionapaul wrote: »

My wife and I have very recently been approved in principle for €400k, which is bang on 4x our joint income. The scenario looked at buying a €500k house with a €100k deposit and we provided lots of supporting documentation. I doubt we'd actually get very close to that amount if push came to shove at drawdown, in any case I'd never borrow 4x our income in any circumstance as that's financial lunacy. Actively wanted the large approval though, to give us some flexibility if we need to borrow over €300k.

Yeah, definitely do your best not to go down that road. It's a hell of a lot of money to have hanging over your head. Both of you are on a really decent salary, but do you intend to both be working for the whole course of the mortgage?

In the end we went with something we could both afford on each of our salaries if one of us had to stop working/wanted to stay home with kids etc.

The feeling of knowing you have that level of security is worth it to me. I'd only be worrying if I had a mortgage that big.

DubDani

There are enough people on that kind of money that were also not affected by the recession at all, and accordingly able to save for a decent deposit.

The company I work for did not cut any people, did not cut Salaries and even paid Bonuses and (modest) payrises during the recession.

On my team there are about 10 people, all in their 30's, all been working for the company for 8+ years and all on about 60K+. And it's nothing special in terms of Job, just safe and well paid.

jon1981

Zamboni wrote: »

Your ninja edit had me confused there
Haha I can't win on this thread - I get done for not accounting for the fact that Irish people are financially imprudent and then I get done if I assume most young couples don't have pensions

Either way, if you include pension contributions into the equation it further questions the capacity for a couple on a combined income of €90k to service a €400k property / €360k mortgage.
And that is going on current interest rates.

Everything is pointing to accumulated wealth fueling this Dublin bubble Whether directly by investors or through inter-generational transfers.

This really is another major f*ck up in the making.

I agree, without a significant cash deposit , no bank will approve a mortgage of that amount on 90k.

imitation

anynews14 wrote: »

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

There are a lot more stable jobs out there with multinationals than you think. There are also plenty of people with rare skillsets and abilities that will mean they are a safe bet. There are also plenty who have the money built up, a good deal of people haved worked abroad on well paying jobs, sometimes tax free. And as others have said, many built up a solid deposit during the recession. Considering building has been at a standstill for 6 years the shortage of houses is no surprise. It was a way of artifically protecting house prices and the governments investment in nama. The consequence is this new bubble.

Maximus_1

o1s1n wrote: »

Yeah, definitely do your best not to go down that road. It's a hell of a lot of money to have hanging over your head. Both of you are on a really decent salary, but do you intend to both be working for the whole course of the mortgage?

In the end we went with something we could both afford on each of our salaries if one of us had to stop working/wanted to stay home with kids etc.

The feeling of knowing you have that level of security is worth it to me. I'd only be worrying if I had a mortgage that big.

Totally agree with this sentiment. You cannot put a price on peace of mind. We borrowed well within our means so that in the event one of us was unable to work for whatever reason, minding children, loosing job, ill health God forbid we would be able to at minimum tread water for a decent time without going under so to speak. The mindset of borrowing to the absolute maximum I can understand to get the place to really want etc but it wouldn't be for me, I've enough grey hair as it is!

dubrov

Zamboni wrote: »

Net monthly combined about €5,800
10% deposit
Repayments on €360k 30Yr 5% roughly €2k

If they limit themselves to one child perhaps.
Childcare will destroy disposable income.

Current variable rates are closer to 4.5% which would be about €1,700 on a 35 year mortgage.

€4,100 left after the mortgage is plenty even with a child in creche.
2 children would be tighter but this should only be for a couple of years.

Interest rates may go up but so will salaries.

Zamboni

dubrov wrote: »

Current variable rates are closer to 4.5% which would be about €1,700 on a 35 year mortgage.

€4,100 left after the mortgage is plenty even with a child in creche.
2 children would be tighter but this should only be for a couple of years.

Interest rates may go up but so will salaries.

You're niggling, which suggests to me that you are trying to justify something to yourself

dubrov

Well, you could call it niggling or actually try to make an argument against it.

I actually think prices will go south from here but thought I'd provide some balance to the previous comments.

Heisenberg1

lima wrote: »

I'm early 30's I've 100k in savings and am not looking to have my other half on the mortgage so I can buy up to say e350k. So if a couple had this amount (or if they had it each) they would easily be able to afford 500-600k

It's crazy money and I wouldn't commit my savings to investing in Ireland in that way but clearly some people are buying to live in Ireland foreve and to die in

Wow with those type of savings you could buy one of those houses in Roscommon with a small loan.

delthedriver

Cuddlesworth wrote: »

Yeah when I think of it both my parents and my girlfriends parents are sitting on nearly 1.5 million in property atm and would be overall owe maybe 100k to the banks. That's a pretty amazing amount of asset wealth.

Very true. As the years roll on the value of their property will increase and their outstanding mortgage will decrease! By doing nothing in the next few years their net wealth will increase. Still plenty of money in the country!

NIMAN

When you hear about the amount of houses selling to cash buyers now, there is definitely LOADS of money still in this economy.

HerrKuehn

I think a lot of people were able to save money during the recession. Rent decreased substantially for a few years. People who were working in industries not affected by the bubble (positively during it or negatively after it) may not have had wage decreases. We saved almost 200k before buying last year. The house cost 440k, mortgage of 270, rest used for fees & renovation etc. I doubt we are unique in that regard. To save that amount of money required determination over a number of years but we are enjoying the benefit of it now. I think 2 people on 45k each borrowing 400k is nuts to be honest. We could have borrowed more, but I wanted to make sure I can pay the mortgage off early.

nilsonmickey

60k is not a large salary. I think for a couple earning 50k each should be entitled to a mortgage of 400k.

seamus

HerrKuehn wrote: »

We saved almost 200k before buying last year. The house cost 440k, mortgage of 270, rest used for fees & renovation etc. I doubt we are unique in that regard.

€200k is pretty unique to be fair. Over six years that's €33k per year saved, after tax. That's how much a single person on €45k earns, which you've managed to bank. Now, maybe you've been saving for ten years and/or have had inheritance or gifts in on top of that, but the amount you had is definitely exceptional. You lucky bugger.

I'd say the typical amount of savings over the last 6/7 years is probably between 25 and 50k.

ionapaul

nilsonmickey wrote: »

60k is not a large salary. I think for a couple earning 50k each should be entitled to a mortgage of 400k.

It's not about being entitled - it's about whether it's a good idea to borrow that much if you are earning €100K! I don't think it is. Plus most prospective home buyers should, when thinking about the medium and long term, hope that credit remains restrained, as this will act as a dampener on prices. When credit flows too easily it's a bad thing for buyers... though you wouldn't think so if you spoke to lots of people.

Electric Sheep

Shedite27 wrote: »

Yeah I agree, and then the common follow on is to blame the bank - "Why won't the bank give me a mortgage?" rather than "Maybe the bank are right, maybe we can't afford that much long-term, perhaps we should evaluate what we should buy"

These are the same type of people who borrowed way over their heads in the bubble, and now blame the banks for it.

NIMAN

Us Irish also have the logic of "well whats the absolute maximum the bank will lend me? 300K, right I'll spend 300K"

Rarely does the logic "maybe I should just borrow 250k, allow a bit of leeway in case anything goes wrong" enter the mind.

o1s1n

NIMAN wrote: »

Us Irish also have the logic of "well whats the absolute maximum the bank will lend me? 300K, right I'll spend 300K"

Rarely does the logic "maybe I should just borrow 250k, allow a bit of leeway in case anything goes wrong" enter the mind.

Speak for yourself - my mortgage is well within my means. We're not all silly feckers. :P

Electric Sheep

nilsonmickey wrote: »

60k is not a large salary. I think for a couple earning 50k each should be entitled to a mortgage of 400k.

Nobody is "entitled" (Ireland's favorite word) to a mortgage. It is totally at the discretion of the bank.

indiewindy

nilsonmickey wrote: »

60k is not a large salary. I think for a couple earning 50k each should be entitled to a mortgage of 400k.

€60K is a large gross salary in Ireland, it is well over the average salary.
You state that a couple earning €100K between them should be able to borrow €400K. Remember that if they have kids that income will drop or high childcare costs will be incurred and also marginal tax rates and the USC will eat into the salary quite a lot.
Watching the programme last night, it looked like the seeds of financial disaster have already been sown in Dublin.

NIMAN

Some of those people on that show last night will be on Joe Duffy complaining in a few years that the banks shouldn't have lent them so much money, and its the banks fault.

El_Dangeroso

NIMAN wrote: »

Us Irish also have the logic of "well whats the absolute maximum the bank will lend me? 300K, right I'll spend 300K"

Rarely does the logic "maybe I should just borrow 250k, allow a bit of leeway in case anything goes wrong" enter the mind.

Someone actually said to me the other day:

'A mortgage is the cheapest loan you can get, you should borrow as much as you can'

Clearly this mentality is still rife. We have learned absolutely nothing.

Bobeagleburger

NIMAN wrote: »

Us Irish also have the logic of "well whats the absolute maximum the bank will lend me? 300K, right I'll spend 300K"

Rarely does the logic "maybe I should just borrow 250k, allow a bit of leeway in case anything goes wrong" enter the mind.

Speak for yourself :pac:

Most people buying these days are more cautious imo.

Idbatterim

Nobody is "entitled" (Ireland's favorite word) to a mortgage. It is totally at the discretion of the bank.

dont forget the word "fair" its in joint first place of Ireland's favorite words!