Central Bank to limit amount banks lend for home purchase

Larbre34

maynooth_rules wrote: »

I presume this has been brought up, but would it be best to buy before the end of the year or hold off until the start of the new year?
We have a healthy deposit that will be between 30-40% of the value of the houses we are looking at. My partner has a decent contracted job, my job is a bit more volatile and most banks won't consider my income.
Hard to know what to do, something in my head is telling me to wait until next year but its tough to know

Two things.

Putting maximum salary and deposit ratios in place may reduce house prices in Dublin where they have been growing quickly, because obviously sales will have to pitched at levels where the typical owner/occupier buyer will be able to afford to purchase.

However, investors have made up >40% of the buyers in Dublin for the last year or more, which makes for a dysfunctional market. If the Govt in next weeks budget do not do away with tax incentives, then that percentage of investors may increase and prices may not reduce hardly at all.

If you haven't begun the mortgage process, I would get stuck in without delays, regardless of the change of criteria around you because your biggest obstacles may have nothing to do with the Central Bank policy.

GinaI

maynooth_rules wrote: »

I presume this has been brought up, but would it be best to buy before the end of the year or hold off until the start of the new year?
We have a healthy deposit that will be between 30-40% of the value of the houses we are looking at. My partner has a decent contracted job, my job is a bit more volatile and most banks won't consider my income.
Hard to know what to do, something in my head is telling me to wait until next year but its tough to know

it is hard to know what to do :-( my position is worse, I have 10% deposit and I was going to apply for mortgage in the end of the year. It took me many years to save this deposit and I am not in position to save for the same amount of years to have now-required 20% :-(

seamus

El_Dangeroso wrote: »

So what will happen the houses that if the rules had not changed, FTB's would have bought? They will be bought by investors no? To rent?

Or those properties just won't be sold. There is very little new building going on at the moment and zero repossessions, so the volume of properties on the market which have to be sold is very low.

I get what you're pointing at; but our primary problem in both the rental and purchasing market at present is supply. In the short-term, locking people out of the purchasing market will drop them into the rental market.

In the medium-term the volume of properties available to rent may increase, but there's zero building output at present and very few empty properties in the places that people want to live.

El_Dangeroso

seamus wrote: »

Or those properties just won't be sold. There is very little new building going on at the moment and zero repossessions, so the volume of properties on the market which have to be sold is very low.

I get what you're pointing at; but our primary problem in both the rental and purchasing market at present is supply. In the short-term, locking people out of the purchasing market will drop them into the rental market.

In the medium-term the volume of properties available to rent may increase, but there's zero building output at present and very few empty properties in the places that people want to live.

Those properties that won't be sold, will people just do nothing with them? Do they disappear into thin air?

I understand what your are saying, and I can see this affecting rental supply for 6 months or so before people accept the new reality of buying/selling a house in this country. Then I think prices will decrease.

Interesting times.

LordNorbury

pwurple wrote: »

I don't see what that has to do with what I said.

Giving yourself mobility and flexibility is important in a modern world. It's a long time since people lived in the same house for generations, where the same job was passed from father to son. Jobs move, people move.

Getting stuck in any home, because you cannot sell it, is a problem.

Well you must not have been living in this country for the last 10 years if you can't see how greed and rampant and insane speculation (based upon nothing other than people buying numerous houses as a purely speculative exercise rather than them buying a house for them to reside in), has not been the central cause of the property crash in this country and the general unaffordability of housing both before and after the crash.

Am I imagining that the overnight queues for property in Dublin back around 2005 and 2006 and 2007 well packed full of fat greedy overweight dopey BMW 5 Series driving speculators who were buying off plans and leveraging equity from their housing portfolio against their next property, pricing those who wanted to buy the same property to live in, out of the market???

jester77

LordNorbury wrote: »

They would be good things in an economy where property is affordable, if the average cost of a reasonably decent 3 bedroomed home in the greater Dublin area was 175K, then for someone on 40K a year, it would work out very well:

40K x 3.5 times = 135K

175K x 20% = 35K

135K + 35K = 175K, therefore, sorted...

Let's ignore for a moment that 35K as a lump sum is extremely large about of money to acquire over a 5 year period, you'd need to be putting away just under 600 quid a month for 5 years, which is up there with the cost of a cheap mortgage! Lets also ignore as a fact that you wouldn't even get a 1 bed shoebox in Dublin at the moment for 175K, or indeed for 275K. And lets also ignore the fact that the majority of the jobs are in Dublin city & county.

These kind of stupid poorly thought out broad sweep policies are absolutely pointless and downright counterproductive because they fail to take account of some very fundamental market realities that I have covered above.

It is also interesting to note that it would appear to me that the people in government and in the ICB who are knocking out these decisions, have all probably bought homes back in the 80's and are so well paid that they will NEVER need to concern themselves on a personal or family level with the consequences of these crazy decisions that they are imposing on the rest of the people in this country.

5 years is a very short time to be saving. The average person who qualifies with a degree is 21 years of age. Someone who is 26 doesn't really need to be buying a house. Their career is barely off the ground and most people don't even know where they will finally end up settling down by the age of 26.

A 20% deposit is favourable all around, it leaves the banks in a more favourable position if the mortgage holder fails to pay. They can afford to take a hit and not be out of pocket. It is also advantageous to the buyer, the bigger the deposit you have the better the interest rate you can negotiate and the less your repayments will be.

seamus

El_Dangeroso wrote: »

Those properties that won't be sold, will people just do nothing with them? Do they disappear into thin air?

People may do nothing with them. People may decide that they don't need to move after all. Older people in family homes who were thinking about cashing out and getting a smaller property may stay put if they can't get their price.

I've done a few viewings in South Dublin this year and about 1 in 4 properties were 1970s/1980s houses, clearly vacant for quite some time. This could be down to deaths or emigration; if people don't need to sell, then they may happily sit on a property for months or years until it looks like it'll fetch a price they're happy with.

Zamboni

GinaI wrote: »

it is hard to know what to do :-( my position is worse, I have 10% deposit and I was going to apply for mortgage in the end of the year. It took me many years to save this deposit and I am not in position to save for the same amount of years to have now-required 20% :-(

Gina you have two choices

Get into bank now and get a loan offer based on 10% and buy what you can
Risk - Negative equity if prices drop next year

Or

Wait and hope that this drags prices down over the next year to a point where your accumulating savings will match 20% of a desired property.
Risk - prices don't drop and you're priced out of the market for years.

LordNorbury

LordNorbury wrote: »

Well you must not have been living in this country for the last 10 years if you can't see how greed and rampant and insane speculation (based upon nothing other than people buying numerous houses as a purely speculative exercise rather than them buying a house for them to reside in), has not been the central cause of the property crash in this country and the general unaffordability of housing both before and after the crash.

Am I imagining that the overnight queues for property in Dublin back around 2005 and 2006 and 2007 well packed full of fat greedy overweight dopey BMW 5 Series driving speculators who were buying off plans and leveraging equity from their housing portfolio against their next property, pricing those who wanted to buy the same property to live in, out of the market???

Here's the future: the 'average' productive member of society isn't going to own their own home. Most property in Dublin will end up in the rental market.

That feeling of gradually increasing economic stability as you pay down your mortgage (and payments reduce in real terms) will be a thing of the past. After all, capitalism doesn't like comfortable people. A rental market will be far more efficient at squeezing every penny possible out of the Irish public.

Depressing.

El_Dangeroso

seamus wrote: »

People may do nothing with them. People may decide that they don't need to move after all. Older people in family homes who were thinking about cashing out and getting a smaller property may stay put if they can't get their price.

I've done a few viewings in South Dublin this year and about 1 in 4 properties were 1970s/1980s houses, clearly vacant for quite some time. This could be down to deaths or emigration; if people don't need to sell, then they may happily sit on a property for months or years until it looks like it'll fetch a price they're happy with.

This chimes with what I think will happen, short term pain - less than a year and then as people get fed up with paying property taxes and water charges and NPPR on vacant properties that are not going to rise too much more in price they will sell.

GinaI

Zamboni wrote: »

Gina you have two choices

Get into bank now and get a loan offer based on 10% and buy what you can
Risk - Negative equity if prices drop next year

Or

Wait and hope that this drags prices down over the next year to a point where your accumulating savings will match 20% of a desired property.
Risk - prices don't drop and you're priced out of the market for years.

I can't see prices dropping down thaaaat much ( to a point where my savings will match 20% deposit I mean)

Deco99

Zamboni wrote: »

Gina you have two choices

Get into bank now and get a loan offer based on 10% and buy what you can
Risk - Negative equity if prices drop next year

Or

Wait and hope that this drags prices down over the next year to a point where your accumulating savings will match 20% of a desired property.
Risk - prices don't drop and you're priced out of the market for years.

So if you are ok with the repayments set by the bank and are not planning on selling any time in near future, now would be the time? Negative equity isnt a problem until you want to sell

Has there been any expectation of what will happen prices outside of dublin?

The Spider

El_Dangeroso wrote: »

This chimes with what I think will happen, short term pain - less than a year and then as people get fed up with paying property taxes and water charges and NPPR on vacant properties that are not going to rise too much more in price they will sell.

well if prices drop, so will property taxes, and there wont be much water used in an unoccupied house. However I don't think this will bring down prices, it's just going to turn Dublin into New York, where everyone pays extortianate rent and only the very wealthy buy.

jay0109

LordNorbury wrote: »

Wanting to borrow to put a roof over your head for you and your family, and have some security of tenure in a nation that is known for its gombeenism and greed, is not reckless borrowing/lending, it is actually acting responsibly.

It is reckless if the amounts borrowed and the prices paid are too high...think back to 2003-2007.

Zamboni

Deco99 wrote: »

So if you are ok with the repayments set by the bank and are not planning on selling any time in near future, now would be the time? Negative equity isnt a problem until you want to sell

Don't believe that well rolled out mantra.
Google "Opportunity Cost".

jay0109

The Spider wrote: »

However I don't think this will bring down prices, it's just going to turn Dublin into New York, where everyone pays extortianate rent and only the very wealthy buy.

Calm down:rolleyes:

LordNorbury

Deleted User wrote: »

Here's the future: the 'average' productive member of society isn't going to own their own home. Most property in Dublin will end up in the rental market.

That feeling of gradually increasing economic stability as you pay down your mortgage (and payments reduce in real terms) will be a thing of the past. After all, capitalism doesn't like comfortable people. A rental market will be far more efficient at squeezing every penny possible out of the Irish public.

Depressing.

I agree, we are being led down this road by an EU agenda that is entirely wealth driven, we are being told that in France and Germany and other" developed and advanced countries", of course, "according to the OECD data", so therefore we must be wrong, that most people in these developed and more advanced economies, don't own their own home, so of course we must tow ourselves into line with the current norms as they are understood elsewhere.

Has anyone asked us how we wish to live in this country lately? We are being led down this road of continuous and remarkable change the last number of years, and it seems to me that middle class people are being absolutely and utterly fúcked over at each and every turn in this journey, to the benefit of a wealthy and elite ruling class of insiders, and this is coming from someone who would consider himself fairly right wing in terms of his traditional political thinking.

The same people who are driving this subtle agenda, are those who wanted the introduction of the common currency that we now know as the Euro, and look at the absolute balls that has been made of that, we are still trying to clean up the mess. It really is past time I think that these people are held to some sort of account, I'm not a fan of Nigel Farage personally but when it comes to how he views the EU personality cult, I think he is on the money on that one.

hmmm

LordNorbury wrote: »

I agree, we are being led down this road by an EU agenda that is entirely wealth driven.

The only "agenda" is the bubble we have just come through which nearly bankrupted the country, caused by massive over-lending to people who couldn't repay their debts once the economic situation changed. If you're going to go off on a rant and blame "Europe" for the CBI trying to stop this re-occurring, well I don't know what to say.

We're some of the most short sighted people on earth. Other countries have also experienced economic near-disasters and put in place policies to prevent it happening again, whereas we seem to be falling over ourselves to desperately get back to borrowing 4,5 & 6 times our salaries to "get on the ladder".

If you can't save a 20% deposit, you're a bad credit risk. Interest rates will never be as low as they are now.
If you have to borrow more than 3.5 times your salary to buy a house, you're overpaying. Buy something you can afford.
If you can't afford to buy a property, get a better job or save harder.

LordNorbury

hmmm wrote: »

The only "agenda" is the bubble we have just come through which nearly bankrupted the country, caused by massive over-lending to people who couldn't repay their debts once the economic situation changed. If you're going to go off on a rant and blame "Europe" for the CBI trying to stop this re-occurring, well I don't know what to say.

We're some of the most short sighted people on earth. Other countries have also experienced economic near-disasters and put in place policies to prevent it happening again, whereas we seem to be falling over ourselves to desperately get back to borrowing 4,5 & 6 times our salaries to "get on the ladder".

It's not about "getting on the ladder", it's about one of the most fundamental needs that us humans have, apart from water and food to subsist, it's about shelter, a roof over your head! Your language (on the ladder), implies that this isn't a need at all, that we don't have a fundamental need for shelter and an abode of some sort and that we are just needing to buy for the purposes of speculation?!?

Would we tolerate a situation whereby food was completely unaffordable and we had to tolerate a serious constraint on that fundamental and necessary human resource, or water, (don't want to get drawn into an off topic dabate on water charges but that is another example of where this EU agenda is taking us)??? No we wouldn't, so why do we tolerate such a massive constraint being placed upon housing???

hmmm

LordNorbury wrote: »

No we wouldn't, so why do we tolerate such a massive constraint being placed upon housing???

There's no constraint on housing, there's a constraint on people's ability to borrow. You can either rent or buy somewhere cheaper. Human rights and "EU agenda", I ask you.

What's an "Irish agenda"? Allow people to borrow 6 times their income again? Is that your plan for the future?

GinaI

hmmm wrote: »

The only "agenda" is the bubble we have just come through which nearly bankrupted the country, caused by massive over-lending to people who couldn't repay their debts once the economic situation changed. If you're going to go off on a rant and blame "Europe" for the CBI trying to stop this re-occurring, well I don't know what to say.

We're some of the most short sighted people on earth. Other countries have also experienced economic near-disasters and put in place policies to prevent it happening again, whereas we seem to be falling over ourselves to desperately get back to borrowing 4,5 & 6 times our salaries to "get on the ladder".

If you can't save a 20% deposit, you're a bad credit risk. Interest rates will never be as low as they are now.
If you have to borrow more than 3.5 times your salary to buy a house, you're overpaying. Buy something you can afford.
If you can't afford to buy a property, get a better job or save harder.

sometimes it is no possible to save harder:e.g. water charges are on the way, rents go up and it is not up to an individual to control this. If you a paying rent higher then your mortage would be and still manage to save a bit, how you are a bad credit risk?

gladrags

LordNorbury wrote: »

They would be good things in an economy where property is affordable, if the average cost of a reasonably decent 3 bedroomed home in the greater Dublin area was 175K, then for someone on 40K a year, it would work out very well:

40K x 3.5 times = 135K

175K x 20% = 35K

135K + 35K = 175K, therefore, sorted...

Let's ignore for a moment that 35K as a lump sum is extremely large about of money to acquire over a 5 year period, you'd need to be putting away just under 600 quid a month for 5 years, which is up there with the cost of a cheap mortgage! Lets also ignore as a fact that you wouldn't even get a 1 bed shoebox in Dublin at the moment for 175K, or indeed for 275K. And lets also ignore the fact that the majority of the jobs are in Dublin city & county.

These kind of stupid poorly thought out broad sweep policies are absolutely pointless and downright counterproductive because they fail to take account of some very fundamental market realities that I have covered above.

It is also interesting to note that it would appear to me that the people in government and in the ICB who are knocking out these decisions, have all probably bought homes back in the 80's and are so well paid that they will NEVER need to concern themselves on a personal or family level with the consequences of these crazy decisions that they are imposing on the rest of the people in this country.

The average nationally is affordable.

Supply is the problem.

Decreasing demand,will decrease price.

It's all very simple.

Except for those who have a vested interest in greed and profit, who will forward bull.... figures.

Estate agents,banks, and all the so called e pxperts, did it before.

They will do it again.

As if they care about the interests of the FTB.

on_my_oe

ec18 wrote: »

you are one of the people that the might make an exception for then

Ghostdancer isn't the only one - our rent is 1.3x our mortgage repayment (we are closing in November, fingers crossed) and we save 1.5x our mortgage repayment.

I honestly understand the motivation behind the changes but I do think they went too far. Perhaps a criteria of two options - option a) is 4x LTI and 10% deposit or option b) 3.5 LTI and 20% deposit

GinaI

hmmm wrote: »

There's no constraint on housing, there's a constraint on people's ability to borrow. You can either rent or buy somewhere cheaper. Human rights and "EU agenda", I ask you.

What's an "Irish agenda"? Allow people to borrow 6 times their income again? Is that your plan for the future?

I've asked that question before, I don't remember getting an answer from anyone. Where those people who have to rent all of their lives will leave when they retire and have no salaries to pay their rent?

jester77

LordNorbury wrote: »

It's not about "getting on the ladder", it's about one of the most fundamental needs that us humans have, apart from water and food to subsist, it's about shelter, a roof over your head! Your language (on the ladder), implies that this isn't a need at all, that we don't have a fundamental need for shelter and an abode of some sort and that we are just needing to buy for the purposes of speculation?!?

Would we tolerate a situation whereby food was completely unaffordable and we had to tolerate a serious constraint on that fundamental and necessary human resource, or water, (don't want to get drawn into an off topic dabate on water charges but that is another example of where this EU agenda is taking us)??? No we wouldn't, so why do we tolerate such a massive constraint being placed upon housing???

What constraint? All I see are sensible lending criteria. If you are unable to meet them then there are other options available that doesn't deny anyone their basic needs.

on_my_oe

gladrags wrote: »

Your comments appear to be contradictory.

So what happens when you reduce competition?

The investors win.

First Time Buyers are now less than 5% of the market in NZ, with investors (landlords and Funds) making up 65%. The remainder is repeat purchasers.

jester77

GinaI wrote: »

I've asked that question before, I don't remember getting an answer from anyone. Where those people who have to rent all of their lives will leave when they retire and have no salaries to pay their rent?

They have pension and savings, just like how people do it in most other countries.

LordNorbury

jester77 wrote: »

What constraint? All I see are sensible lending criteria. If you are unable to meet them then there are other options available that doesn't deny anyone their basic needs.

That sounds like the opinion of a classic Irish property investor who believes that someone should be grateful to rent in Tullamore, and commute to Dublin every day where they work. Why is this the extent of our vision in this country every time this comes up for discussion? What is so brazen about NOT wanting to spend 3 hours commuting to and from work every day of the week???

The problem here in this country is simply one of vision, there is a "go fúck yourself, who do you think you are?" attitude to people in this country who wish to have some basic security of tenure in this country that comes with residential property ownership, and who also wish to enjoy the smallest quality of life that comes with not having to spend 2-3 hours a day in your car driving to work.

GinaI

jester77 wrote: »

They have pension and savings, just like how people do it in most other countries.

will there be a pension in 30-40 years time is another question. I don't believe current pesnion is enough to pay rent.

drumswan

LordNorbury wrote: »

It's not about "getting on the ladder", it's about one of the most fundamental needs that us humans have, apart from water and food to subsist, it's about shelter, a roof over your head! Your language (on the ladder), implies that this isn't a need at all, that we don't have a fundamental need for shelter and an abode of some sort and that we are just needing to buy for the purposes of speculation?!?

Would we tolerate a situation whereby food was completely unaffordable and we had to tolerate a serious constraint on that fundamental and necessary human resource, or water, (don't want to get drawn into an off topic dabate on water charges but that is another example of where this EU agenda is taking us)??? No we wouldn't, so why do we tolerate such a massive constraint being placed upon housing???

You are confusing housing and property ownership. Its this hysterical need to own the property you live in that the rest of us need to be protected from.

The problem here in this country is simply one of vision, there is a "go fúck yourself, who do you think you are?" attitude to people in this country who wish to have some basic security of tenure in this country that comes with residential property ownership

Security of tenure can be delivered through rent legislation as it is elsewhere. The notion that you have to commit to buying for that is nauseating.