Central Bank to limit amount banks lend for home purchase

Volvic12

I personally think 20% (if introduced) is too high. For example, if you are 25, working in Dublin, earning say €35,000 a year (above average) - what chance have you of every saving money that will go in anyway towards a deposit.
People are forgetting that rents are very high in Dublin. That is making it harder for people to save for a deposit - catch 22 so to speak.

I think in isolation, it might be a good economic policy / regulation BUT that is not the case. For example, even if you do save up for the deposit, you need to make sure you have enough money to cover the mortgage, water charges, property tax on day 1 etc.

I'm not convinced that the Central bank hasn't been lobbied by Private Equity Firms to introduce this. It forces people to rent. We will see rent going up and up in Dublin - mark my words. FTB won't be able to buy so PE firms and investors will. They will then rent out properties to people who are trying to save to purchase a house i.e. rent go up, harder to save!

D3PO

Deco99 wrote: »

6 figure deposit?? How many years were you saving and do you have a pretty good salary the whole time? Did you have to pay rent during this time? Is that a couples saving? At over a grand a month roughly saving, its pretty hard to see how you managed that without some other factors coming into play because even those above normal salary couldnt do that

thats not exactly true. I pay my mortgage and save over 1k a month granted im on an above normal salary, but so may the poster be.

that said passing it off as normal isnt right either as its not somethign the average person could do.

Potatoeman

D3PO wrote: »

yes it is a double standard on paper, but realistically how many NE owners trade up or have done so far this year ? figures suggest hardly anybody.

I also think the numbers still in NE would be low enough now (outside of those how took 100% mortgages or who are in default in some way) neither group really in a position to trade up its fair to say .

most people with a deposit and paying interest and capital on their mortgage even at the peak would be out of NE although their house may still be worth less than they paid for it.

Shouldnt the salary multiples still apply though as they are borrowing more so increasing their risk?

D3PO

Volvic12 wrote: »

I personally think 20% (if introduced) is too high. For example, if you are 25, working in Dublin, earning say €35,000 a year (above average) - what chance have you of every saving money that will go in anyway towards a deposit.
People are forgetting that rents are very high in Dublin. That is making it harder for people to save for a deposit - catch 22 so to speak.

!

house share at say 500 quid a month. gives you plenty of scope to save a deposit even after food and bills.

if you dont want to house share and would rather shell out 1400 a month in rent and go on the piss every saturday night thats your own choice but you cant then complain that you cant save.

Potatoeman

My point being the deposit is not a good sign of repayment salary multiples seems far better way.

D3PO

Potatoeman wrote: »

Shouldnt the salary multiples still apply though as they are borrowing more so increasing their risk?

i think they should and they may we do. The CB proposals are a framework it doesnt mean that banks cannot have stricter lending policies if they so wish and i suspect depending on the circumstance of an appliacation they will sometimes have more stricter criteria in place.

Michael D Not Higgins

Volvic12 wrote: »

I personally think 20% (if introduced) is too high. For example, if you are 25, working in Dublin, earning say €35,000 a year (above average) - what chance have you of every saving money that will go in anyway towards a deposit.

A houseshare isn't that expensive. €500-600/month, your take home pay at 35k is 2300/month.

Plenty of people rent and save for deposits. I'm doing it myself and can save £500/month at the moment.

D3PO

Potatoeman wrote: »

My point being the deposit is not a good sign of repayment salary multiples seems far better way.

I disagree, savings show you are financially responsible to put that money aside.

if far more appealing than somebody on 80k who cant save and wastes their money on fast women and fast cars. Expectign somebody to change their spending habits is a big leap.

showing a savings habit to me at least is a far more attractive prospect.

This is exaclty why 100% mortgages based on salary and no savings was a complete clusterfu(k and something i said form the very day they were launched well before the bubble burst.

Michael D Not Higgins

D3PO wrote: »

I disagree, savings show you are financially responsible to put that money aside.

if far more appealing than somebody on 80k who cant save and wastes their money on fast women and fast cars. Expectign somebody to change their spending habits is a big leap.

showing a savings habit to me at least is a far more attractive prospect.

Which is why I think the gifting of deposits shouldn't be allowed. Sure if it's just the parents topping up a deposit that's ok, but you hear about people getting the full deposit from their parents after not saving anything themselves.

D3PO

Michael D Not Higgins wrote: »

Which is why I think the gifting of deposits shouldn't be allowed. Sure if it's just the parents topping up a deposit that's ok, but you hear about people getting the full deposit from their parents after not saving anything themselves.

I dont think you can say it shouldnt be allowed but for sure a dimmer view should be taken to it.

with the new proposales gettiing gifted 20% would be hard to argue against if we have a functional reposession flow in this country.

As we havent it should at the very least mean a very dim view is taken to this kind of application with criteria on how much to be leant being restricted.

Volvic12

D3PO wrote: »

house share at say 500 quid a month. gives you plenty of scope to save a deposit even after food and bills.

if you dont want to house share and would rather shell out 1400 a month in rent and go on the piss every saturday night thats your own choice but you cant then complain that you cant save.

Lets say on above case, take home pay is around 2000. Cost of living has gone up in Dublin. Quite expensive to get by. House share at 500 a month (low) plus travel plus bills - comes to about 600 (being conservative - probably closer to 700). That leaves 1400 for rest of month etc. Food - 100 per week. Left with a thousand per month max. So now you look at clothes - if you are working you will need to invest in this - especially if looking to advance - shirts, suits, dresses - whatever you require. Obviously other expenses to consider - you have to live some life. Ridiculous comment above "if you dont want to house share and would rather shell out 1400 a month in rent and go on the piss every saturday night thats your own choice but you cant then complain that you cant save". Not all people in their 20s do this. But there are other expenses - gym, attending sport events etc. Stop preaching from your high horse and get in touch with reality.

How much exactly are you meant to save per month given that a €300,000 house would require a saving of €60,000.

Look, maybe you're right. Maybe you should have to save 10/15 years before you can purchase a house. I just think it's wrong that the people bringing in this policy are the ones that are going home to their own houses this evening (in the majority of cases).

Volvic12

Michael D Not Higgins wrote: »

A houseshare isn't that expensive. €500-600/month, your take home pay at 35k is 2300/month.

Plenty of people rent and save for deposits. I'm doing it myself and can save £500/month at the moment.

Agree, you can save 500 a month. But if you wanted a purchase a house for 300,000, you need to save for next 10 years - maybe that is correct.

Michael D Not Higgins

Food 100 per week for a single person? Are you shopping in M&S?

Volvic12

Michael D Not Higgins wrote: »

Food 100 per week for a single person? Are you shopping in M&S?

€14 a day for a single person for breakfast, lunch and dinner I don't think is unreasonable?
Especially if you want to eat healthy.

Michael D Not Higgins

Volvic12 wrote: »

Agree, you can save 500 a month. But if you wanted a purchase a house for 300,000, you need to save for next 10 years - maybe that is correct.

Or maybe you decide, as a single person on an average wage, that a house for 300k is probably out of your price range, not to mention your needs.

Michael D Not Higgins

Volvic12 wrote: »

€14 a day for a single person for breakfast, lunch and dinner I don't think is unreasonable?

Our shopping bill is £80/week for two people, so yes I do think that's unreasonable.

Meathlass

Volvic12 wrote: »

€14 a day for a single person for breakfast, lunch and dinner I don't think is unreasonable?
Especially if you want to eat healthy.

I spend about €40 a week on food. I have meat for 2 meals every day and porridge for breakfast, lots of other snacks. I might stretch to €50 if I buy a bottle of wine.

I could live like a king on €100 food shopping a week

Volvic12

Michael D Not Higgins wrote: »

Our shopping bill is £80/week for two people, so yes I do think that's unreasonable.

Are you dealing in sterling? Huge difference in cost of living in UK (besides London which is alot worse than here)

jester77

Deco99 wrote: »

6 figure deposit?? How many years were you saving and do you have a pretty good salary the whole time? Did you have to pay rent during this time? Is that a couples saving? At over a grand a month roughly saving, its pretty hard to see how you managed that without some other factors coming into play because even those above normal salary couldnt do that

Roughly 15 years. Was nowhere near a grand a month, more like 400-500. Less at the start, work bonuses, there was the SSIA savings scheme, a redundancy and good interest rates around the time everyone was going mad buying property. I lived a normal life throughout all those years, always rented in city centers, have never needed a car, went on plenty of holidays and travelled lots.

Volvic12

Meathlass wrote: »

I spend about €40 a week on food. I have meat for 2 meals every day and porridge for breakfast, lots of other snacks. I might stretch to €50 if I buy a bottle of wine.

I could live like a king on €100 food shopping a week

Meathlass - €5.70 a day on food. Love to know the breakdown of that. Anyway, getting sidetracked.

Volvic12

Michael D Not Higgins wrote: »

Or maybe you decide, as a single person on an average wage, that a house for 300k is probably out of your price range, not to mention your needs.

Totally agree that €300,000 house would be out of price range (just using as an example)

Michael D Not Higgins

Volvic12 wrote: »

Are you dealing in sterling? Huge difference in cost of living in UK (besides London which is alot worse than here)

I'm in Edinburgh. Fairly comparable cost of living.

vinylbomb

jester77 wrote: »

a redundancy

Nice if you can get it.

hmmm

D3PO wrote: »

This is exaclty why 100% mortgages based on salary and no savings was a complete clusterfu(k and something i said form the very day they were launched well before the bubble burst.

It's not only that deposits showed that someone was capable of saving, it's also important that people "have skin in the game". If people know that they will lose a chunk of money if they buy the wrong house, they are more likely to be prudent as to how much they borrow and as to how far they stretch themselves. People on 100% mortgages in negative equity have been skipping off to Australia with no intentions of ever returning.

Meathlass

Volvic12 wrote: »

Meathlass - €5.70 a day on food. Love to know the breakdown of that. Anyway, getting sidetracked.

Briefly this weeks shopping:
4 x Chicken fillets - €8
2 x steak - €10
2lb x mince - €3
2 x salmon - €4

I'll make up batches of chicken curry, chicken biranyi and stew and eat them during work/evening meal.

Porridge for breakfast - one bag at about €2 lasts me about a month.

packet of biscuits, multi-pack of taytos and bars for work - €5

Bananas, grapes, apples, melon, carrots, potatoes - about €8

rice, pasta, frozen veg, jars of sauce - buy one of the former each week

I don't really deny myself anything but €40 a week seems to be my average. I don't eat out though and don't buy coffees at work either.

desertcircus

Volvic12 wrote: »

€14 a day for a single person for breakfast, lunch and dinner I don't think is unreasonable?
Especially if you want to eat healthy.

If you're saving for a deposit, it's unreasonable. Cereal and milk should be under a euro a day, a tenner gets you a week's worth of sandwich ingredients, and dinners can be produced for a fiver.

flutered

the cb has ensured that the rental market will be rater high for our lifetime, as the renters will never be able to afford to by, while the landloards will be able to buy again at prices of their chooseing.

MouseTail

I expect lots of financial products aimed at older people to release equity in their homes to enable their children buy.

OMD

Deleted User wrote: »

well wikipedia has average gross monthly income (for working people) of €2,700, or €2,160 net.

That is just over 30,000 a year, which based on the new rulings mean that they can afford somewhere for about 135,000 contributing 20,000 that they have saved up themselves.

Not sure what you would get in Dublin for that. And on that salary, I am guessing it would take at least 5 years, and realistically a lot more, to save 20k. That's assuming of course no 'bumps' along the way.

Average pay in Ireland is just under €44,000 for a full time worker. (39 hours a week) I wouldn't rely on Wikipedia.

Cuddlesworth

OMD wrote: »

Average pay in Ireland is just under €44,000 for a full time worker. (39 hours a week) I wouldn't rely on Wikipedia.

Are you sure that's not average household income?

"On average individuals in the Republic of Ireland have an annual gross income of €26,800"

"The average household has a disposable income of just under €46,000"