Central Bank to limit amount banks lend for home purchase

kandoola

gaius c wrote: »

True but the mates are not going to work for half their usual rate or anywhere close to it. At best, they'll chop their 20% margin. The cost to build their own house isn't going to be a million miles off the "real" cost to build that house for an ordinary client.

Probably chop the tax they would have to pay too if its into the hand.

I know a lot of tradesmen who do labour swaps too. They all help each other out for free.
My brother finished building his house last year. All his mates chipped in for nothing in the evenings and at weekends until it was finished. They are now all working (including my brother - electrician) on the next guys house. Each of them working on the house will eventually get his turn I guess.

The EU banking regulator has already spoken favourably about the proposed new rules. Now the European Commission has sung from the same hymn sheet.

For:

• The Central Bank (obviously)
• EU banking regulators (answerable to ECB, as is the ICB)
• New Beginning (representing people in mortgage arrears/default)
• FTBs with savings >20% price of houses they would like to buy
• Investors

Against:

• Banks
• Mortgage brokers
• Estate Agents
• Some politicians (Brian Hayes MEP being the most vocal of late)
• FTBs with savings <20% price of houses they would like to buy

Theboinkmaster

So what's the current status of these rules for a 1 Jan introduction?

Theboinkmaster

Theboinkmaster wrote: »

So what's the current status of these rules for a 1 Jan introduction?

Consultation until Dec 6. Then, presumably, some time to read and respond.

Chev2010

"For:
The Central Bank (obviously)
EU banking regulators (answerable to ECB, as is the ICB)
New Beginning (representing people in mortgage arrears/default)
FTBs with savings >20% price of houses they would like to buy
Investors
"

I'd have placed Investors in the Against party. If I owned investment property now I'd want a good supply of FTBs with endless cash to push the price up, if I was buying a property in the future as an investment I'd also want more FTBs to keep pushing up prices after I bought :P

In terms of capital appreciation, yes. But that's only if you plan to sell. I was thinking more of investors/landlords who want the market to dip so they can afford to buy at a price that gives them good rental yield.

jay0109

Of the banks, AIB is for it....Ulster Bank and PTSB against it. BoI were meh

I'd also say that most, if not all Politicians were against it

kandoola

I dont think this is going to happen at all.

Which is a pity.

Chev2010

" I dont think this is going to happen at all."

I'm not so sure, I think some form of it will happen - likely a watered down version of the proposal. The CB are in a position where they don't need to get voted in next year so if they feel it's the best approach they can bring it in and watch the results.

Lucy B

Anybody I have spoken to who would know about all this stuff doesn't think it will happen. I hope it doesn't. Will take us forever to save another 10%.

Lucy B

Lucy B wrote: »

Anybody I have spoken to who would know about all this stuff doesn't think it will happen. I hope it doesn't. Will take us forever to save another 10%.

What do they do that would know? (Not being smart, genuinely interested)

The EU bank regulator and the European Commission are strongly in favour. Against the proposal: banks, most estate agents and mortgage brokers (all lose business if there are fewer people looking for mortgages and bidding on houses), plus a few politicians.

Hard to see a politically independent central bank explaining to European colleagues that they backed down due to political pressure. Equally hard to heed the warnings of banks who were careless in the past.

And if there were to be another bubble the regulator's reputation would go the same way as the guy who neglected to regulate during the 2000s.

That's just my read. I'm not an expert and have no connection or sources in the central bank.

cd07

Do the changes due to be introduced in January with a 20% deposit required, apply to people moving house as well? And if we have a mortgage approved before Christmas will these changes still apply?

gaius c

Lucy B wrote: »

Anybody I have spoken to who would know about all this stuff doesn't think it will happen. I hope it doesn't. Will take us forever to save another 10%.

And who might they be?

cd07

cd07 wrote:

Do the changes due to be introduced in January with a 20% deposit required, apply to people moving house as well? And if we have a mortgage approved before Christmas will these changes still apply?

please guys need advice!

blindside88

cd07 wrote: »

please guys need advice!

The new changes apply to everyone applying for a mortgage. AIB have said that if you get approval before Jan it'll be valid for 6 months but how well that'll hold up under new legislation is anyone's guess

cd07

thanks a mil

blindside88

cd07 wrote: »

thanks a mil

That's my understanding of it anyway but I am open to correction

If you're moving, presumably you'll be selling something so you won't need to borrow more than 80% of the price of the new house - unless you sell a 200k apartment and want to buy a house for more than a million

My understanding is the same as blindside88. The consultation paper says that mortgage approvals from this year are still good next year. Most of the banks give approval that lasts several months. As was said above, mortgage approval in principle often comes through but it's not legally guaranteed. They are plenty of stories of people being offer X but, when it comes to the crunch, the bank offers a bit less for one reason or another.

Larry Wildman

So someone who had managed to haul themselves out of negative equity, get their apartment to parity, save 10%, pay tax on the rental income, pay exhorbitant childcare costs and hold down a job suddenly cannot buy a house?

The State seems determined to ruin the lives of ordinary people. The sooner that Lucinda Creighton's new party gets going, the better.

Barely Hedged

Larry Wildman wrote: »

So someone who had managed to haul themselves out of negative equity, get their apartment to parity, save 10%, pay tax on the rental income, pay exhorbitant childcare costs and hold down a job suddenly cannot buy a house?

The State seems determined to ruin the lives of ordinary people. The sooner that Lucinda Creighton's new party gets going, the better.

Would a medium to long term stabilisation in house prices due to house buyers being required to provide a larger amount of equity not be to the benefit of ordinary people?

Larry Wildman

Larry Wildman wrote: »

So someone who had managed to haul themselves out of negative equity, get their apartment to parity, save 10%, pay tax on the rental income, pay exhorbitant childcare costs and hold down a job suddenly cannot buy a house?

The State seems determined to ruin the lives of ordinary people. The sooner that Lucinda Creighton's new party gets going, the better.

Lucinda supports the prudent proposals of the Central Bank.

http://m.independent.ie/business/personal-finance/property-mortgages/creighton-new-home-buyers-plan-a-return-to-ff-days-30688999.html

Larry Wildman

Barely Hedged wrote: »

Would a medium to long term stabilisation in house prices due to house buyers being required to provide a larger amount of equity not be to the benefit of ordinary people?

What about families who are just doing their best? Who work hard and pay for everything? Who get nothing? Who just want to make a few quid and educate their kids?

Barely Hedged

Larry Wildman wrote: »

What about families who are just doing their best? Who work hard and pay for everything? Who get nothing? Who just want to make a few quid and educate their kids?

Again, how would a stabilisation of house prices impact these people - positively or negatively?

kandoola

Barely Hedged wrote: »

Again, how would a stabilisation of house prices impact these people - positively or negatively?

I think that if there was 20% minimum required it would be a very good thing in general.
But while it would probably bring house prices down, or more likely reduce the rate of increase, there would be a lot of people effected.

There would be a much smaller pool of people who actually can buy a house. Eventually a percentage of the people on the bottom of the group who can buy a house right now, would drop off of the bottom and never be able to buy.

The reason would be that they could not compete with faster savers and would just never catch up, and would be overtaken by those faster savers coming into the market for property too.

Some people just arent used to the fact that there is a line of income below which you will never ever be able to buy your own house (depending where you live of course). Because in the last 15 years or so their was an illusion propagated that anyone who wants to buy a house can have one.

Barely Hedged

kandoola wrote: »

I think that if there was 20% minimum required it would be a very good thing in general.
But while it would probably bring house prices down, or more likely reduce the rate of increase, there would be a lot of people effected.

There would be a much smaller pool of people who actually can buy a house. Eventually a percentage of the people on the bottom of the group who can buy a house right now, would drop off of the bottom and never be able to buy.

The reason would be that they could not compete with faster savers and would just never catch up, and would be overtaken by those faster savers coming into the market for property too.

Some people just arent used to the fact that there is a line of income below which you will never ever be able to buy your own house (depending where you live of course). Because in the last 15 years or so their was an illusion propagated that anyone who wants to buy a house can have one.

Isn't it better to refuse those type of people mortgages and ultimately provide them with social housing rather that burden them with a 20/25/30/35 year debt they can't pay?

makeorbrake

kandoola wrote: »

There would be a much smaller pool of people who actually can buy a house. Eventually a percentage of the people on the bottom of the group who can buy a house right now, would drop off of the bottom and never be able to buy.

The reason would be that they could not compete with faster savers and would just never catch up, and would be overtaken by those faster savers coming into the market for property too.

If they can't save the 20%, then they shouldn't be looking at buying a property - end of.

They're not competing with 'faster savers'. They're not in the market until they have the 20%.

Fkall

kandoola wrote: »

I think that if there was 20% minimum required it would be a very good thing in general.
But while it would probably bring house prices down, or more likely reduce the rate of increase, there would be a lot of people effected.

There would be a much smaller pool of people who actually can buy a house. Eventually a percentage of the people on the bottom of the group who can buy a house right now, would drop off of the bottom and never be able to buy.

The reason would be that they could not compete with faster savers and would just never catch up, and would be overtaken by those faster savers coming into the market for property too.

Some people just arent used to the fact that there is a line of income below which you will never ever be able to buy your own house (depending where you live of course). Because in the last 15 years or so their was an illusion propagated that anyone who wants to buy a house can have one.

This simple fact is often forgotten.

In our parents generation, those earning less than the average industrial wage rented from the country/city council.

Greyian

Larry Wildman wrote: »

So someone who had managed to haul themselves out of negative equity, get their apartment to parity, save 10%, pay tax on the rental income, pay exhorbitant childcare costs and hold down a job suddenly cannot buy a house?

The State seems determined to ruin the lives of ordinary people. The sooner that Lucinda Creighton's new party gets going, the better.

This is a very strange post.

If they're trying to save money for a deposit, why are they renting out the apartment instead of living in it, that's a very poor financial decision impeding their ability to save, because they aren't getting tax relief wherever they are renting to live, despite paying tax on their rental income.

If it's because of the children, why did they:
A) Buy an apartment knowing it wouldn't be suitable for their growing family
or
Not put off having children until they were in a position to do so without such hardship.


This all ignores the simple fact of the matter that a couple on €x per year with no children will always be in a better position than a couple of €x per year with 2 children, all others things being equal.

You seem to be suggesting we should give everyone access to larger loans (lower deposit ratio required), because "What about families who are just doing their best? Who work hard and pay for everything? Who get nothing? Who just want to make a few quid and educate their kids?"
Sure, that sounds great. We'll give people exorbitant loans, and if they can't meet their repayments, we'll complain that the banks were irresponsible. If they end up in negative equity, we'll complain that Joe Public should all get debt writeoffs. And if property prices continue to rise? Sure, we'll just get rid of deposit requirements completely, because it's the only way people will be able to 'get on the property ladder' in 10, 15, 20 years time.

Giving people excessive amounts of money to buy overpriced property isn't the answer. Bringing property prices back down to affordable levels for "families who are just doing their best" is what we should be doing.

kandoola

Barely Hedged wrote: »

Isn't it better to refuse those type of people mortgages and ultimately provide them with social housing rather that burden them with a 20/25/30/35 year debt they can't pay?

It is, and thats the way it should be and used to be. But try telling them that.

Barely Hedged

kandoola wrote: »

It is, and thats the way it should be and used to be. But try telling them that.

I believe the majority of people are in favour of this 20% so really it doesn't matter what they think.