Central Bank to limit amount banks lend for home purchase

Larry Wildman

Balmed Out wrote: »

Negative equity mortgages are exempt

I wasn't talking about negative equity mortgages.

I was referring to people who are stuck with apartments (that they'll keep) and who are on the verge of buying.

Cookie_Monster

on_my_oe wrote: »

NZ applied a 20% LTV in October 2013, and it did temporarily slow down property increases, but within six months, prices were increasing again at a rapid rate. The actual effect was to shut out FTBs, as many had 10% deposits, and this flowed on to the rental market; those locked out of the buyers market are stuck renting, so lower income families can't get a rental property because private professional renters are more appealing.

Just one this:

the 20% LTV only applied to 80% of a bank's portfolio and they were free to do what they wanted with the other 20%. For example we only had 10% when building our house, and not even 5% at the start, we saved as we built.

Friends of ours only have 5% and while they have some stricter conditions they still easily got a mortgage.
Both of us were FTB.
It works well outside of Auckland were supply and demand are more stable but Auckland is like Dublin and is a mess property wise, with both insane buying costs and high rental for 3rd world levels of accomodation.

Check this out for stupidly expensive: http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11339278

Balmed Out

Normally not the bigest fan of the site as they dont usually allow discussion of house prices but Brendan Burgess's www.askaboutmoney.com have a forum dedicated to this central bank proposal and are allowing discussion on how it may affect prices.

http://www.askaboutmoney.com/forumdisplay.php?f=138

A good outline of the proposal

http://www.askaboutmoney.com/showthread.php?t=189564

details for anyone wanting to make a submission

http://www.askaboutmoney.com/showthread.php?t=189557

mr_seer

GampDub wrote: »

Phew - We currently have approval in principal on a mortgage and are currently sale agreed on a property but it not available to close until end of Jan 2015.

Contacted the bank today to see how this would effect us but they have advised that once we get full loan approval prior to the introduction of the new rules we will be able to draw down on the intial agreed terms regardless of when we go to close.

Hoping to have full loan approval in the next week or so

We are purposely on taking the mortgage out in my partners name as we didnt want to tempted by crazy money and burden ourselves for years to come. So happy all round but probably wont rest til we have keys in hand...

You went sale agreed on a property without mortgage approval? Wow

ffactj

MYOB wrote: »

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.

So if all FTB buyers go to Maynooth and travel back to 2012 they should be ok then.

ffactj

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.

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.

In the meantime rents are going up, so theyll have a harder time saving the rest.

blindside88

mr_seer wrote: »

You went sale agreed on a property without mortgage approval? Wow

So did I. Surely most people do as you can't get full approval until you have a house selected and have it valued. Sale agreed can still be pulled out of by either party until contract is signed so what's the issue?

Balmed Out

ffactj wrote: »

In the meantime rents are going up, so theyll have a harder time saving the rest.

They dont have to keep the apartment... They want to purchase a new property and have an investment property too.

Michael D Not Higgins

Michael D Not Higgins wrote: »

Do gifts still count for the 20% deposit? The deposit is supposed to demonstrate a capability to save in line with the cost of the purchase. Being handed that by your parents demonstrates nothing.

It demonstrates you have a 20% deposit. Such utter nonsense stating gifts shouldn't count. The point of a deposit is to reduce the cost of the mortgage.

makeorbrake

Ariyah Muscular Sperm wrote: »

It demonstrates you have a 20% deposit. Such utter nonsense stating gifts shouldn't count. The point of a deposit is to reduce the cost of the mortgage.

It also demonstrates an abilty to save...

gladrags

Barely Hedged wrote: »

?



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???

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

You are clearly shooting in the dark.

For you to suggest that historical socio-economics alone,is not relevant to this debate, is pure arrogance.

For you to simply disregard the relevance of,say, comparisons between economical cultures is puzzling.

There are clear and relevant comparisons.

Your inability to understand alternative perspectives,and sweep them aside,is your problem.

"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."

Your example is petty,I don't feel the need to explain any trumped up scenario.

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

"Explain to me"," now it is "Give me".

Cannot help you here, you come across as a demanding three year old.

Try working it out for yourself,using perspective.

"I'm 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???"

The tenements go back to the early 20th century,the time of Redmond/Larkin,and probably late 19th c.

Check your history, and get your facts straight.

kippy

pwurple wrote: »

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

Pretty much all of those "other" reasons go back to my two main reasons for negative equity being an issue:
1. If you income levels/expenditure levels change.
2. If you HAVE to sell the house.

It's a problem right now for anyone who owns a 1/2 bed apartment, got caught with the on the bottom of the ladder, and now need to upscale, IE those who need to sell and it's a massive problem for those that lost their jobs etc etc.

I'd like to know of all the houses in "negative equity" how many are actually a "problem" for the owner.
We're in negative equity by a margin, however we bought a good house at the time. Our current mortgage is approximately 200 euro a month cheaper than rent in the same estate for the same hose.
Negative equity is not an issue for me despite my house being in the stats no doubt.

ffactj

Balmed Out wrote: »

They dont have to keep the apartment... They want to purchase a new property and have an investment property too.

I was talking about FTBs saving for a deposit in general.

MouseTail

makeorbrake wrote: »

It also demonstrates an abilty to save...

10% is satisfactory to demonstrate that. Having said that, I reiterate what I stated at the start of this thread, this is a consultation paper only, and should not be seen in isolation. The budget I think will have several measures to ameliorate the housing crisis.

El_Dangeroso

mileycactus wrote: »

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

That's really interesting, thanks for posting. Really that gives people 6 months panicking time breathing space to get on the slide ladder.

Slick50

These 'Consultation Papers', to me, are practically a confession that the central bank was negligent in it's duty during the celtic tiger years. There is nothing new in these papers, nothing that wasn't known of previously. It even states it is back to the old ways of banking.
While these measures may initially cause anxiety to some people, FTB's on the brink of buying in particular, in the long run they will actually save people money. They will also have the effect of bringing stability to the market. I think they are sound measures, that should have been adhered to all along.

Michael D Not Higgins

Ariyah Muscular Sperm wrote: »

It demonstrates you have a 20% deposit. Such utter nonsense stating gifts shouldn't count. The point of a deposit is to reduce the cost of the mortgage.

If that's the only point, why demand 20% deposit?

L1011

ffactj wrote: »

So if all FTB buyers go to Maynooth and travel back to 2012 they should be ok then.

If people buy suitable property they'll be OK. Single FTBs should not be in competition with families in the first place.

Barely Hedged

gladrags wrote: »

You are clearly shooting in the dark.

For you to suggest that historical socio-economics alone,is not relevant to this debate, is pure arrogance.

For you to simply disregard the relevance of,say, comparisons between economical cultures is puzzling.

There are clear and relevant comparisons.

What comparisons? You havnt made a single one, highlighted a particular suituation or scenario. You realise how vast a topic socio-economics is? If youre not willing to take one situation/scneario/comparison from the broad stroke topic youve mentioned, then there is no debate. All your post does is to paint you as having an agenda and utilising hypebole to achieve it.

gladrags wrote: »

Your inability to understand alternative perspectives,and sweep them aside,is your problem.

Ive no problem developing an understanding for perspectives on the basis that you actually tell me what the specifics of your perspective is.

gladrags wrote: »

Your example is petty,I don't feel the need to explain any trumped up scenario.

No my example is the reality of the situation. You can search numerous posts in this forum that highlight this issue. The issue has even be discused in the national media and even on Live Line! (a ridiculous show highlighting a ridiculous situation). As has been reported countless times a non paying tenent can remain insitu for 12-15 months while the PTRB go through their processes and a legal enforcement of an eviction takes place. This is not a petty situation to a landlord that perhaps has a mortgage to pay and is stuffed for 12-15 months. Social repsonsbility works both ways and your ignorance of the fact is simply breath taking when you quote the Redmond/Larkin era.

gladrags wrote: »

"Explain to me"," now it is "Give me".

Cannot help you here, you come across as a demanding three year old.

Try working it out for yourself,using perspective.

This is an informal forum for discussion. Im not writing you a formal letter on headed paper so grammar isnt up for discussion, only fact.

gladrags wrote: »

"I'm 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???"

The tenements go back to the early 20th century,the time of Redmond/Larkin,and probably late 19th c.

Check your history, and get your facts straight.

The 1900's incorporates 1900 - 1999 not the late 19th century. Because i mentioned the most recent and logically relevant Dublin tenement overhall and failed to mention every decade tenement changed happened in Dublin, my point is not valid? My perspective skills really need honing.

pwurple

kippy wrote: »

Negative equity is not an issue for me despite my house being in the stats no doubt.

Oh I see. It doesn't bother you, so it couldn't possibly be an issue for anyone else. :rolleyes:

Thanks for the clarification.

Daith

MYOB wrote: »

Single FTBs should not be in competition with families in the first place.

Why not? If they have the deposit and can show repayment what's the issue?

L1011

Daith wrote: »

Why not? If they have the deposit and can show repayment what's the issue?

That's outside the scenario being discussed - where there's gnashing of teeth that its "unfair" that people with two incomes can buy bigger houses.

Daith

MYOB wrote: »

That's outside the scenario being discussed - where there's gnashing of teeth that its "unfair" that people with two incomes can buy bigger houses.

My apologies so.

youwhoglue

Does anyone think that this is a good idea? It will help to try and stop another bubble forming.

Interest rates are not going to go up in the short to medium term because the big European economies are struggling along at 0.5% - 1% growth and we're treble that with a 5% predicted next year.

If there is a restriction to 20% deposit surely this will inhibit house prices rising. And if house prices do go down as a result, everyone's current deposit will get closer to the 20% mark.

If the average house price in Dublin is 263k. With these 'new' rules a buyer will need an income of ~60k per year plus 50k deposit. Doesn't seem unreasonable to me.

And remember, this is a discussion paper....and it shouldn't be too easy to buy a house!

The objection is that it won't stop house prices increasing, but rather make life harder for FTBs (and as a result, easier for investors).

Of course it's a sensible idea as part of a concerted government strategy to lower house prices, but we don't have that. So as it stands, it's another blow against normal working people.

All those posters suggesting that this measure alone will decrease prices are in cloud cuckoo land IMHO

youwhoglue

youwhoglue wrote: »

And remember, this is a discussion paper....and it shouldn't be too easy to buy a house!

why shouldn't it be easy to buy a house?

kippy

pwurple wrote: »

Oh I see. It doesn't bother you, so it couldn't possibly be an issue for anyone else. :rolleyes:

Thanks for the clarification.

Eh, no.

I was pointing out that negative equity is not an "issue" for everyone who is in negative equity and I gave my own situation as an example of someone in negative equity but who it is not an issue for.
I could give you at least 3/4 more examples of close friends in a similiar situation.
That's not to say its not an issue for other people.
My question however is this:
How many people who are in negative equity, feel that negative equity is an immediate issue for them?

Eldarion

Deleted User wrote: »

why shouldn't it be easy to buy a house?

It's very easy to buy a house. Just have the money.

It shouldn't be easy getting HUGE amounts of credit to buy a house though.

Michael D Not Higgins

Deleted User wrote: »

why shouldn't it be easy to buy a house?

Because the easy line of credit is what caused the bubble in the first place.

Aemtler

I think it is important for the Central Bank to get a wide range of views from consumers on the discusion paper - not just from the Banks and other big institutions.

From Page 25 of the discussion paper

Section 6: Making submissions
The Central Bank invites all stakeholders to provide comments on the draft regulations which form part of this Consultation Document and on the questions raised in this Consultation Paper. Please make your submissions electronically by email to realestate@ centralbank.ie

Responses should be submitted no later than 8th December 2014.