Central Bank to limit amount banks lend for home purchase

Chris_5339762

I think thats about correct. However, given the very high rent prices (that cause a lot of people to be unable to save properly), I feel that somehow evidence of high renting and paying that over time should REDUCE the deposit required. [Not that I have any idea how practical or possible this would be]. Would make the high rent less of a burden.

Inspector Coptoor

I would imagine they could choose between paying a deposit of 22k and take a mortgage of 198k

OR

Pay a deposit of 40k and take a mortgage of 180k which would mean either a shorter mortgage period of reparation or a lower monthly payment over a similar timeframe

Inspector Coptoor

Barely Hedged wrote: »

Also 3.5 LTI limit. Another good bit of soon to be legislation

The 3.5 LTI limit is too low for South Dublin.

We could have 100k saved in another 2 years.
As first time buyers, we'd only be able to get a mortgage of 350k which won't buy much in South dublin unfortunately

Barely Hedged

Inspector Coptoor wrote: »

The 3.5 LTI limit is too low for South Dublin.

We could have 100k saved in another 2 years.
As first time buyers, we'd only be able to get a mortgage of 350k which won't buy much in South dublin unfortunately

These rules are for the long term stability of the country and economy. Its unfortunate that you find yourself in this situation but given what happened in the 2000's you cant fault the reasoning for it.

Conversely, some people will be in the same boat as you and this will dampen the price down to a level people with the same LTI and deposit as you can afford.

Its a decision for the good of the majority rather than the minority

It is generally to be welcomed, IMHO. I hope they haven't watered it down to the point of being ineffective. FTBs get a lighter regime; 20% of the value of the loan book can be exempt from LTI limits and 15% of loan book exempt from LTV limits. There will be overlap between those groups but still plenty of scope for making exceptions - and probably no transparency from the banks on how they choose who gets exemptions.

Inspector Coptoor

It's decent legislation, no doubt.

It comes 12 years to late.

The horse has bolted, we'll see if there's much point closing the stable door

Clonnative

Good rules, but again can anyone answer will existing approvals in principal be affected?

ghostdancer

re the 3.5x salary, can someone explain this line to me:

- This limit should not be exceeded by more than 20 per cent of the euro value of all housing loans for PDH purposes during an annual period.


i can't tell if it's related to an individual and their loan, or all loans provided by a lender (ie. giving some leeway outside the 3.5x in certain cases as had originally been mentioned months ago)

gaius c

Inspector Coptoor wrote: »

The 3.5 LTI limit is too low for South Dublin.

We could have 100k saved in another 2 years.
As first time buyers, we'd only be able to get a mortgage of 350k which won't buy much in South dublin unfortunately

Buy in cash then.

Michael D Not Higgins

ghostdancer wrote: »

re the 3.5x salary, can someone explain this line to me:

- This limit should not be exceeded by more than 20 per cent of the euro value of all housing loans for PDH purposes during an annual period.


i can't tell if it's related to an individual and their loan, or all loans provided by a lender (ie. giving some leeway outside the 3.5x in certain cases as had originally been mentioned months ago)

The latter

Kinet1c

Inspector Coptoor wrote: »

The 3.5 LTI limit is too low for South Dublin.

We could have 100k saved in another 2 years.
As first time buyers, we'd only be able to get a mortgage of 350k which won't buy much in South dublin unfortunately

Plus your 100k so 450k.

Inspector Coptoor

Kinet1c wrote: »

Plus your 100k so 450k.

100k as a deposit would give you a max mortgage under new rules of:
(22 x 10) + (78 x 5) = €610k

Greyian

Inspector Coptoor wrote: »

100k as a deposit would give you a max mortgage under new rules of:
(22 x 10) + (78 x 5) = €412k

Your figures are off somewhere.

If you have €100k deposit as a first time buyer, you could get the following:
22*9 = 198k
78*4 = 312k
Maximum Mortgage: 510,000
Include your deposit of €100,000, it would be €610,000.

Obviously though, to get a 510k mortgage, you'd need combined salary of nearly 150k, which most people won't have.

Inspector Coptoor

Greyian wrote: »

Your figures are off somewhere.

If you have €100k deposit as a first time buyer, you could get the following:
22*9 = 198k
78*4 = 312k
Maximum Mortgage: 510,000
Include your deposit of €100,000, it would be €610,000.

Obviously though, to get a 510k mortgage, you'd need combined salary of nearly 150k, which most people won't have.

Yeah, I see where I went wrong.

They only include basic wages though yeah?

We both do overtime but that's not guaranteed income, is that how it works?

Larbre34

I know its a regulator decision rather than a Govt one, but its a disgraceful bias towards rural areas, many people there will be able to well afford 10% of €220k or less and it will put them in a house. Meanwhile in Dublin and Galway and suburbs, ordinary families will have ownership put permanently out of reach because of massive disproportion.

Again, i know its not the Govt but they are enabling it and they will suffer for it, as the practical realities will have kicked in just in time for the election.

MarkAnthony

Not everyone can afford to live in South Dublin, or Dublin or the commuter towns or Wexford or the arse end of a shack out in a field in Kerry. Yous buys where you can afford.

While the the dublin property market is odd in of itself what I find really odd is that people seem to have this entitlement to live in a three/four bed semi in SCD as a first home. I realise the 'ladder' has fallen out of favour and market conditions have prevented many from getting on the ladder in their twenties and trading up, but FTBs need to get real in relation to what they should be aiming for.

It's all very well saying I cant buy X on 3.5 but allowing 9xLTI only means it's just as out of reach but the ones that do manage to get in are crazy enough to borrow that amount and completely financially irresponsible.

makeorbrake

Larbre34 wrote: »

I know its a regulator decision rather than a Govt one, but its a disgraceful bias towards rural areas

That would depend of course on your original viewpoint generally. A FTB out in the sticks doesn't need to spend that sort of money (more often than not). Hmm....will there be an element of cause and effect here? Is it likely that this may push up prices subtly in certain outlying commuter areas?

Greyian

Larbre34 wrote: »

I know its a regulator decision rather than a Govt one, but its a disgraceful bias towards rural areas, many people there will be able to well afford 10% of €220k or less and it will put them in a house. Meanwhile in Dublin and Galway and suburbs, ordinary families will have ownership put permanently out of reach because of massive disproportion.

Again, i know its not the Govt but they are enabling it and they will suffer for it, as the practical realities will have kicked in just in time for the election.

Except that this isn't the case. Why do people keep throwing out these statements with absolutely no reasoning or evidence?

Here's a post I wrote on this last week, and that was factoring in 20% deposit for everyone, whereas FTBs have an easier time with these rules than previously anticipated.

To purchase a median property in Dublin requires ~€270,000.
A FTB will require a deposit of €32,000 to purchase one (22k = 10% of €220k + 10k = 20% of €50k). They would also require combined salary of €68,000.

If we consider than 50% of properties are cheaper, and 50% are more expensive, it doesn't seem unreasonable at all to think these salaries/deposits are out of reach of the average Dublin worker.

Greyian

MarkAnthony wrote: »

Not everyone can afford to live in South Dublin, or Dublin or the commuter towns or Wexford or the arse end of a shack out in a field in Kerry. Yous buys where you can afford.

While the the dublin property market is odd in of itself what I find really odd is that people seem to have this entitlement to live in a three/four bed semi in SCD as a first home. I realise the 'ladder' has fallen out of favour and market conditions have prevented many from getting on the ladder in their twenties and trading up, but FTBs need to get real in relation to what they should be aiming for.

It's all very well saying I cant buy X on 3.5 but allowing 9xLTI only means it's just as out of reach but the ones that do manage to get in are crazy enough to borrow that amount and completely financially irresponsible.

Exactly. Every time people have thrown up statements about how €60k+ deposits will be required, I've been left wondering what properties people are looking at.

Sure, with some of the logic people are using, we should allow mortgages of 50 times salary, because it's the only way a new graduate will have a hope of buying a 5-bed in Ballsbridge.

Idioteque

Larbre34 wrote: »

I know its a regulator decision rather than a Govt one, but its a disgraceful bias towards rural areas, many people there will be able to well afford 10% of €220k or less and it will put them in a house. Meanwhile in Dublin and Galway and suburbs, ordinary families will have ownership put permanently out of reach because of massive disproportion...

Why 'Permanently'!?!...if we take a €350K house in Dublin that a family was looking to buy, they'll now need an extra €13K in deposit up front to buy that house...that's hardly permanently putting home ownership out of reach.
That's also with prices staying static, if they go down then it's even less, although I think these measure will more likely slow the growth than have a major impact on prices going downwards...but would love that to happen obviously

seamus

Idioteque wrote: »

Why 'Permanently'!?!...if we take a €350K house in Dublin that a family was looking to buy, they'll now need an extra €13K in deposit up front to buy that house.

...If they're a first time buyer.

I suspect the largest market for €220k+ properties are people just peeking out of negative equity and trying to trade up from the shoebox they overpaid for at the last boom. They'll have their 10% sorted, but a further 10% will effectively lock them out of the market and leave them in a property which is likely unfit for purpose.

Though that said, there's the possibility that the €220k rule for first time buyers will mean the sub-€300k market will become very popular with FTBs and in fact could bring up the prices of property in that bracket, which will go some way to resolving the issue for people in negative equity.

MarkAnthony

seamus wrote: »

...If they're a first time buyer.

I suspect the largest market for €220k+ properties are people just peeking out of negative equity and trying to trade up from the shoebox they overpaid for at the last boom. They'll have their 10% sorted, but a further 10% will effectively lock them out of the market and leave them in a property which is likely unfit for purpose.

Though that said, there's the possibility that the €220k rule for first time buyers will mean the sub-€300k market will become very popular with FTBs and in fact could bring up the prices of property in that bracket, which will go some way to resolving the issue for people in negative equity.

Shhhhh! Gimmie another couple of weeks to get contracts exchanged will ya! :pac:

seamus

MarkAnthony wrote: »

Shhhhh! Gimmie another couple of weeks to get contracts exchanged will ya! :pac:

If the RTE report is correct and this needs to be approved/passed by Oireachtas, then it's going to be a number of months before it kicks in. The property market will become an absolute feeding frenzy in that case in the lead up to this being passed.

gaius c

seamus wrote: »

If the RTE report is correct and this needs to be approved/passed by Oireachtas, then it's going to be a number of months before it kicks in. The property market will become an absolute feeding frenzy in that case in the lead up to this being passed.

Absolutely. Canny buyers will completely pile in so that they can pay more today than they would tomorrow.

MarkAnthony

seamus wrote: »

If the RTE report is correct and this needs to be approved/passed by Oireachtas, then it's going to be a number of months before it kicks in. The property market will become an absolute feeding frenzy in that case in the lead up to this being passed.

gaius c wrote: »

Absolutely. Canny buyers will completely pile in so that they can pay more today than they would tomorrow.

I'm alright I've bought on the Northside where I'll no doubt experience frequent burglaries, rapes and murders.

seamus

gaius c wrote: »

Absolutely. Canny buyers will completely pile in so that they can pay more today than they would tomorrow.

You're making the mistake in assuming that people think of property like they think of other purchases. They don't.

What they will see is a wall coming down which means that they can either make the leap and buy before that wall comes down, or wait till after the wall comes down and spend another five years renting and scrimping to increase their deposit.

Applying rationality to buyers in an Irish property market is folly.

Very few people want to rent in Ireland, partially due to snobbery but also because the dysfunctional rental laws encourage people towards buying. The prospect of renting for longer than one has to is still anathema in Ireland.

Larbre34

seamus wrote: »

If the RTE report is correct and this needs to be approved/passed by Oireachtas, then it's going to be a number of months before it kicks in. The property market will become an absolute feeding frenzy in that case in the lead up to this being passed.

No, the statutory instrument will be put before the Oireachtas and guillotined and signed before the end of the week. There will be no time for any carpet bagging or limbo dancing. These rules are effectively in right now, except for the handful of folks due to close by Friday.

hmmm

About time. If you have to borrow more than 3.5 times your income, you're over-stretching yourself financially anyway.

Larbre34

Idioteque wrote: »

Why 'Permanently'!?!...if we take a €350K house in Dublin that a family was looking to buy, they'll now need an extra €13K in deposit up front to buy that house...that's hardly permanently putting home ownership out of reach.
That's also with prices staying static, if they go down then it's even less, although I think these measure will more likely slow the growth than have a major impact on prices going downwards...but would love that to happen obviously

Even if prices stay static, thats a 70k deposit for a trader up. Lets assume they are just peeking out of negative equity then theyll need most or all of that in cash, and given that they have been stuck in a negative equity house for a while, they may be 35 or 40 years of age. They may not be able to achieve the term of mortgage to make the balance of the purchase viable.

hmmm

Larbre34 wrote: »

Even if prices stay static, thats a 70k deposit for a trader up.

Why should we have to put the country at risk again just because someone wants to "trade up"? These people are in negative equity - they have no assets, yet expect to be able to buy a bigger property.