Central Bank to limit amount banks lend for home purchase

Barely Hedged

gaius c wrote: »

Ordinary Joe Soaps shouldn't be buying apartments. They should be owned by BTL landlords to provide cheaper and flexible accommodation options for young people straight out of college (wider 20-30 age bracket basically).

Come on now - really. Seriously. No disrespect to you, but that is up there with some of the most outlandish posts ive ever read.

gaius c wrote: »

One huge problem with the Irish rental sector is that apartments are way way too expensive and the people who should be living in them end up cramming into houseshares for what should be family homes thus creating further pressure on stock there.

Way too expensive? What price should they be.

gaius c wrote: »

NAMA are trying to offload 500 apartments out in Tallaght Cross. The vast majority of them are completely empty. With the news that it now costs over a grand of post-tax income to live in a sinkhole like Jobstown, the fact that these apartments are deliberately being left empty is a national scandal.

I believe the block was built as a hotel originally wih their design allowing the units to be converted into apartments if the hotel didnt take off. I would say the delays are down to this reconfiguration work that needs to take place? Amongst many other possible reasons for delays in construction work

The Spider

Any of you boys and girls touching 40'd want to get a move on....

http://www.independent.ie/business/personal-finance/property-mortgages/people-over-40-denied-mortgages-as-lenders-impose-lower-maximum-age-limits-30771918.html

That's just a scary story randomly plucked from the UK Press Association by the Indo. They see hundreds of stories from the PA, Reuters and other agencies daily and select a very small bunch of them that suit their agendas - one of which is to panic people into jumping 'on the ladder'.

The Spider

Deleted User wrote: »

That's just a scary story randomly plucked from the UK Press Association by the Indo. They see hundreds of stories from the PA, Reuters and other agencies daily and select a very small bunch of them that suit their agendas - one of which is to panic people into jumping 'on the ladder'.

Speculation, but I reckon there could be something to it, although how banks expect people in their twenties/early thirties to have a 20% deposit is beyond me. So now even if you have 20% and are over 40 you'll need more to shorten the term, banks won't lend into retirement age so more than likely you'll get a loan for 15-20 years.

Just re-reading my post. I suggested it was both 'random' and 'deliberate'
Sorry about that. I think they selected this one from a big bank of possible stories because they like a bit of panic.

Is it really new?
Was it not always the case that banks were reluctant to lend for longer than you will be working? I mean, on the basis that repayment becomes a challenge when you've almost no income.

I was offered a mortgage this year which would have taken me to 69. That, they reckoned, was the end of my working life. Eeek. Probably true but I really hope I don't have to work at full tilt when I'm in my late 60s!

seamus

Yeah, there's nothing really new about that. Banks have always been very shy to provide loans to most people past 60, never mind 65. People were aghast when the 35 year mortgage came about because the idea that someone would still be paying a mortgage in their 60's was madness.

Michael D Not Higgins

Barely Hedged wrote: »

I dont really understand what your position is...

My position is that some people bought into the media hype (and still do) while others did not. I happen to be in the latter but do not blame the former.

I agree with you that it isn't unfair as the other person posted. These are just people who were swept along with the tide and have now to deal with the repercussions. Fairness doesn't come into it. They took a gamble on the market continuing upwards and lost.

El_Dangeroso

Isn't it sad that buying a home to live in was a gamble?

That's what these new rules are trying to prevent.

Michael D Not Higgins

El_Dangeroso wrote: »

Isn't it sad that buying a home to live in was a gamble?

That's what these new rules are trying to prevent.

The problem was it wasn't a home to live in. It was a home to leverage upwards.

El_Dangeroso

Michael D Not Higgins wrote: »

The problem was it wasn't a home to live in. It was a home to leverage upwards.

Don't a lot of economies use a property 'ladder' of some sort, or is the new idea to buy where you plan to die?

I thought house prices were crazy back in 2007 but I don't judge my friends for buying then, they just wanted a place for themselves and buying small and building up equity was seen as a valid route.

Barely Hedged

El_Dangeroso wrote: »

Don't a lot of economies use a property 'ladder' of some sort, or is the new idea to buy where you plan to die?

I thought house prices were crazy back in 2007 but I don't judge my friends for buying then, they just wanted a place for themselves and buying small and building up equity was seen as a valid route.

This is not the point and youre missing it altogether.

Property, like any asset, is subject to market forces and hence price moves. Buying into it so that you will see guaranteed price growth and then trade up is a risk. They took a risk and it didn't pay off.

The Spider

Barely Hedged wrote: »

This is not the point and youre missing it altogether.

Property, like any asset, is subject to market forces and hence price moves. Buying into it so that you will see guaranteed price growth and then trade up is a risk. They took a risk and it didn't pay off.

And many others took a risk and it did pay off, such is any kind of investment in any asset. That's arguing against market forces, the value of your investment may as well as rise, yadda, yadda, yadda!

MayBea

Michael D Not Higgins wrote: »

But someone looking to buy at 350k should have 90k income with 10% deposit. How are they having so much trouble saving a deposit at that income?

It should't be a major trouble. However, even for the high-earner individual with 90K income it will result in the delay of buying the property for the minimum of two years.

Getting down to the numbers:
Joe gets 90K, which is something around 4,400 monthly roughly.
We can conservatively assume the rent of 1,200 being paid every month as well as the savings of 1,500 (which is slightly over than 1/3 of his salary).
He has the savings of 35K and now needs to double them, so.. another 35,000k / 1,500 = approx. 24 months of saving (AND paying the rent at the same time, which is 28,800k paid over this period).
The house price is now 367k (moderate growth of 2.5% a year), therefore: instead of getting the house for 350k in 2015 he gets it in 2017 for : 367k + 28.8k (the rent he paid)= 395.8k

I agree wholeheartedly with having a salary limitation. But I do think that the 20% deposit is not a runner.

Michael D Not Higgins

MayBea wrote: »

It should't be a major trouble. However, even for the high-earner individual with 90K income it will result in the delay of buying the property for the minimum of two years.

Getting down to the numbers:
Joe gets 90K, which is something around 4,400 monthly roughly.
We can conservatively assume the rent of 1,200 being paid every month as well as the savings of 1,500 (which is slightly over than 1/3 of his salary).
He has the savings of 35K and now needs to double them, so.. another 35,000k / 1,500 = approx. 24 months of saving (AND paying the rent at the same time, which is 28,800k paid over this period).
The house price is now 367k (moderate growth of 2.5% a year), therefore: instead of getting the house for 350k in 2015 he gets it in 2017 for : 367k + 28.8k (the rent he paid)= 395.8k

I agree wholeheartedly with having a salary limitation. But I do think that the 20% deposit is not a runner.

You might as well make the same argument for the first 10% that has to be saved. Sure, why not give 100% mortgages to everyone?

gaius c

gaius c wrote: »

Yep. Had reason to walk through the Square in Tallaght on Wednesday night around 9pm. I estimate that only a third of the apartments looked occupied but would they think of dropping the price on the other two thirds to get them filled?

Or would an enterprising young journalist bother their hole looking at this extremely obvious scam to force prices up?

Having lived in some of the apartments around the square I can easily imagine why they are empty.
Badly built and finished shoeboxes is all they are.

The Spider

MayBea wrote: »

It should't be a major trouble. However, even for the high-earner individual with 90K income it will result in the delay of buying the property for the minimum of two years.

Getting down to the numbers:
Joe gets 90K, which is something around 4,400 monthly roughly.
We can conservatively assume the rent of 1,200 being paid every month as well as the savings of 1,500 (which is slightly over than 1/3 of his salary).
He has the savings of 35K and now needs to double them, so.. another 35,000k / 1,500 = approx. 24 months of saving (AND paying the rent at the same time, which is 28,800k paid over this period).
The house price is now 367k (moderate growth of 2.5% a year), therefore: instead of getting the house for 350k in 2015 he gets it in 2017 for : 367k + 28.8k (the rent he paid)= 395.8k

I agree wholeheartedly with having a salary limitation. But I do think that the 20% deposit is not a runner.

I think 1500 a month savings is very optimistic to be honest that's a helluva lot, leaves 1700 a month lets do the breakdown:

Joe's on 90 grand so more than likely has a car loan. lets be conservative and say he has a second hand car loan of 300 a month over 5 years.

Phonebill 80 a month.

Petrol/public transport 200 a month, Joe likes to drive his car.

Esb 120 a month

Gas 100

Joe hasn't even had his dinner yet, let's carry on!

Food/groceries 400

After all those bills, poor old Joe'd need a drink.

Socialising 100 euro a week

Before everyone jumps on here about socialising being too expensive, lets look at it, Joe is in a decent job needs to stay on top that's going to cost at least one work night a week, minimum spend 25 euro, he buys his boss a pint and buys the lads a couple.

If Joe's in a relationship he has to entertain the missus at least once or twice a week, one night out and one in with a dvd and possibly a takeaway not much change out of that 100, and he hasn't even caught up with the lads.

If Joe's single well that socilaising budget is going to rise, no one likes sitting around the house after working all week, when they know they should be out and about at the weekend.

If Joe's in any sports clubs or anything outside that it's going to cost him too.

God help him if he wants to buy clothes not much cash to do that.

Don't see how he can save 1500

Fkall

Fkall wrote: »

This simple fact is often forgotten.

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

And the councils have provided how much housing, of late?

jay0109

The Spider wrote: »

I think 1500 a month savings is very optimistic to be honest that's a helluva lot, leaves 1700 a month lets do the breakdown:

Joe should easily be able to save 2-2k per month without living like a hermit, especially if he's serious about saving for a house.
And him on 90k!

I find some of your figures above to be exceptionally generous

The Spider

jay0109 wrote: »

Joe should easily be able to save 2-2k per month without living like a hermit, especially if he's serious about saving for a house.
And him on 90k!

I find some of your figures above to be exceptionally generous

Nah, don't see it to be honest, especially if his rent is 1200 a month, if he lived in shared accommodation he could maybe save there, but we've all lived in shared accommodation and know that you end up out more often as the sitting room or kitchen is monopolised, being out means spending more money.

Figures aren't overly generous, anyone who's going out one or two nights a week knows well its going to cost them more than 100 euro.

basing the gas and esb on what I paid when I lived alone in a two bed house paying 1100 a month, and no I didn't have it on all the time.

80 euro's for a phone bill? easy.

400 on food? it'd probably cost more if you eat out, that's based on a weekly shop, one meal out'd add at least 80 to that, and when you go out for dinner who doesn't go for a pint?

I didn't include the cinema, music downloads or anything like that, app purchases, lunch in work, etc. the odd can of coke maybe?

Greyian

The Spider wrote: »

Nah, don't see it to be honest, especially if his rent is 1200 a month, if he lived in shared accommodation he could maybe save there, but we've all lived in shared accommodation and know that you end up out more often as the sitting room or kitchen is monopolised, being out means spending more money.

What kind of extras is he getting with that €80/month phone bill? Because if he's paying that much for just normal phone usage, he's not terribly intelligent.

Why is a 1 person household using €220 between ESB and heating? My household uses less with 3 adults in it.

If he's serious about saving, he could also cut down the food bill by 100/month easily, and down by 200 or so with a little bit of effort.

Also, why does he have such a high car loan? That's €14500 for the car using AIB's current personal loan rate. He should be paying some sort of a deposit for a car, so you're looking at a 2nd hand car that's costing around €20000.
Would a 2008 BMW not be good enough for Joe? (http://www.carzone.ie/used-cars/bmw/3-series/used-2008-bmw-3-series-316i-m-sp-kildare-fpa-97614154414176970)

He doesn't need €100/week for socialising. Between sports and socialising I spend about €150-200/month, he could surely do likewise.

Theboinkmaster

MayBea wrote: »

It The house price is now 367k (moderate growth of 2.5%a year),

With new 20% rule and removal of CGT exemption is a drop of 2.5% not more realistic.

The Spider must live some life, if he thinks that those are normal figures.

€40 phone, unlimited data with 3.
Don't go out on the rip every week.
Own my car (at 90k potentially even has company car/phone)
Crazy lekky and heat assessment 220!!
€400 on food??? has he ever heard of Lidl?

desertcircus

The Spider wrote: »

I think 1500 a month savings is very optimistic to be honest that's a helluva lot, leaves 1700 a month lets do the breakdown:

Joe's on 90 grand so more than likely has a car loan. lets be conservative and say he has a second hand car loan of 300 a month over 5 years.

Phonebill 80 a month.

Petrol/public transport 200 a month, Joe likes to drive his car.

Esb 120 a month

Gas 100

Joe hasn't even had his dinner yet, let's carry on!

Food/groceries 400

After all those bills, poor old Joe'd need a drink.

Socialising 100 euro a week

Before everyone jumps on here about socialising being too expensive, lets look at it, Joe is in a decent job needs to stay on top that's going to cost at least one work night a week, minimum spend 25 euro, he buys his boss a pint and buys the lads a couple.

If Joe's in a relationship he has to entertain the missus at least once or twice a week, one night out and one in with a dvd and possibly a takeaway not much change out of that 100, and he hasn't even caught up with the lads.

If Joe's single well that socilaising budget is going to rise, no one likes sitting around the house after working all week, when they know they should be out and about at the weekend.

If Joe's in any sports clubs or anything outside that it's going to cost him too.

God help him if he wants to buy clothes not much cash to do that.

Don't see how he can save 1500

300 a month for electricity, gas and phone is astronomical. A hundred quid a week for groceries is astronomical. My wife and I spend maybe half of those amounts between the two of us, probably a lot less. The vast majority of people have no obligation to go drinking five pints with colleagues every week, or to spend 75 quid a week on entertaining a partner. These numbers bear no relationship to reality.

Xaniaj

desertcircus wrote: »

300 a month for electricity, gas and phone is astronomical. A hundred quid a week for groceries is astronomical. My wife and I spend maybe half of those amounts between the two of us, probably a lot less. The vast majority of people have no obligation to go drinking five pints with colleagues every week, or to spend 75 quid a week on entertaining a partner. These numbers bear no relationship to reality.

Absolutely insane numbers and if someone is serious about saving, all of those figures could easily be brought down (except the rent which is fair enough assuming Joe really wants to live alone).
The fact is that a house will be (for most people) the biggest purchase of ones life; it should require some time and effort. The idea of saving for 6 months and suddenly being mortgage ready has always seemed insane to me.

Michael D Not Higgins

This is my point. Someone on 90k (or a couple on 90k combined) should be able to save no problem for that 10% with a bit of cop on. Similarly if you look at a single person looking to buy at 3.5x LTI and 90% LTV on the average industrial wage of 36k, it's maxed out at 140k for what they can afford. If they have to save another 10% / 14k, that shouldn't break the bank.

Looking at the 24 months saving pointed out by the previous poster in the 90k example, this person would have to save about 600 a month. Totally doable on that salary.

Sala

Sounds like Joe wants to have his cake and eat it too

Regardless of whether your deposit is 10% or 20%, most people have to cut back to save for it which includes scaling back on the socializing, meals out etc. It will be extra hard for some people (ie those with childcare) but not for 90k Joe

Michael D Not Higgins

Michael D Not Higgins wrote: »

This is my point. Someone on 90k (or a couple on 90k combined) should be able to save no problem for that 10% with a bit of cop on. Similarly if you look at a single person looking to buy at 3.5x LTI and 90% LTV on the average industrial wage of 36k, it's maxed out at 140k for what they can afford. If they have to save another 10% / 14k, that shouldn't break the bank.

Looking at the 24 months saving pointed out by the previous poster in the 90k example, this person would have to save about 600 a month. Totally doable on that salary.

Let's not forget things like Car insurance/tax/petrol, contents insurance, medical insurance
That's a couple of thousand a year right there

Deleted User

Deleted User wrote: »

Let's not forget things like Car insurance/tax/petrol, contents insurance, medical insurance
That's a couple of thousand a year right there

Going on holiday (or do working people not deserve holidays anymore?). The myriad of unexpected expenses associated with white or brown good breaking, having to travel for weddings and funerals, clothes (which he probably needs to spend a decent amount on if he's in a 90k a year job), shoes (that wear out), looking after less fortunate family members, buying his lunch when he's working, etc etc

I love these people who do this idiotic wages minus rent minus 50 quid a week on food = loads of money to save for a house! Try living in the real world...

allibastor

The big question is,

where did he get a job for 90K and where can I find one!!!

desertcircus

[Deleted User] wrote: »

Going on holiday (or do working people not deserve holidays anymore?). The myriad of unexpected expenses associated with white or brown good breaking, having to travel for weddings and funerals, clothes (which he probably needs to spend a decent amount on if he's in a 90k a year job), shoes (that wear out), looking after less fortunate family members, buying his lunch when he's working, etc etc

I love these people who do this idiotic wages minus rent minus 50 quid a week on food = loads of money to save for a house! Try living in the real world...

Treble the median salary should really be enough to allow a single person with no children to save enough for a deposit. Saying so isn't idiotic, it's basic mathematics.