Central Bank to limit amount banks lend for home purchase

thisonetaken

Did the central bank actually announce anything in the end? I can see loads of articles online about how they were expected to announce changes on Thursday or Friday but can't see anything were the changes were actually confirmed by the central bank....

Sala

thisonetaken wrote: »

Did the central bank actually announce anything in the end? I can see loads of articles online about how they were expected to announce changes on Thursday or Friday but can't see anything were the changes were actually confirmed by the central bank....

I think the commission is meeting Tuesday and have to approve it?

handlemaster

leinsterdude wrote: »

I work in Dublin,live near Naas,takes me 50 minutes to get to work, 4 bed detached house beside schools sports community hall pitch n Pitt etc, €210k mortgage now that's just affordable, why do people obsess with living in Dublin and paying silly prices, I hate my mortgage at that level with two earners, never mind spending 400k upwards

50 Mins to where in Dublin ? And at what time ? Its all relative. Personally i'd rather pay more and have less travel.

The_Conductor

thisonetaken wrote: »

Did the central bank actually announce anything in the end? I can see loads of articles online about how they were expected to announce changes on Thursday or Friday but can't see anything were the changes were actually confirmed by the central bank....

They said they would make an announcement next week (that is the week of the 26th Jan). There were no statements scheduled for Thursday/Friday (a lot of the senior staff are at Davos- from the 21st to the 24th- so there was never going to be an announcement on Thursday/Friday).

gaius c

MarkAnthony wrote: »

I was watching something there the other day saying Berlin was uber cheap (although it's now getting more expensive very quickly). I'm not sure how Dublin compares to Berlin (honest question, I do genuinely wonder how it compares).

Actually, according to that link, Berlin isn't "the same or more expensive than Dublin". It's miles cheaper!

MarkAnthony

gaius c wrote: »

Actually, according to that link, Berlin isn't "the same or more expensive than Dublin". It's miles cheaper!

That's what I thought but it was just something I'd seen somewhere. Maybe time to learn German and move! I love Berlin!

gaius c

You can rent off johnmurphy. :-P
Great city. Was at a concert at Templehof airport a few years back. Great place. You can virtually smell the history in the place.

dr.fuzzenstein

MarkAnthony wrote: »

That's what I thought but it was just something I'd seen somewhere. Maybe time to learn German and move! I love Berlin!

Gotta love the buletten.

The_Morrigan

Folks I've split out the discussion about buying in the commuter belt - new thread can be found here

El_Dangeroso

Cover of the Sindo this morning states a 15% deposit increasing 1% for the next 5 years to an eventual 20%.

I'd be OK with that as long as the rules regarding investor mortgages stay the same.

The_Conductor

El_Dangeroso wrote: »

Cover of the Sindo this morning states a 15% deposit increasing 1% for the next 5 years to an eventual 20%.

I'd be OK with that as long as the rules regarding investor mortgages stay the same.

Has there been any announcement regarding the investor rules (or indeed PPR mortgage rules)? The 15% + 1, +1, +1, +1, +1 seems like a reasonable compromise.

El_Dangeroso

The_Conductor wrote: »

Has there been any announcement regarding the investor rules (or indeed PPR mortgage rules)? The 15% + 1, +1, +1, +1, +1 seems like a reasonable compromise.

Announcement expected on wed/thurs. I think it's a fine compromise. I was afraid they might go 15% and then 20% at the end of the year, so anything that averts panic buying is a good thing IMO.

Sala

El_Dangeroso wrote: »

Announcement expected on wed/thurs. I think it's a fine compromise. I was afraid they might go 15% and then 20% at the end of the year, so anything that averts panic buying is a good thing IMO.

I agree. I didn't they should change it but was more afraid of them going from 15% now to 20%!which would cause panic buying. 1% won't cause much of an inpact as it's about 2-3k of a starter house so it won't force people to buy now as opposed to a few months later

handlemaster

Whats the proposals for investors ? Government try to ignore this sector as its not a vote winner. But they forget the private sector is providing more efficient ly accommodation for people than the public sector can and the government dont want to start providing housing whole scale again. There has to be an incentive for investors also or the government will be up the creek in a few years time.

mickman

Is there any talk of the 3.5 times salary cap ? Is that in for certain

gaius c

El_Dangeroso wrote: »

Cover of the Sindo this morning states a 15% deposit increasing 1% for the next 5 years to an eventual 20%.

I'd be OK with that as long as the rules regarding investor mortgages stay the same.

The Indo has been making all sorts of claims since the proposals were first unveiled. I'd take them with a pinch of salt until we have the actual announcement.

Gumbo

mickman wrote: »

Is there any talk of the 3.5 times salary cap ? Is that in for certain

Is that not still up to the banks? BOI told me during the week they offer 4.5 times the salary but can go to 5.5 if the repayment capacity is there.

MarkAnthony

kceire wrote: »

Is that not still up to the banks? BOI told me during the week they offer 4.5 times the salary but can go to 5.5 if the repayment capacity is there.

A key point that's not being talked about is that the 3.5 limit is already there and banks have a discretion to increase it. The concern was that they were doing it in more than (IIRC) 20% of cases. If memory serves there was still discretion with the 3.5 LTI but in limited circumstances.

mickman

kceire wrote: »

Is that not still up to the banks? BOI told me during the week they offer 4.5 times the salary but can go to 5.5 if the repayment capacity is there.

Yeah but part of the central banks proposals is to cap it at 3.5 times salaries

The_Conductor

The Indo article is speculation based on leaks- and reported in such a way to try and sell papers- nothing more, nothing less.

Lets hang on for Honohan to make his announcement- for the details- its a tad more reliable than leaked information that may or may not come to pass.

Michael D Not Higgins

MarkAnthony wrote: »

A key point that's not being talked about is that the 3.5 limit is already there and banks have a discretion to increase it. The concern was that they were doing it in more than (IIRC) 20% of cases. If memory serves there was still discretion with the 3.5 LTI but in limited circumstances.

The proposal was for 20% not of number of mortgages but of the euro value of total mortgages. It stands to reason that those who are less risky above the LTI limit are those who are more able to pay and are thus buying more expensive houses. That leads to the total number of those mortgages being less than 20% of the total.

As an example, say lending is €10M. €2M can be lent at above 3.5, and let's say that's 2 houses. That leaves €8M for 3.5 and below. Let's say they're average of 400k, so 20 houses. Suddenly, your 20% is now closer to 9% of actual mortgages.

MayBea

kceire wrote: »

Is that not still up to the banks? BOI told me during the week they offer 4.5 times the salary but can go to 5.5 if the repayment capacity is there.

They told us the same before Christmas, however gave us an offer for 3.5 times cumulative salary at the beginning of January (this is sufficient to our needs though).

I find that the friendly sales person in the branch will say all manner of things and come up with generous offers based on a quick calculator tool (Computer says €XXX,000) but then blame the faceless underwriters when the actual mortgage offer is tightened up. Put in a real application and get a solid loan offer if you want the real numbers.

NotCominBack

kceire wrote: »

Is that not still up to the banks? BOI told me during the week they offer 4.5 times the salary but can go to 5.5 if the repayment capacity is there.

5.5? is that dependant upon requestor age of approx 8-12 years?

seamus

NotCominBack wrote: »

5.5? is that dependant upon requestor age of approx 8-12 years?

Nope. Since standard retirement age has been raised to 68, you get get 35 year mortgages now up to the age of 33.

Banks are offering me 4.5-5 times salary (in principle) and the people we're talking to are indicating there's a lot of flexibility going on.

Get a piece of paper with that offer written on it. Salespeople say all kinds of things to keep you in their system instead of losing you to a competitor. Then when you get to the nitty gritty and find the real offer is 10% less, you're already hooked in and - they hope - less likely to walk away than you were at the beginning of the process.

I remember a mortgage salesperson in the branch using what was pretty much the general mortgage calculator tool they have on their website. Based on general info, they can come up with a nice big number. But the underwriters do the serious bit.

johnp001

seamus wrote: »

Nope. Since standard retirement age has been raised to 68, you get get 35 year mortgages now up to the age of 33.

Banks are offering me 4.5-5 times salary (in principle) and the people we're talking to are indicating there's a lot of flexibility going on.

I would be very concerned that the banks are giving out AIPs too freely at the moment. The reason I think this is that the alternative would be a responsible bank putting off potential buyers by being more reticent with their AIPs. The buyers would then flock to their competitors who would issue AIPs to everyone and then at drawdown time only the best risks from among those that have been issued AIPs would actually be able to draw down the mortgage. The responsible bank would then be left with a choice between losing market share and taking on the poorer risks rejected by the other banks with their "sham" AIPs not worth the paper they are printed on.
There are starting to be a lot of anecdotes about sales falling through due to failure to draw down finance.

The Central Bank statement announcing the introduction of the new rules last October stated:
"While the regulations are not yet in place, regulated lenders are instructed to take account of the likely introduction of such a regime and to begin to adapt their lending practices already in anticipation of its introduction. "

mr_seer

Michael D Not Higgins wrote: »

The proposal was for 20% not of number of mortgages but of the euro value of total mortgages. It stands to reason that those who are less risky above the LTI limit are those who are more able to pay and are thus buying more expensive houses. That leads to the total number of those mortgages being less than 20% of the total.

As an example, say lending is €10M. €2M can be lent at above 3.5, and let's say that's 2 houses. That leaves €8M for 3.5 and below. Let's say they're average of 400k, so 20 houses. Suddenly, your 20% is now closer to 9% of actual mortgages.

Sorry Michael D, that is not correct. The proposal exemption basket (15% proposed) is based on the number of mortgages and not on the quantum of debt issued by the bank.

MarkAnthony

mr_seer wrote: »

Sorry Michael D, that is not correct. The proposal exemption basket (15% proposed) is based on the number of mortgages and not on the quantum of debt issued by the bank.

I defer to both of you, I've not been following it that closely. The point I was making is it's not a blanket ban on mortgages in excess of 3.5 LTI.

Barely Hedged

seamus wrote: »

Nope. Since standard retirement age has been raised to 68, you get get 35 year mortgages now up to the age of 33.

Banks are offering me 4.5-5 times salary (in principle) and the people we're talking to are indicating there's a lot of flexibility going on.

I think the term of mortgages should be capped too at 25y's.

35y's is too long and is just a considerable amount of rope to hang yourself with.