Central Bank to limit amount banks lend for home purchase

Glenbhoy

MayBea wrote: »

A colleague has just been approved for a mortgage from BOI. Application process took 4 weeks for him, nothing was said about picking a particular house beforehand.

It's only when an actual house is picked that the bank will issue an offer letter, anything prior to the offer letter is hypothetical.

Glenbhoy

Mr.McLovin wrote: »

http://www.independent.ie/business/personal-finance/enda-kenny-wades-into-row-over-central-banks-mortgage-cap-plans-30684117.html

Enda to the rescue...

What would make it even easier to attain is if prices dropped due to the lack of intervention from well meaning (they mean well for everyone barring those who are not already on the ladder) if idiotic policy makers.

Can they not see that with the implementation of the CBI rules and the inevitable reduction in house prices which would result, properties would be very attainable for the average FTB. They would not be priced out of the housing market forever, that's not how markets work, prices adjust, FTB'ers would be in a much better situation, 80% mortgage at a lower price and they wouldn't be forced to pay the additional cost of this 'Enda Insurance'.
Seriously, how can he think his proposal is good for FTB'ers, they pay more for a property, they borrow 90% of the value and they have to pay an additional fee on additional 10% for the government insurance - with friends like Enda......

Deco99

Glenbhoy wrote: »

What would make it even easier to attain is if prices dropped due to the lack of intervention from well meaning (they mean well for everyone barring those who are not already on the ladder) if idiotic policy makers.

Can they not see that with the implementation of the CBI rules and the inevitable reduction in house prices which would result, properties would be very attainable for the average FTB. They would not be priced out of the housing market forever, that's not how markets work, prices adjust, FTB'ers would be in a much better situation, 80% mortgage at a lower price and they wouldn't be forced to pay the additional cost of this 'Enda Insurance'.
Seriously, how can he think his proposal is good for FTB'ers, they pay more for a property, they borrow 90% of the value and they have to pay an additional fee on additional 10% for the government insurance - with friends like Enda......

Enda is keeping prices up cause that's good for government coffers and votes

Glenbhoy

Deco99 wrote: »

Enda is keeping prices up cause that's good for government coffers and votes

Short term anyway, in the longer term, it rarely works out too well.
An unfortunate side effect of democracy is the rampant populism to which this country has been subjected for god knows how many years (and we're far from unique). Next thing they'll decide that the increased stamp duty revenues, coupled with the new young persons insurance premium revenues will mean we can abolish the water charges. Roll on winter so that I can leave my taps running from mid Nov to mid Feb to ensure my pipes don't freeze!!!

leinsterdude

Key question, will property in Dublin and commuter belt grow slowly now and next year ? Or stagnate, tried to sell our four bed detached in Kildare area four years ago, could not sell, hope to sell next year, what you think ? Long wait to move, very frustrating as whole family life on hold.

Deco99

leinsterdude wrote: »

Key question, will property in Dublin and commuter belt grow slowly now and next year ? Or stagnate, tried to sell our four bed detached in Kildare area four years ago, could not sell, hope to sell next year, what you think ? Long wait to move, very frustrating as whole family life on hold.

Oh careful asking questions on here, you might get the crystal ball treatment. From what I made out the new rules would bring the prices down over long term but Enda's goverment insurance scheme would keep them rising. There is a slight panic on at the moment to buy before the rules even though the banks are almost at the rules levels already.

I read elsewhere that the mortgage insurance scheme might only apply to new-builds but haven't seen that anywhere official. Anyone any more detail on what is proposed?

Michael D Not Higgins

Deleted User wrote: »

I read elsewhere that the mortgage insurance scheme might only apply to new-builds but haven't seen that anywhere official. Anyone any more detail on what is proposed?

It's mere kite-flying from the government at this stage so no real details on the proposal.

MayBea

leinsterdude wrote: »

Key question, will property in Dublin and commuter belt grow slowly now and next year ? Or stagnate, tried to sell our four bed detached in Kildare area four years ago, could not sell, hope to sell next year, what you think ? Long wait to move, very frustrating as whole family life on hold.

With Irish Economy is on the continuos growth (growth of 4.2pc GDP is projected for 2015), increasingly high demand and low supply I would suggest we can see the prices being stagnated at most.

P. Breathnach

Deleted User wrote: »

I read elsewhere that the mortgage insurance scheme might only apply to new-builds but haven't seen that anywhere official. Anyone any more detail on what is proposed?

Michael D Not Higgins wrote: »

It's mere kite-flying from the government at this stage so no real details on the proposal.

Enda Kenny is no economist. The Central Bank is proposing measures that make sense as economic management. Enda does not have the crednentials to argue against them. So, in effect, he is saying "Okay, we agree with the proposals, but let's see how we can keep our voters happy - even if it means undermining the measures".

That's the sort of populist nonsense that helped get us into trouble in the first place.

Some members of the government, and many advisors to the government, have a bit of economic cop-on. Let's hope that they put a stop to this daft idea.

El_Dangeroso

Why isn't the central bank clarifying anything with regards to approval prior to Jan 15? Have I missed something or do we know for sure if approvals will be honoured in the new year?

Apologies if you've seen this already but the consultation doc is here.
It won't let me copy and paste but page 25 of the pdf says if lenders agree a mortgage offer in principle before Jan 1 it is not affected.

Incidentally, page 22 of the PDF (numbered '21' on the actual document) takes a dim view of the kind of mortgage insurance the govt is proposing....

This mortgage insurance wheeze seems to be limited to new builds:
Construction Strategy published by Govt in May says:

Consideration will be given to the concept of a mortgage insurance scheme and how it might benefit new housing completions in the Irish market. The objective of any scheme would be to ensure adequate availability of mortgage finance on affordable terms for new completions, particularly for First Time Buyers, as the economy recovers, and in doing so to provide the certainty needed to support greater levels of investment in new housing.

El_Dangeroso

Deleted User wrote: »

Apologies if you've seen this already but the consultation doc is here.
It won't let me copy and paste but page 25 of the pdf says if lenders agree a mortgage offer in principle before Jan 1 it is not affected.

Incidentally, page 22 of the PDF (numbered '21' on the actual document) takes a dim view of the kind of mortgage insurance the govt is proposing....

Thanks for that.

Does anyone know if any bank is giving out approval that lasts 6 months? Or is it a case of 3 months and we'll extend if the circumstances have not changed?

I'm trying to figure out when the new rules are really going to come into play in terms of all approval under previous rules running out. Will it be April 2015 or July 2015?

Deco99

Going in to two this afternoon, will let you know

gaius c

Deleted User wrote: »

I read elsewhere that the mortgage insurance scheme might only apply to new-builds but haven't seen that anywhere official. Anyone any more detail on what is proposed?

New builds only and whispers that it'll be restricted to "CIF approved" developments. If so, they'll kill the second hand market stone dead but they'll finally get their buyers for Adamstown.

Dearg81

El_Dangeroso wrote: »

Thanks for that.

Does anyone know if any bank is giving out approval that lasts 6 months? Or is it a case of 3 months and we'll extend if the circumstances have not changed?

I'm trying to figure out when the new rules are really going to come into play in terms of all approval under previous rules running out. Will it be April 2015 or July 2015?

I believe that you only get 6 months on new builds and 3 months if it's not a new build. I bought a new build ithis year and I have a 6 month offer which I'll have to renew next month as the house wont be built until early next year.

Lucy B

gaius c wrote: »

New builds only and whispers that it'll be restricted to "CIF approved" developments. If so, they'll kill the second hand market stone dead but they'll finally get their buyers for Adamstown.

I thought from the news that I heard yesterday that it was 10% for first time buyers. Regardless of whether it was new build or 2nd hand?? Was delighted when I heard it, but confused now again....

MayBea

Dearg81 wrote: »

I believe that you only get 6 months on new builds and 3 months if it's not a new build. I bought a new build ithis year and I have a 6 month offer which I'll have to renew next month as the house wont be built until early next year.

Dearg81 Congratulation on securing a house! May I ask you if you paid the deposit already at this stage and it's just the mortgage portion that is left?
I'm trying to figure out as how does it work with the new houses .. Thinking that I might have a much larger deposit if it's the case of an extra 6 months of waiting.Thanks

Dearg81

MayBea wrote: »

Dearg81 Congratulation on securing a house! May I ask you if you paid the deposit already at this stage and it's just the mortgage portion that is left?
I'm trying to figure out as how does it work with the new houses .. Thinking that I might have a much larger deposit if it's the case of an extra 6 months of waiting.Thanks

Thanks MayBea. Yes you're correct, I've paid the deposit(10%) and I'll pay the remainder(mainly mortgage) when we get the keys basically.

Yes you will be able to save after you pay the deposit if you are in a similar scenario to me.

Glenbhoy

Deleted User wrote: »

Apologies if you've seen this already but the consultation doc is here.
It won't let me copy and paste but page 25 of the pdf says if lenders agree a mortgage offer in principle before Jan 1 it is not affected.

Incidentally, page 22 of the PDF (numbered '21' on the actual document) takes a dim view of the kind of mortgage insurance the govt is proposing....

Page 27 states that

"While the Central Bank will take full account of all such submissions, it can be
assumed that a regime of the type foreshadowed in this document is likely to be
introduced. With this in mind, lenders are expected not to accelerate high LTV or
LTI loan approvals for the purpose of circumventing the limits, in case they are
introduced. Instead, lenders are instructed to take account now of the likely
introduction of such a regime and begin to adapt their lending practices already in
anticipation of its introduction. In order to minimise any disruption to the market
that might be caused by a long lead-in period, the consultation period will last two
months rather than the standard three months."

This conflicts a little with what it states on P.25, but basically it's saying that, these are coming in and we expect banks to take account of them from today. Truth is, banks are hardly in the position to be throwing out loads of money even if they wanted to. Applicants can flock to banks all they want and the banks will pick the cream of the crop and give them high LTI's and LTV's whilst they still can.

For those who don't get that, console yourself with the fact that you'll be better off in the long run.

I never noticed that mortgage insurance paragraph first time around, basically telling the govt in advance of Enda's airy fairy announcement that they can shove the scheme where the sun don't shine, it won't be getting aproved by them - i haven't had a chance to read much into this new proposal, but would taking on this risk not affect sovereign debt etc (although truth be told, the amounts and take up will probably be tiny if it ever comes to pass).

Frank Lee Midere

P. Breathnach wrote: »

Enda Kenny is no economist. The Central Bank is proposing measures that make sense as economic management. Enda does not have the crednentials to argue against them. So, in effect, he is saying "Okay, we agree with the proposals, but let's see how we can keep our voters happy - even if it means undermining the measures".

That's the sort of populist nonsense that helped get us into trouble in the first place.

Some members of the government, and many advisors to the government, have a bit of economic cop-on. Let's hope that they put a stop to this daft idea.

The country deserves to be bankrupted ( for real this time) if populist measures are introduced to keep bankers, developers and other Gombeens happy.

As for the FTB who thinks that increasing credit to everybody while restricting supply will help them get that house - mother Ireland is rearing them yet.

Frank Lee Midere

MayBea wrote: »

With Irish Economy is on the continuos growth (growth of 4.2pc GDP is projected for 2015), increasingly high demand and low supply I would suggest we can see the prices being stagnated at most.

Lol. Continious growth as predicted by the people who predicted continuous growth in 2006 and continuous recession in 2011.

Glenbhoy

Lucy B wrote: »

I thought from the news that I heard yesterday that it was 10% for first time buyers. Regardless of whether it was new build or 2nd hand?? Was delighted when I heard it, but confused now again....

Rumour is that it will be restricted to new builds, whilst I can see the logic, I'm not sure about the equity of that.

In any case, they're proposing that the bank still lend you 90% of the value and that the state will insure 10% of the value, you will then pay the state/bank an additional premium on top of your mortgage repayments on the 90% of value. One would however expect such a premium to be quite small.

On the other hand, without this scheme being introduced across the market (restricting to new builds will have negligible impact on the market), allied with the ending of the cgt relief (and of course the worldwide recession which might just be about to gather steam again), property prices will almost certainly drop, how significantly depends on how strongly banks pursue defaulters. Therefore the 20% deposit you require will be smaller than you imagine and repayments likewise, it might delay your purchase by a year to 18 months, but it might mean your mortgage is cleared many years earlier.

Frank Lee Midere

gaius c wrote: »

Read the article.

That would imply that approx 15% of them are being "under-utilised" through "sub-optimal asset management", which would come as no surprise to anybody who has marveled at the increasing rents in Tallaght despite all the empties around the Square.

Either way, the fact that they want to sell them to anybody bar ordinary joe soaps who would pay more suggests that they aren't really that interested in genuinely getting the best deal for the taxpayer.

Thanks. It certainly proves that the Gombeen concern for the FTB is a masquerade. Hint to the economically challenged - if you want cheaper houses increased supply is the answer not curtailed supply and increased credit.

Deco99

Deco99 wrote: »

Going in to two this afternoon, will let you know

How did you get on?

A320

Dearg81 wrote: »

I believe that you only get 6 months on new builds and 3 months if it's not a new build.

Not true,depends on bank how long approvals lasts and house is nothing to do with it

Dearg81

A320 wrote: »

Not true,depends on bank how long approvals lasts and house is nothing to do with it

I can't speak for all banks but your second point is definitely wrong. KBC do 6 months for new builds otherwise it's 3 months.

Deco99

[Deleted User] wrote: »

How did you get on?

Well. Went to AIB and PTSB. Not a mention about the central bank recommendations. It was a discussion point at the end and I doubt either had read much about it in news. No approval by either as it has to go through underwriters so that approval in principal is false. But here goes if I cleared their credit check and everything I provided was true I could get 4 times the salary and upto 92% LTV. Based on ability to repay. I pay rent and save for more than the repayments so I can show I could make the repayment and have 1300€ aib's benchmark for single person living expenses after repayment monthly

El_Dangeroso

Deco99 wrote: »

Well. Went to AIB and PTSB. Not a mention about the central bank recommendations. It was a discussion point at the end and I doubt either had read much about it in news. No approval by either as it has to go through underwriters so that approval in principal is false. But here goes if I cleared their credit check and everything I provided was true I could get 4 times the salary and upto 92% LTV. Based on ability to repay. I pay rent and save for more than the repayments so I can show I could make the repayment and have 1300€ aib's benchmark for single person living expenses after repayment monthly

Any mention of how long the approval would last?