Central Bank to limit amount banks lend for home purchase

Deco99

El_Dangeroso wrote: »

Any mention of how long the approval would last?

Not yet because its not approved yet, the paperwork gets sent to underwriters and credit checks so bout a week or so.

MayBea

Frank Lee Midere wrote: »

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

I agree, this could be argued, particularly amid new recession fears.
However, I find the market demand for properties at the moment is too high to fluctuate the prices down in the very nearest future. I personally know (among friends and colleagues) 6 couples/single persons eager to buy with approved mortgages - with one out of these six prospective buyers is a cash buyer with 400K - unable to find a suitable property. These people will not disappear in 2015.

A320

Dearg81 wrote: »

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.

Not with EBS,AIB,PTSB and BOI

TSB says 4 months approval is valid for

Frank Lee Midere

ffactj wrote: »

So we are agreed then. When people predict future property prices its just a guess and should be treated as such by all.
There is no magic ingredient that anyone has that makes their guess any better than any other person, be they bull, bear or cow.

No, your complete economic illiteracy isn't mine. Over time house prices fall to a historic average.

matt-dublin

Frank Lee Midere wrote: »

No, your complete economic illiteracy isn't mine. Over time house prices fall to a historic average.

That's funny, historically 3 bed semis in Dublin used to be about £17k

Glenbhoy

matt-dublin wrote: »

That's funny, historically 3 bed semis in Dublin used to be about £17k

I wonder how prevalent the 3 bed semi has been in Dublin's history? Did the vikings introduce them as way of enslaving the population?

I think you know perfectly well what the poster is referring to.

ffactj

Frank Lee Midere wrote: »

No, your complete economic illiteracy isn't mine. Over time house prices fall to a historic average.

Way to say absolutely nothing.
So whats the historic average wage you are talking about?
Which type of houses fall to this historic average?
Would they not rise to this historic average too then?
Would that be the median or the average.
Would it be the average of a one income family or a two income family, or even more incomes?
What time frame are we talking about.
The average now or 20 years ago or even 40?
Is it not different depending on the area you are looking at?

economic illiteracy indeed.
Give us some numbers.

gaius c

CB rules won't be getting overturned btw.
http://www.irishtimes.com/business/sectors/financial-services/banking-confidence-the-key-for-new-regulator-1.1982265?page=2

From the new Euro bank regulator:

I strongly welcome such measures. They have been in place in France for some time and they have been very effective. They have a real impact on stopping asset bubbles in their tracks. So I think those are good measures

It's done. The ECB has more influence on the Central Bank of Ireland (direct and indirect) than the indirectly pressure applied by Irish government ministers or disgruntled mortgage brokers. Indeed, the fact that they are putting pressure on the 'independent' Central Bank makes it near impossible for the ICB to dilute their rules.

Cyril Roux is hardly going to tell his (former colleague) and EU bank regulator Mme Nouy that they had to water down their macro-prudential measures because he got a bad press in Dublin. He's destined for a job in Frankfurt. Parochial concerns about Prime Time highlighting a young couple 'struggling to get on the ladder' in Naas are not a major worry.

"Y'see Danièle, Alan Kelly - transport minister - said mean things about our idea. And I'm not sure whether you read the SIndo but they have been really harsh, as has Joe Duffy - surely you know what he's like. Don't get me started on the irate letters we've had from estate agents in Terenure..."

P. Breathnach

Deleted User wrote: »

...
"Y'see Danièle, Alan Kelly - transport minister - said mean things about our idea. And I'm not sure whether you read the SIndo but they have been really harsh, as has Joe Duffy - surely you know what he's like. Don't get me started on the irate letters we've had from estate agents in Terenure..."

Beautifully put.

And the existence of responses like that is evidence that the measures are actually needed.

hmmm

It sounds like the adults are stepping in to make sure that as a country we don't bankrupt ourselves again, and come running to Europe to bail us out. It's embarrassing that we haven't the wherewithall to control ourselves and our property addiction.

kippy

hmmm wrote: »

It sounds like the adults are stepping in to make sure that as a country we don't bankrupt ourselves again, and come running to Europe to bail us out. It's embarrassing that we haven't the wherewithall to control ourselves and our property addiction.

Indeed - it is a good thing that Europe are watching over us, however it would be good if they could solve our social housing and rental issues as well.
(Sarcasm)

Barely Hedged

gaius c wrote: »

CB rules won't be getting overturned btw.
http://www.irishtimes.com/business/sectors/financial-services/banking-confidence-the-key-for-new-regulator-1.1982265?page=2

From the new Euro bank regulator:

This is the most succint and accurate quote i have read in a long time (in bold):

“However, on balance, I believe that the most important thing is to avoid destabilising the banking system . . . In my view it is irresponsible to give loans to people who possibly will not be able to repay them. It is so much worse for people to find that they cannot afford their commitments than to be declined credit because they do not fall within the loan-to-income or loan-to-value caps.”

El_Dangeroso

Thank god saner heads are prevailing for once! This is great news.

by the seaside

hmmm wrote: »

It sounds like the adults are stepping in to make sure that as a country we don't bankrupt ourselves again, and come running to Europe to bail us out. It's embarrassing that we haven't the wherewithall to control ourselves and our property addiction.

A key problem is that the country lack the levers to control prices. Central Bank interest rates are set in Frankfurt.

hmmm

by the seaside wrote: »

A key problem is that the country lack the levers to control prices. Central Bank interest rates are set in Frankfurt.

That's only one lever. The other levers are completely under our control and one of the main ones is being discussed in this thread. Other levers include the cost of building, access to land to build on, height and zoning restrictions, wage costs etc., again largely under our control - as they were when we last bankrupted ourselves.

Michael D Not Higgins

hmmm wrote: »

That's only one lever. The other levers are completely under our control and one of the main ones is being discussed in this thread. Other levers include the cost of building, access to land to build on, height and zoning restrictions, wage costs etc., again largely under our control - as they were when we last bankrupted ourselves.

In the grand scheme of things, those other factors under Irish control would substantially outweigh any influence from interest rates.

gaius c

Michael D Not Higgins wrote: »

In the grand scheme of things, those other factors under Irish control would substantially outweigh any influence from interest rates.

Amen. I'm getting weary of VI's claiming that there is no possible way houses can cost less than a zillion euro!

Has anyone spoken to their bank about a mortgage lately?

How long does each bank give approval for?

jay0109

Deleted User wrote: »

Has anyone spoken to their bank about a mortgage lately?

How long does each bank give approval for?

I got 6 months from BoI a few weeks back

A320

Deleted User wrote: »

Has anyone spoken to their bank about a mortgage lately?

How long does each bank give approval for?

BOI and EBS are 6 Months,PTSB 4 months,Cant remember AIB but wont be using their offer.

Deco99

A320 wrote: »

BOI and EBS are 6 Months,PTSB 4 months,Cant remember AIB but wont be using their offer.

I thought aib had lowest rates at the moment.? What would put you off them? Something mortgage related?

A320

Deco99 wrote: »

I thought aib had lowest rates at the moment.? What would put you off them? Something mortgage related?

They only gave us one value of a loan,every other bank went through deifferent scenarios for different randon house purchase prices,the QFA got the maths wrong too on disposable income/loan affordability and when we tried to correct her she was having none of it,we could just go and ask to speak with another advisor i suppose

trobbin

I think it's a good move from the CB. Even if people don't think so, it will help contain a lot of frantic people. I do worry about people in Dublin stretching themselves too much, anyone agreeing with this, doesn't think longterm. I have friends who recently got into a bidding war, and paid €65k more than what I considered a fair asking price. They went crazy for the house and I advised to walk away or at least think longterm. They haven't got any money, yet they bid €15k more than the rival bidder, in an effort to win. And win it they did.

It just astonishs me, that we're here again after all what happened. My friends (above) now have a 35year mortgage, no kids, want to get married next year, and they're both 32 years of age. They're already complaining about money everytime I hear them speak, plus they will need credit and personal loans for needed improvements to the house, and new furniture. When they're both 66 they will be in the last year of paying their ridiculously high mortgage. I just hope they realise the extent of what they've done.

Some people argue that houses will go up to the boom prices again, so they're frightened into panick bids. But did we all not agree that the boom prices where stupid? Did we not all say, how stupid was everyone? Some things about the boom; wages was higher, more houses where available, tracker mortgages where available (do people realise buying a house in the boom for €500k on a tracker mortgage, was a better deal than the 4/5% you get now and pay €350k??, I suppose don't understand.

Do the people getting into bidding wars realise that interest rates are at an all time low. Bank of America, Bank of England and the ECB will all rise rates. ECB will be last in the line, but they will follow suit. Do people think they will be able to cope with the increased rates? By 2017 ECB may be at a base rate of 4% they are currently .015%.

People who think bidding wars is correct and house prices are currently too low are very foolish, IMO. And that's why I welcome the proposal by the CB. Anything to stop reckless people from hurting there own futures.

Sala

Some very good points trobbin. Many people buying at the end of this year will be panicked into over bidding, and will end up with a liability akin to those who bought in the bubble (or should I say, last bubble!) due to the higher interest they are paying.

A 20% deposit is only insurmountable for a lot of people if prices are too high. 20% of a reasonably priced property is achievable

Larry Wildman

Sala wrote: »

Some very good points trobbin. Many people buying at the end of this year will be panicked into over bidding, and will end up with a liability akin to those who bought in the bubble (or should I say, last bubble!) due to the higher interest they are paying.

A 20% deposit is only insurmountable for a lot of people if prices are too high. 20% of a reasonably priced property is achievable

How is it achievable?

It's reasonable to expect someone to save 10%...that might be between €30k and €50k.

But 20%? Between €60k and €100k.

Very few people can pay rent and save (say) €1,000 a month.

Michael D Not Higgins

Larry Wildman wrote: »

How is it achievable?

It's reasonable to expect someone to save 10%...that might be between €30k and €50k.

But 20%? Between €60k and €100k.

Very few people can pay rent and save (say) €1,000 a month.

It's achievable in the same way it was achievable when it was standard practice for the previous generation. Prices should come to a level that people can afford if everyone has to save 20%.

The only other factor is the investment buyer which wouldn't have been as much of an influence 20-30 years ago.

Larry Wildman

Michael D Not Higgins wrote: »

It's achievable in the same way it was achievable when it was standard practice for the previous generation. Prices should come to a level that people can afford if everyone has to save 20%.

The only other factor is the investment buyer which wouldn't have been as much of an influence 20-30 years ago.

Standard practice was 10%.

Even of one accepts that 20% is necessary, moving the goalposts in one fell swoop is madness. Why not slowly bring it to 20% over 10 years?

johnp001

Larry Wildman wrote: »

Standard practice was 10%.

Even of one accepts that 20% is necessary, moving the goalposts in one fell swoop is madness. Why not slowly bring it to 20% over 10 years?

Standard practice was historically 20% deposit for the majority of loans. (figures in central bank proposal show as much as 70% of loans were for <80% LTV as late as 1999 and that over 90% of loans were for less than 3.5 LTI into the early 2000s)
In the last decade it was briefly standard practice for banks to issue 100% loans with over a third of loans being for >90% LTV in 2006 (CB proposal figures again) but this is not a sufficient argument to carry on the practice in the light of its effects.


Interesting article in Sunday Independent
http://www.independent.ie/business/irish/regulators-strict-mortgage-curbs-face-a-baptism-of-fire-30710348.html
states that Hong Kong is the only example of a country with a longstanding mortgage cap where it had the effect of keeping mortgage delinquency rates at 1.5% while property prices fell 40%.

NZ_2014

What a mess lads, I just read the article, the country had loan restrictions in the 90s, and then the country let loose and partied like a bunch of 19 year olds in vegas for a weekend in the 2000s. There is some sanity on the horizon but my head is still spinning from it all!:eek:

Its interesting what was said about the risk in Hong Kong is passed from bank to the buyers.