Central Bank to limit amount banks lend for home purchase

jester77

vinylbomb wrote: »

This line is being trotted out again and again, but youre only exposing your own ignorance in saying it.
In reality the reason that we had a bust last time was because of imprudent lending to developers, and to a lesser degree mortgage lending to individuals.

IF the proposed regulations were coupled with strong renter-friendly legislation, zero-tolerance for loans that are in repossession criteria and inducement of developers to put housing on standing land banks then it may make sense.

But as ever in Ireland, the left hand doesnt know what the right is doing.

You are very naive if you don't think individuals were responsible. There were lots of clueless people who went in and took out 100% mortgages and many that even added a new car purchase to their mortgage.

vinylbomb

jester77 wrote: »

You are very naive if you don't think individuals were responsible. There were lots of clueless people who went in and took out 100% mortgages and many that even added a new car purchase to their mortgage.

You are naive if you think that ONLY individuals were responsible.

Its all well and good complaining about 100% mortgages - but most are in their homes and paying their way to a greater or lesser degree, unlike the developers who we have all paid for. That's where the vast majority of the housing bust as it relates to the country being in the sh1tter has happened.

jester77

jester77 wrote: »

You are very naive if you don't think individuals were responsible. There were lots of clueless people who went in and took out 100% mortgages and many that even added a new car purchase to their mortgage.

one more time for the hard of reading:

Firstly, and let's say this loud and clear and make sure it is understood - joe soap not repaying his or her mortgage did not cause the economic crisis.

The "we all partied" myth is just that. Most people put a roof over their head - or more likely their children's heads. And most did not default. In fact consumer mortgage default was almost non-existent at the time of the bailout, at the time of the housing crash, and at the time of massively increasing unemployment.

Mortgage default is a symptom, not the disease.

jester77

vinylbomb wrote: »

You are naive if you think that ONLY individuals were responsible.

Its all well and good complaining about 100% mortgages - but most are in their homes and paying their way to a greater or lesser degree, unlike the developers who we have all paid for. That's where the vast majority of the housing bust as it relates to the country being in the sh1tter has happened.

Can you quote the part where I said that ONLY individuals were responsible?

gladrags

Barely Hedged wrote: »

Yet more hyperbole

There is a difference in life between 'what I want',and what you get.

The poster makes a very valid point regarding tennaments.

And I expect, the relivance of heritage,history and culture,is lost to you'r disingenuous and insulting remarks

vinylbomb

jester77 wrote: »

Can you quote the part where I said that ONLY individuals were responsible?

You didn't. Apologies, but that seemed to be the thrust of your argument.

IMO lending to developers was 80% of the problem.
I'm not trying to make a strawman here - but I don't believe you are addressing the concerns that I have with the regulations as they are proposed - they don't prevent bubbles in the future and lock out many people out of loans.
Furthermore they condemn anyone now in negative equity to many more years of the same situation.

Its the timing and the limited nature of the CBI announcement that I am not happy with. NO joined up thinking. Plus ca change.

vinylbomb

As it happens - I'm not against the 20% LTV proposal. I have literally just (Monday just gone) put in a mortgage application, with a 25% deposit (20% savings, 5% gift).
Its the multiple that worries me - as it stands my proposed mortgage repayments stand to be significantly less than my monthly savings & rent.

That and the slapdash arseholery nature of the announcement, lack of joined up thinking and lack of clarity as to where all this will end up.

GinaI

vinylbomb wrote: »

As it happens - I'm not against the 20% LTV proposal. I have literally just (Monday just gone) put in a mortgage application, with a 25% deposit (20% savings, 5% gift).
Its the multiple that worries me - as it stands my proposed mortgage repayments stand to be significantly less than my monthly savings & rent.

That and the slapdash arseholery nature of the announcement, lack of joined up thinking and lack of clarity as to where all this will end up.

I am another way around. Multiple doesn't worry me, but 20% deposit kills me.

seamus

vinylbomb wrote: »

That and the slapdash arseholery nature of the announcement, lack of joined up thinking and lack of clarity as to where all this will end up.

Actually what will happen here is that the banks will tell the CBI in the consultation period that this will decimate the mortgage market and cause another price crash and instead suggest a 10% deposit/5 times income limit.
Then they'll come to an agreement on 15%/4x limit.

The actual limits aren't set in stone and this something of a bartering period between the CBI and the banks, so the CBI is of course going to low-ball it.

pwurple

Department of Environment data to 2008 show that in the years 2006-2008, between 23 and 34 per cent of FTBs who took out a mortgage had an LTV of 100 per cent.

Fast forward 5 years, and surprise surprise, we have a negative equity situation, with ~300,000 properties in negative equity currently. How many of those would not be in that situation if 20% deposit had been required at the time? 100,000 families maybe, conservatively?

This is what those 20% proposals are aimed at fixing. Not every single piece of the flawed situation here, just that little bit of it.

El_Dangeroso

The Spider wrote: »

Agree with that I suppose, however I do stand by the fact that rents are going to skyrocket. Whether it'll lead to price drops remains to be seen as has been said that this isn't a credit driven bubble, banks have been lending more prudently than ever.

I wouldn't like to put a bet on it, but I do think that you may have people who've got a twenty percent deposit together holding back until they see which way it looks like it's going to go.

Ya, I'd agree we are probably looking at rental increases in the short term alright.

I'm totally one of the people that are going to hold back. will be an interesting 6 months no doubt.

kippy

pwurple wrote: »

Department of Environment data to 2008 show that in the years 2006-2008, between 23 and 34 per cent of FTBs who took out a mortgage had an LTV of 100 per cent.

Fast forward 5 years, and surprise surprise, we have a negative equity situation, with ~300,000 properties in negative equity currently. How many of those would not be in that situation if 20% deposit had been required at the time? 100,000 families maybe, conservatively?

This is what those 20% proposals are aimed at fixing. Not every single piece of the flawed situation here, just that little bit of it.

As I said before,
Negative equity is not an issue for anyone if:
1. You are not planning to sell the house.
2. You are able to afford your repayments.
The same can be said for a loan for any asset, to a point.

Negative equity situations aren't the big issue in the economy.
Lack of jobs is, because that's what changes negative equity into defaults.

Deck1

HI All,
Just a quick post in relation to this...say someone is currently mortgage approved but it runs out in the next few months-January
Current situation is approval in principal can be extended once your situation hasn't changed-savings still the same -10% and salary same or possibly increased...

wondering if I dont buy -find something suitable and need to extend will the extension be based on the new requirements or as having been adjudged to be mortgage approved previously then find that they can extend on the old criteria....

For my own 2 cents i find 20 a little high but I did read earlier in the year of the gov proposing to gaurentee 10-15 % for ftb..which isnt too bad,at least it doesnt wipe a ftb out like the current proposals do...will be interesting to see if the budget has anything in it tied to this as relief on mortgages have proven to overheat the market maybe this approach will work

taking ftb out will i think vastly reduce the number of buyers out there...the 5-6-700 k houses in the west are slow sellers the 150-300k houses are flying so there lies the demand

Now i did read the scheme is mooted to only support ftb with new houses only...not much good when there is no supply of new ones in the first place so until supply catches up it might not be too bad if the gov backs a percentage of any house purchase for a ftb once they meet the other ability to repay criteria as determined by the bank...then let the bank get the 10% off the government(good luck with that paperwork) so the banks will apply stricter criteria and hopefully cool the market...but if badly run then its a landlords fantasy....

kitchenkid

vinylbomb wrote: »

As it happens - I'm not against the 20% LTV proposal. I have literally just (Monday just gone) put in a mortgage application, with a 25% deposit (20% savings, 5% gift).
Its the multiple that worries me - as it stands my proposed mortgage repayments stand to be significantly less than my monthly savings & rent.

That and the slapdash arseholery nature of the announcement, lack of joined up thinking and lack of clarity as to where all this will end up.

It is a consultation paper - not an announcement of what will happen, but an agenda for discussion with the banks.

drumswan

kippy wrote: »

As I said before,
Negative equity is not an issue for anyone if:
1. You are not planning to sell the house.
2. You are able to afford your repayments.

Many, many people bought into the "ladder" idea, NE is a huge issue for them as they cannot trade up. Many, many more bought as an "investment", when their investment fell in value they decided to stop paying. This is a huge issue for the rest of us.

Barely Hedged

gladrags wrote: »

There is a difference in life between 'what I want',and what you get.

?

gladrags wrote: »

The poster makes a very valid point regarding tennaments.

And I expect, the relivance of heritage,history and culture,is lost to you'r disingenuous and insulting remarks

There is no validity to his remarks and awareness of heritage, culture and history has nothing to it. Another hyperbole merchant.

Explain to me how the following one situation only resembles tenements - non paying tenants can remain insitu for between 12-15 months before being evicted.

Give me concrete examples of the equivalence of todays situation to tenements.

Im willing to debate on fact but throwing around comparisons of todays situations with tenements of the 50's and 60's and claiming that anybody who doesnt agree with that doesnt have an appreciation of culture or heritage???

kippy

drumswan wrote: »

Many, many people bought into the "ladder" idea, NE is a huge issue for them as they cannot trade up. Many, many more bought as an "investment", when their investment fell in value they decided to stop paying. This is a huge issue for the rest of us.

Of course, negative equity is a big issue for any "investor" who has to sell or at least break even on the rental returns.

FTB's, in a some instances were unable to get the money required (during the boom) to buy a property that would work for them in the long term, buying 1 or 2 bed appartments with the intention of selling them in a couple of years after the asset had increased in value, then attempt to buy a more appropriate (for their needs house).
They got caught out, no doubt.
However the steps that are mooted by the central bank won't assist FTB's buying something that will work for them over a longer period of time and if this were in place in the "boom" times, a 20% deposit would not be close to covering the loss that many apartments have made in the interim.

Duckett

As we all know, interest rates are at an all time low today and can only go one way from here ...... consider how mortgage holders might cope if rates rise to 8%+ over the next five years. The availability of too much capital is as much a problem as too little. No one knows what will happen in the future but rates were as high as 14% 30 years ago. Hopefully we never go there again and in the absence of control of our own currency, we need prudent behaviour by central bankers..... as unfortunately rules are essential that ensures oversight of lenders. With all blunt instruments there are losers and winners but we must avoid what happened during the tiger years .......... The market will always rebalance and over time a normalised situation will hopefully evolve ........... i.e. less volatility, a fair rental market etc. A competitive quality construction sector that addresses consumer needs has been missing for 40 years and we need new players to come to the market and fast .......... stay positive .....

kippy

Duckett wrote: »

As we all know, interest rates are at an all time low today and can only go one way from here ...... consider how mortgage holders might cope if rates rise to 8%+ over the next five years. The availability of too much capital is as much a problem as too little. No one knows what will happen in the future but rates were as high as 14% 30 years ago. Hopefully we never go there again and in the absence of control of our own currency, we need prudent behaviour by central bankers..... as unfortunately rules are essential that ensures oversight of lenders. With all blunt instruments there are losers and winners but we must avoid what happened during the tiger years .......... The market will always rebalance and over time a normalised situation will hopefully evolve ........... i.e. less volatility, a fair rental market etc. A competitive quality construction sector that addresses consumer needs has been missing for 40 years and we need new players to come to the market and fast .......... stay positive .....

That's a fair point.
One's ability to repay the mortgage based on interest rate rises of that magnitude would become a major issue.

GinaI

Deck1 wrote: »

HI All,
Just a quick post in relation to this...say someone is currently mortgage approved but it runs out in the next few months-January
Current situation is approval in principal can be extended once your situation hasn't changed-savings still the same -10% and salary same or possibly increased...

wondering if I dont buy -find something suitable and need to extend will the extension be based on the new requirements or as having been adjudged to be mortgage approved previously then find that they can extend on the old criteria....

For my own 2 cents i find 20 a little high but I did read earlier in the year of the gov proposing to gaurentee 10-15 % for ftb..which isnt too bad,at least it doesnt wipe a ftb out like the current proposals do...will be interesting to see if the budget has anything in it tied to this as relief on mortgages have proven to overheat the market maybe this approach will work

taking ftb out will i think vastly reduce the number of buyers out there...the 5-6-700 k houses in the west are slow sellers the 150-300k houses are flying so there lies the demand

Now i did read the scheme is mooted to only support ftb with new houses only...not much good when there is no supply of new ones in the first place so until supply catches up it might not be too bad if the gov backs a percentage of any house purchase for a ftb once they meet the other ability to repay criteria as determined by the bank...then let the bank get the 10% off the government(good luck with that paperwork) so the banks will apply stricter criteria and hopefully cool the market...but if badly run then its a landlords fantasy....

check your situation with you bank ("say someone is currently mortgage approved but it runs out in the next few months-January
Current situation is approval in principal can be extended once your situation hasn't changed-savings still the same -10% and salary same or possibly increased...

wondering if I dont buy -find something suitable and need to extend will the extension be based on the new requirements or as having been adjudged to be mortgage approved previously then find that they can extend on the old criteria....")
and let us know, please

jmayo

realweirdo wrote: »

...
And again our arrears crisis has nothing to do with the easy availability of credit. It has everything to do with massive unemployment.

I seriously cannot believe someone thinks that our existing mortgage defaulting levels has nothing to do with the huge amount of unregulated credit that was dished out to people that really shouldn't have got it. :rolleyes:

A lot of the people getting the debt writeoffs are already in employment, some of it damm good employment.

on_my_oe wrote: »

...
Unfortunately two of my siblings are mortgage brokers in NZ and my mother and another sister are estate agents, all operating in the Auckland market. My aunt is also senior in the South Auckland 'Housing NZ' (social housing) division.

A Kiwi and from a family of estate agents/mortgage brokers.
What did you do in a previous life

vinylbomb wrote: »

This line is being trotted out again and again, but youre only exposing your own ignorance in saying it.
In reality the reason that we had a bust last time was because of imprudent lending to developers, and to a lesser degree mortgage lending to individuals.

Ehh without the imprudent lending on both sides we would not have had the boom and bust.
Look how many mortgages are in trouble, look how many SMEs and members of the professional classes are in trouble because they got up to their necks in property related borrowing.

Of course we don't really see how bad it is since nothing is being done about it, as the powers that be first prevented repossessions and then try and kick start another bubble to payoff the banks for all the defaulted debts that haven't gone away but are parked out of view.
The only big indication is the level of personal debt we all know about.

vinylbomb wrote: »

IF the proposed regulations were coupled with strong renter-friendly legislation, zero-tolerance for loans that are in repossession criteria and inducement of developers to put housing on standing land banks then it may make sense.

But as ever in Ireland, the left hand doesnt know what the right is doing.

Now this is something I really agree with.

Deleted User wrote: »

one more time for the hard of reading:

Firstly, and let's say this loud and clear and make sure it is understood - joe soap not repaying his or her mortgage did not cause the economic crisis.

The "we all partied" myth is just that. Most people put a roof over their head - or more likely their children's heads. And most did not default. In fact consumer mortgage default was almost non-existent at the time of the bailout, at the time of the housing crash, and at the time of massively increasing unemployment.

Ehh some just put a roof over the head while a whole slew decided that they wanted the roof over Boris, Krystof, Madeline, Janik and all the other immigrants that were going to be moving to our country.
The amount of people who either bought multiple properties in Ireland or released equity in Irish property to buy overseas was huge.

Then we had students just out of college buying with 100% mortgages, we had others financing non property related spending through mortgages.
Take a look back at the volume of new cars during our bubble.
And they weren't just your bog standard Ford, VW or Toyota.

It was lunacy pure and simple for a fair chunk of the population.

Now it is welcome to reality for a hell of a lot of people.
As one poster said they sacrificed to buy their home, they didn't have holidays, they didn't buy new cars, etc.

I disagree that this CB move is being done to put a brake on prices in the market.
IMHO it is part of the window dressing as part of the future bank stress tests.
If the state was serious about taking the heat out of the property market they would, in this budget, slap huge tax on development land not being developed in the major urban centres.
No need to force land in Cavan, Castlebar etc to be developed, but there is huge need in greater Dublin.

They would also push for repossession of property in long term default be they residence or rental.

Why didn't they remove the capital gains freebie at the last budget rather than continue it for another year ?
It stinks of the lark ff pulled with biffo extending the section 23/50s long after the market was on the up.

ffactj

This is only the start.
You'll find now that FTB will only be able to afford the lowest end houses.
Builders will only build the cheapest houses, they probably cant even make a profit as it is.
People wont sell existing houses.

Next thing you know they'll will be bringing in some other tax or similar to tweak it.
Then another tweak and on and on.

Also single FTBs are now and always will be competing with double income families. There is only one loser in that bidding war.

L1011

ffactj wrote: »

Also single FTBs are now and always will be competing with double income families. There is only one loser in that bidding war.

I was able to buy a perfectly suitable property as a single buyer - generally they're not looking for the same properties for starters.

ffactj

MYOB wrote: »

I was able to buy a perfectly suitable property as a single buyer - generally they're not looking for the same properties for starters.

When, where and what type of property?

mileycactus

Deck1 wrote: »

HI All,
Just a quick post in relation to this...say someone is currently mortgage approved but it runs out in the next few months-January
Current situation is approval in principal can be extended once your situation hasn't changed-savings still the same -10% and salary same or possibly increased...

wondering if I dont buy -find something suitable and need to extend will the extension be based on the new requirements or as having been adjudged to be mortgage approved previously then find that they can extend on the old criteria....

For my own 2 cents i find 20 a little high but I did read earlier in the year of the gov proposing to gaurentee 10-15 % for ftb..which isnt too bad,at least it doesnt wipe a ftb out like the current proposals do...will be interesting to see if the budget has anything in it tied to this as relief on mortgages have proven to overheat the market maybe this approach will work

taking ftb out will i think vastly reduce the number of buyers out there...the 5-6-700 k houses in the west are slow sellers the 150-300k houses are flying so there lies the demand

Now i did read the scheme is mooted to only support ftb with new houses only...not much good when there is no supply of new ones in the first place so until supply catches up it might not be too bad if the gov backs a percentage of any house purchase for a ftb once they meet the other ability to repay criteria as determined by the bank...then let the bank get the 10% off the government(good luck with that paperwork) so the banks will apply stricter criteria and hopefully cool the market...but if badly run then its a landlords fantasy....

I am in the same situation. Contracts signed since May, house build slower than planned and due to finish in Dec/Jan. Mortgage loan offer runs out this month and worries about the prospect of having to come up with extra deposit. I did a bit of reading today and in the Central Bank statement i found the below. Seems pretty clear to me. One you have the loan offer by end of year its valid for the 6 months and the proposed rules do not apply. If you get loan offer it in January, new rules apply

L1011

ffactj wrote: »

When, where and what type of property?

2012 (late enough for the TRS insanity to have pushed prices back up), Maynooth, 3 bed terrace - in theory its still too much house.

Everyone on here is stuck with the idea of a three bed semi-D with space for two saloon cars and a trampoline as 'the' FTB house, be you a single person, a couple who's never having kids or a family. Oh, and if its in D14 all the better.

pwurple

kippy wrote: »

As I said before,
Negative equity is not an issue for anyone if:
1. You are not planning to sell the house.
2. You are able to afford your repayments.
The same can be said for a loan for any asset, to a point.

Negative equity situations aren't the big issue in the economy.
Lack of jobs is, because that's what changes negative equity into defaults.

How about you add...
3. If you never ever change job
4. If you never move country or even county
5. If you never have any more children
6. If you never get any older (needing a house without stairs)
7. If your relationship stays intact and you are not trying to split assets
8. If you or anyone in your family ever has an accident or gets sick enough to need a change of location or house.


Ie... It's only a problem if nothing ever changes in your life. It's a massive problem for an awful lot of people

Larry Wildman

This is a complete joke.

I know quite a few people who have worked hard to save their 10% deposit whilst paying exhorbitant rent and carrying an apartment which is in negative equity.

Now these people are being told that it'll be another four or five years before they can purchase their own home. It's ridiculous. Every time the State interferes with the property market, it makes a dog's dinner of things.

If you're buying a home that you intend to stay in forever, temporary periods of negative equity are pretty irrelevant.

Potatoeman

Duckett wrote: »

As we all know, interest rates are at an all time low today and can only go one way from here ...... consider how mortgage holders might cope if rates rise to 8%+ over the next five years. The availability of too much capital is as much a problem as too little. No one knows what will happen in the future but rates were as high as 14% 30 years ago. Hopefully we never go there again and in the absence of control of our own currency, we need prudent behaviour by central bankers..... as unfortunately rules are essential that ensures oversight of lenders. With all blunt instruments there are losers and winners but we must avoid what happened during the tiger years .......... The market will always rebalance and over time a normalised situation will hopefully evolve ........... i.e. less volatility, a fair rental market etc. A competitive quality construction sector that addresses consumer needs has been missing for 40 years and we need new players to come to the market and fast .......... stay positive .....

I'm not sure having 20% of a deposit will make much of a difference. If the issue is interest rates then you limit the salary multiples and what about those with larger mortgages on variable interest rates now, they will be in a far worse place. Then you have more taxes coming in and higher rents so it's a lose lose for ftb's unless they have rich parents.

Balmed Out

Larry Wildman wrote: »

This is a complete joke.

I know quite a few people who have worked hard to save their 10% deposit whilst paying exhorbitant rent and carrying an apartment which is in negative equity.

Negative equity mortgages are exempt