Central Bank to limit amount banks lend for home purchase

Deck1

mrmitty wrote: »

If we're going to regulate the banks lending ability then perhaps we can now start to regulate and license properly the estate agents and auctioneers.


It's time to put a stop to the shenanigans of that profession.

Couldnt agree more...need a bidding system similar to England where bids are open and registered....there is an auction house trying this approach now in Ireland

Nothing ever grated on me more than the auctioneer saying there is a bid against ya.....really....really is there (its hard to be sure with nothing to confirm it).....really as opposed to UK system...log on there sunshine you can see the current confirmed winning bid...and it aint you...no smoke screens

Panda_Turtle

Tobyglen wrote: »

3.5 Times you income is way too harsh. To buy in Dublin is v expensive. 4.5 times would have been a better measurement. We have to accept that prices are vastly different in parts of the country and a blanket times your salary shouldn't be applied. If you have shown that you're in a good job with good prospects then the CB should trust the Credit Teams in the respective banks to make correct decisions. We have gone too far the other side now in terms of regulation. By all means apply the 4.5 rules stringently and never go above 90% LTV but don't freeze people out of the market.

To buy in Dublin is v.expensive you say.

YES! But, one could hope that these rules put water on the fire of increasing house prices in Dublin!

So its a long term measure.

People are complaining to suit their own situation, i.e. wanting to buy a house now, or already own houses and want them to increase in value/not lose value.

_Kaiser_

So what I take from this is...

- As a potential FTB who's pushing 40, Dublin will be out for sure
- Even Cork would probably be out
- With bills, a child to support, and rent to pay as it is + my age the chances of getting a mortgage NOT in the arse-end of Cavan (which I wouldn't mind if it was still 5 years ago but needs are different now) is pretty slim
- Renting is already bad enough in Dublin and this will probably get worse as these rules freeze more people out of buying
- Whatever about the argument of these rules being too late, it does nothing to reform the cowboy country that is the private rental sector in this country which as above, will only get worse!

That about right?

mudda3

El_Dangeroso wrote: »

In my experience most banks want to lend 3X salary max, and I think I've queried with all the big ones.

You can't borrow more than you can repay non matter what house you want - that's whst happened to people last time

Kinet1c

_Kaiser_ wrote: »

So what I take from this is...

- As a potential FTB who's pushing 40, Dublin will be out for sure
- Even Cork would probably be out
- With bills, a child to support, and rent to pay as it is + my age the chances of getting a mortgage NOT in the arse-end of Cavan (which I wouldn't mind if it was still 5 years ago but needs are different now)
- Renting is already bad enough in Dublin and this will probably get worse as these rules freeze more people out of buying
- Whatever about the argument of these rules being too late, it does nothing to reform the cowboy country that is the private rental sector in this country which as above, will only get worse!

That about right?

Plenty of affordable apartments in the cities you mentioned.

Zebrano

Anyone know when this is going through the oireachtas.

_Kaiser_

Kinet1c wrote: »

Plenty of affordable apartments in the cities you mentioned.

Apartments + kids = not ideal

In Europe maybe but not in our modern shoebox, poorly built, post-Celtic tiger era. I certainly wouldn't be taking on a few hundred grand's worth of debt for an apartment

matt-dublin

Also is the 220k per borrower or per loan?

For example of you have a couple who are FTBs does that entitle them to 440k @ 10%?

The 20% doesn't apply to trader uppers I think or restructuring loans.

quadrifoglio verde

_Kaiser_ wrote: »

So what I take from this is...

- As a potential FTB who's pushing 40, Dublin will be out for sure
- Even Cork would probably be out
- With bills, a child to support, and rent to pay as it is + my age the chances of getting a mortgage NOT in the arse-end of Cavan (which I wouldn't mind if it was still 5 years ago but needs are different now)
- Renting is already bad enough in Dublin and this will probably get worse as these rules freeze more people out of buying
- Whatever about the argument of these rules being too late, it does nothing to reform the cowboy country that is the private rental sector in this country which as above, will only get worse!

That about right?

How can the central banks regulate the private rental sector? I hope you do appreciate that many landlords see are rental sector as totally in favour of the tenant and let's face it, if you've a bad tenant it is. By the way that's not me trying to excuse bad landlords.
But you can't expect a central bank to regulate private market rentals.
If anything these rules makes it harder and less attractive to become a landlord. 30% deposit will put most people off

_Kaiser_

quadrifoglio verde wrote: »

How can the central banks regulate the private rental sector? I hope you do appreciate that many landlords see are rental sector as totally in favour of the tenant and let's face it, if you've a bad tenant it is. By the way that's not me trying to excuse bad landlords.
But you can't expect a central bank to regulate private market rentals.
If anything these rules makes it harder and less attractive to become a landlord. 30% deposit will put most people off

Which is my point... there's no point in addressing one side without also addressing the other.

This will just make the situation in the rental market worse than it is AND frustrate potential buyers/people looking to trade-up.

With an election on the horizon, and the Irish obsession with property ownership generally, this seems like (yet) a very stupid move by Enda and co if they sign off on it.

Kinet1c

_Kaiser_ wrote: »

Apartments + kids = not ideal

In Europe maybe but not in our modern shoebox, poorly built, post-Celtic tiger era. I certainly wouldn't be taking on a few hundred grand's worth of debt for an apartment

75 apartments just showed up in a search on Daft.ie for 2-3 bed apartments in Dublin City, under 150k. That's not a few hundred grand worth of debt. You'd need your 10% and would have relatively low repayments plus a room each.

Jeremyr

As a person who has been saving for the past 10 years i for one welcome these rules


I'll have roughly 115k deposit and hope to buy a 3 bed semi in Dublin for around 190k


Hopefully prices drop a bit because of this and i can purchase a 3 bed as i was starting to get depressed over it

youcancallmeal

Anyone know if there is there any updated mortgage calculators online yet?

jay0109

Kangoo Man wrote: »

While I welcome the exemptions for first time buyers, in my opinion it's a bad time to introduce this when the property market is on the floor.

Property prices are most certainly not on the floor. There has been a 40% rise in a lot of Dublin in the last 18 months (per P Honohan in his interview yesterday with rte). Our property nationally is rising at something like 12 times the EU average (for 2014).
By my calculations, a lot of areas in Sth Dublin are now just 20-30% below where they were at the height of the boom.

Honohan should have brought this in at least 12 months ago

jay0109

Zebrano wrote: »

Anyone know when this is going through the oireachtas.

I the next few days per Honohan. It doesn't have to be debated or voted on ,etc. It just needs to be 'presented' before the Oireachtas....if I understand it all correctly

quadrifoglio verde

_Kaiser_ wrote: »

Which is my point... there's no point in addressing one side without also addressing the other.

This will just make the situation in the rental market worse than it is AND frustrate potential buyers/people looking to trade-up.

With an election on the horizon, and the Irish obsession with property ownership generally, this seems like (yet) a very stupid move by Enda and co if they sign off on it.

This isn't enda and co. This is a regulator independent of government doing what they should have done years ago. Just because they didn't do it years ago, doesn't mean that you don't do it now. If a building is built and then becomes a fire hazard, do we change regs around buildings, or do we just sit there and think sure it won't Happen again?

Jeremyr

jay0109 wrote: »

Property prices are most certainly not on the floor. There has been a 40% rise in a lot of Dublin in the last 18 months (per P Honohan in his interview yesterday with rte). Our property nationally is rising at something like 12 times the EU average (for 2014).
By my calculations, a lot of areas in Sth Dublin are now just 20-30% below where they were at the height of the boom.

Honohan should have brought this in at least 12 months ago

Should have been brought in 15 years ago more like

johnp001

Jeremyr wrote: »

Should have been brought in 15 years ago more like

Very true but as the saying goes: “The best time to plant a tree was 20 years ago. The second best time is now.”

PRAF

quadrifoglio verde wrote: »

Also, if it freezes people out of the market, what will happen the price? If I need to sell and no one buys at 400k, but someone offers me 350k, well then I sell at 350k because thats what the market is willing to pay. The % that id have needed to save and amount I needed to borrow is now less as well

I hope so! The real problem appears to be in Dublin and primarily in the 3 & 4 bed family home market. Some crazy price increases in that segment of the market. Not all of it driven by a credit binge mind you, but no doubt a part of it. A 5-10% drop would be nice!

PRAF

_Kaiser_ wrote: »

So what I take from this is...

- As a potential FTB who's pushing 40, Dublin will be out for sure
- Even Cork would probably be out
- With bills, a child to support, and rent to pay as it is + my age the chances of getting a mortgage NOT in the arse-end of Cavan (which I wouldn't mind if it was still 5 years ago but needs are different now) is pretty slim
- Renting is already bad enough in Dublin and this will probably get worse as these rules freeze more people out of buying
- Whatever about the argument of these rules being too late, it does nothing to reform the cowboy country that is the private rental sector in this country which as above, will only get worse!

That about right?

Firstly, totally understand your situation, I'm in a similar situation myself. Currently renting and hoping to buy. These rules make it harder for me too.

Apartment living with kids is not ideal, especially if you have more than 1 and if they are in that 2-5 years old bracket.

There are affordable places in Dublin but they might be quite a bit out from town, not well served by transport (i.e. no DART or Luas), etc.

However, I don't really blame the regulator for this. Finally we have a regulator who is doing his/her job. Now it's over to govt. We need a new housing policy to increase supply, better regulate rental prices, etc. This might be the kick up the hole they need to do something. I'd be very disappointed if they just dreamed up another demand side solution (i.e. increased mort int relief, FTB grants, etc.).

The_Conductor

Zebrano wrote: »

Anyone know when this is going through the oireachtas.

I'm not entirely sure it has to go through the Oireachtas- it may simply need the Minister's signature. Not all SIs need to go through the Houses.

Kinet1c

From here

The new borrowing rules will be in force when regulation is laid before the Oireachtas.

Central Bank Governor Patrick Honohan said this may happen in a matter of days.

Shiraz 4.99

Our family were looking to trade up to 5 bed detached with converted garage, that's all on hold now cause of this 20% requirement.
So there's a very affordable (150k) 4 bed semi in South Kildare that would really suit a growing family that will not be going on the market.
At our prices builders can't afford to start new developments so there's zero activity in our area.

cpoh1

Shiraz 4.99 wrote: »

Our family were looking to trade up to 5 bed detached with converted garage, that's all on hold now cause of this 20% requirement.
So there's a very affordable (150k) 4 bed semi in South Kildare that would really suit a growing family that will not be going on the market.
At our prices builders can't afford to start new developments so there's zero activity in our area.

But that 5 bed detached house will become more affordable down the line. Anyone who is borrowing more than 3.5 times a combined salary and doesnt have a decent deposit is nuts.

_Kaiser_

quadrifoglio verde wrote: »

This isn't enda and co. This is a regulator independent of government doing what they should have done years ago. Just because they didn't do it years ago, doesn't mean that you don't do it now. If a building is built and then becomes a fire hazard, do we change regs around buildings, or do we just sit there and think sure it won't Happen again?

You don't really believe in the so-called independence of the Regulators we have in this country do you? They're no more "independent" than the judges that are appointed by government.

And ultimately if these rules require government sign-off to come into effect, it is up to Enda and Co (even though they'll happily try to pass it back to Regulator if/when it all goes pear-shaped).

Like it or not, if more people now can't afford to buy, and those who are renting find prices going up even further because of this increased demand coupled with reduced supply, it will be the Government who get it in the neck come polling day - and rightly so IMO. They are, after all supposed to govern in the best interests of all citizens, not just tinker at the edges by making half-assed attempts to deal with the issues so they can say "hey we did something" which is usually the norm.

PRAF wrote: »

However, I don't really blame the regulator for this. Finally we have a regulator who is doing his/her job. Now it's over to govt. We need a new housing policy to increase supply, better regulate rental prices, etc. This might be the kick up the hole they need to do something. I'd be very disappointed if they just dreamed up another demand side solution (i.e. increased mort int relief, FTB grants, etc.).

Unfortunately I think that's exactly what they've done and the housing policies and rental sector reform you mention (and which I fully agree with) won't happen because renting is still seen as something that has to be "endured" on the road to ownership - not as a viable long-term solution in itself.

PRAF

_Kaiser_ wrote: »

Unfortunately I think that's exactly what they've done and the housing policies and rental sector reform you mention (and which I fully agree with) won't happen because renting is still seen as something that has to be "endured" on the road to ownership - not as a viable long-term solution in itself.

Yeah, I was very disappointed with a recent report (commissioned by govt I think but authored by someone who appeared to have a vested interest) which said no to curbs on rental increases.

In my mind, we now have a ceiling on credit fueled price increases. It's as good a time as any to tighten up rules around rent increases. Why are some landlords happy with a 4-7% yield, when others seem to want 10%+.

I am somewhat optimistic on the govts plans to increase the supply of social housing. However, much more still needs to be done on the supply side. Significant taxes on the hoarding of suitable land for development should also be considered. I also think planning laws need to change and we need to start embracing mid rise (8-16 story) in our city centres

the kelt

Patrick Honohan "First time buyers were not to blame for the previous bubble"

So why then are those previous first time buyers hoping to trade up being the ones most punished by the new rules?

handlemaster

will sellers in dublin now not be tempted to push their asking prices towards 220 particularly for property tgat was around 150 k etc... thoses who are pushed out from buying above 220k pulling prices up. i think the new rules are good should help came down.

dearg lady

the kelt wrote: »

Patrick Honohan "First time buyers were not to blame for the previous bubble"

So why then are those previous first time buyers hoping to trade up being the ones most punished by the new rules?

They're not though, they're excluded.

I'm not crazy about the 2 different sets of rules, and the 220k shelf, I'm not sure how that will pan out in reality, but it's certainly a step in the right direction

RoboRat

I cant fathom the thinking behind penalising people who obviously have paid for their mortgage and have a proven track record. The people who this will most affect are those who bought in the final years preceding the recession and who have been saddled which a huge mortgage on a property and the negative equity that followed. The same people who rather than walking away from their debt, like a lot of developers done, sucked it up and paid what they owed.

They need to rethink this and possibly add a caveat to cater for people like myself who have been stuck in a rut and want to get on with our lives. I want to sell because I hate being a landlord and my life has changed a lot from when I bought the place. At the time is was perfect but my life changed, my job moved and I had kids and my house is not a viable option anymore. I had intended on selling this year when my debt had levelled against the value and I had the 10% - I would still be selling for about 25% less than what I paid but I was willing to accept that. Now, I am being thrown back into limbo again.