Central Bank to limit amount banks lend for home purchase

flogen

I'm curious about the logic of those saying that €220k & 3.5 LVI is too low for Dublin - it may well be at the moment but if that is the case, do people not think it will force prices lower as a result?

I'd also question the argument that this will push currently lower prices up towards 220k... surely if sellers are all trying to hit that €220k 'sweet-spot' to attract FTBs then you'll also see some property prices falling towards that line?

So a property listed @ €230k-240k today might slip down towards €220k... this would mean that a slightly less attractive property - that might be listed today at €220k - will have to slip down to €200-210k in order to compete... and so on. I know I'm applying logic to the Irish property market, which is a fool's errand, but I think it's a slightly more logical outcome than seeing prices rise to €220k.

joey100

Just wondering if anyone can help me out or might know a bit more about the situation than I do. Myself and my partner were approved for a mortgage in September (10% deposit and house is less than 3.5 times our salary). We got full sanction and deposit has been placed on a new build house. Unfortunately the builder has been slow getting the house finished and now looks like we have to apply for an extension to the mortgage offer. Will these new rules come into effect for us or because we have already received sanction and the deposit is paid are we ok? Thanks for your help, Joe

desertcircus

_Kaiser_ wrote: »

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.



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.

The regulator has taken an action which is within his remit. Anything else to do with the housing market isn't in his job description. He's trying to insulate us from price shocks and prevent a second bubble. As long as those two things are done, he's succeeded. Everything else is the government's responsibility.

mrmitty

So now that banks can discriminate in favor of first time buyers, what's next, the color of your skin or your gender?
Relegion perhaps?

jay0109

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 being punished. If they have equity in their gaff, that'll go some way towards the deposit for the house their trading up to.
If their in NE, they have an exemption from these new rules

matt-dublin

jay0109 wrote: »

They're not being punished. If they have equity in their gaff, that'll go some way towards the deposit for the house their trading up to.
If their in NE, they have an exemption from these new rules

and if they're just breaking even they're shafted.

jay0109

matt-dublin wrote: »

and if they're just breaking even they're shafted.

Calm down everyone, calm down...there's a lot of emotive stuff on here at present.

If this brings house prices down or even just stablises them, instead of the top of the euro league stuff we've seen the past 2 years, is that not good for everyone....1st timers, 2nd timers, future generations etc

matt-dublin

jay0109 wrote: »

Calm down everyone, calm down...there's a lot of emotive stuff on here at present.

If this brings house prices down or even just stablises them, instead of the top of the euro league stuff we've seen the past 2 years, is that not good for everyone....1st timers, 2nd timers, future generations etc

It won't reduce the house prices...

- people currently selling will withdraw their houses for fear of price reduction.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve.

result - less property in the market equalling more demand, prices stagnate or rise.

on the flip side, the property prices drop and everyone who has bought in the last 3-5 years instantly go into negative equity. But then again this will stop people from selling. Because they won't sell again it will reduce the quantity of houses. Again, house prices will begin to raise due to availability.

People saving for deposits will end up spending less of their disposable income to save harder. This will result in a lower tax take for the revenue and retail expenditure across the county.

Less house sales will also mean lower revenue on stamp duty so its likely that 1% rate will come up as well.

RoboRat

They're not being punished. If they have equity in their gaff, that'll go some way towards the deposit for the house their trading up to.
If their in NE, they have an exemption from these new rules

Where did you see about the NE? I cant find anything about that?

First time buyers were not to blame for the previous bubble

This is a stupid comment, the 'regulator' the banks and the central bank were to blame and anybody who bought during the previous bubble and who continued to pay their mortgages, even though they were thoroughly shafted by the government and the CB, should not be penalised. I wish I had just told them to fcuk off and declared bankruptcy/ personal insolvency back in 2009 rather than standing by my debt. I would be better off now if I done that.

matt-dublin

completely agree on the banks comment. I've gone through hell over the last 8 years to ensure i've a good repayment history so that when i can purchase again (was hoping in the very near future) I will have a good credit history, along with my 10% deposit and joint salaries of myself and future wife to be.

johnp001

matt-dublin wrote: »

It won't reduce the house prices...

- people currently selling will withdraw their houses for fear of price reduction.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve.

result - less property in the market equalling more demand, prices stagnate or rise.

on the flip side, the property prices drop and everyone who has bought in the last 3-5 years instantly go into negative equity. But then again this will stop people from selling. Because they won't sell again it will reduce the quantity of houses. Again, house prices will begin to raise due to availability.

People saving for deposits will end up spending less of their disposable income to save harder. This will result in a lower tax take for the revenue and retail expenditure across the county.

Less house sales will also mean lower revenue on stamp duty so its likely that 1% rate will come up as well.

Alternative scenario:
- people currently selling will withdraw their houses for fear of price reduction lower their expectations slightly and sell quickly in order to take maximum advantage before future price decreases in the market.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve. will sell this year instead

matt-dublin

johnp001 wrote: »

Alternative scenario:
- people currently selling will withdraw their houses for fear of price reduction lower their expectations slightly and sell quickly in order to take maximum advantage before future price decreases in the market.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve. will sell this year instead

scenario is the key word there.

in reality it won't happen.

RoboRat

RoboRat wrote: »

Where did you see about the NE? I cant find anything about that?



This is a stupid comment, the 'regulator' the banks and the central bank were to blame and anybody who bought during the previous bubble and who continued to pay their mortgages, even though they were thoroughly shafted by the government and the CB, should not be penalised. I wish I had just told them to fcuk off and declared bankruptcy/ personal insolvency back in 2009 rather than standing by my debt. I would be better off now if I done that.

If this brings house prices down or even just stablises them, instead of the top of the euro league stuff we've seen the past 2 years, is that not good for everyone....1st timers, 2nd timers, future generations etc

Its not good for those who bought in 2004 - 2008 and who incurred huge negative equity. The people who didn't walk away and paid their dues. I am not saying the idea behind it is wrong, I am just saying that like the tax relief, they need to add a caveat to look after those people. Perhaps leave it at 10% for those people. Its would not be too difficult to do this and these people have proven that they are able to pay and more importantly can be trusted to pay.

jank

_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?

There are places in Cork where you can buy a house for a little over 100k.
http://www.daft.ie/sales/6-inis-eoghain-mayfield-cork/972807/

If you are pushing 40 and have very little in the way of savings then I would suggest one has to blame themselves and not some other entity.

The central banks job is to regulate the banks, not the housing market. People seem to be forgetting that. It is not the central bank to dictate or say what type of rental market should exist in Ireland. For that, one has to look at the government.

dearg lady

matt-dublin wrote: »

It won't reduce the house prices...

- people currently selling will withdraw their houses for fear of price reduction.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve.

result - less property in the market equalling more demand, prices stagnate or rise.

on the flip side, the property prices drop and everyone who has bought in the last 3-5 years instantly go into negative equity. But then again this will stop people from selling. Because they won't sell again it will reduce the quantity of houses. Again, house prices will begin to raise due to availability.

People saving for deposits will end up spending less of their disposable income to save harder. This will result in a lower tax take for the revenue and retail expenditure across the county.

Less house sales will also mean lower revenue on stamp duty so its likely that 1% rate will come up as well.

I don't understand, you're saying it won't reduce prices but will push people into negative equity, which is it!

Villa05

_Kaiser_ wrote: »

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

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.

Enda cant block it if they do wewillrevert to th 20% deposit.
i for one am delighted that one state agency is showing signs od competency.

As for the others and joined up thinking. You get what you vote for.

PRAF

matt-dublin wrote: »

It won't reduce the house prices...

- people currently selling will withdraw their houses for fear of price reduction.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve.

result - less property in the market equalling more demand, prices stagnate or rise.

on the flip side, the property prices drop and everyone who has bought in the last 3-5 years instantly go into negative equity. But then again this will stop people from selling. Because they won't sell again it will reduce the quantity of houses. Again, house prices will begin to raise due to availability.

People saving for deposits will end up spending less of their disposable income to save harder. This will result in a lower tax take for the revenue and retail expenditure across the county.

Less house sales will also mean lower revenue on stamp duty so its likely that 1% rate will come up as well.

OR sellers begin to realise that 10%+ capital appreciation per year is no longer realistic. They lower their expectations a bit knowing that prices are now inextricably linked to real incomes and hard saved deposits. Rather than waiting to sell next year (in anticipation of another 15% increase), they sell this year.

It could go either way.

However, your point about the macro effects of tens of thousands of families scrimping and saving for 20% deposits is a very good one. Similarly, it can't be a good idea for the economy to allow rent takers to endlessly increase rent, sucking money out of the productive economy.

That's why the govt has to move on curbing rental price inflation, increasing the supply of properties, examining the costs of building, taxing the hoarding of development land, etc.

matt-dublin

dearg lady wrote: »

I don't understand, you're saying it won't reduce prices but will push people into negative equity, which is it!

I'm highlighting the potential polar results.

either which way its not good for anyone that currently owns a house or someone trying to purchase a property.

RoboRat

matt-dublin wrote: »

completely agree on the banks comment. I've gone through hell over the last 8 years to ensure i've a good repayment history so that when i can purchase again (was hoping in the very near future) I will have a good credit history, along with my 10% deposit and joint salaries of myself and future wife to be.

Exact same boat as myself. I have gone through hell for the last 9 years and this is the thanks I get. Seann Quinn racks up a €1.2bn debt, pays off €20k and has his life back now. Bualadh bos for the CB and government on setting a fine example.

matt-dublin

PRAF wrote: »

OR sellers begin to realise that 10%+ capital appreciation per year is no longer realistic. They lower their expectations a bit knowing that prices are now inextricably linked to real incomes and hard saved deposits. Rather than waiting to sell next year (in anticipation of another 15% increase), they sell this year.

It could go either way.

However, your point about the macro effects of tens of thousands of families scrimping and saving for 20% deposits is a very good one. Similarly, it can't be a good idea for the economy to allow rent takers to endlessly increase rent, sucking money out of the productive economy.

That's why the govt has to move on curbing rental price inflation, increasing the supply of properties, examining the costs of building, taxing the hoarding of development land, etc.

noone is looking (well me certainly) for capital appreciation, im more than happy to buy the house i was looking at in south dublin for the current proposed price.

Based on deposit and existing LTI it was going to be coming out at less than 35% of our nett income.

We have a deposit waiting and ready to go. We're just waiting to sell my apartment that i purchased in the boom 8 years ago and is just breaking even.

now, we won't be able to buy it.

now it sounds like my best option will be to drop the price by 20k, avail of the negative equity mortgage rules and see if we can get through that way.

the kelt

RoboRat wrote: »

Its not good for those who bought in 2004 - 2008 and who incurred huge negative equity. The people who didn't walk away and paid their dues. I am not saying the idea behind it is wrong, I am just saying that like the tax relief, they need to add a caveat to look after those people. Perhaps leave it at 10% for those people. Its would not be too difficult to do this and these people have proven that they are able to pay and more importantly can be trusted to pay.

In other words the forgotten damned generation.

The generation most hit in recent years and once again most hit again. Nothing been done to help this generation again.

I firmly believe this government/regulators do not realise how many people are in this exact situation or just arent bothered about them. They may just realise come election time i feel.

johnp001

johnp001 wrote: »

Alternative scenario:
- people currently selling will withdraw their houses for fear of price reduction lower their expectations slightly and sell quickly in order to take maximum advantage before future price decreases in the market.
- people thinking of selling next year won't sell because they won't get the prices they want to achieve. will sell this year instead

matt-dublin wrote: »

scenario is the key word there.

in reality it won't happen.

It is significantly more coherent than the situation proposed in your post.
Lots of threads on here and elsewhere recently with people asking "should I sell now or hold out for more next year?" If the introduction of these new rules makes up their mind for them then the alternative scenario in my post becomes quite likely.
May I ask, exactly why do you think it won't happen?

PRAF

RoboRat wrote: »

Exact same boat as myself. I have gone through hell for the last 9 years and this is the thanks I get. Seann Quinn racks up a €1.2bn debt, pays off €20k and has his life back now. Bualadh bos for the CB and government on setting a fine example.

Understand your frustration and empathise with it. I'm in the same boat. I don't think it's correct to blame the regulator for regulating the financial services industry. They've now done their bit, against the wishes of the govt and the rest of the political parties.

Overall housing policy is the responsibility of the govt. In particular, the minister in charge. I think it was Jan O'Sullivan for most of the last few years. I think it is Paudie Coffey now.

TrishSimon

joey100 wrote: »

Just wondering if anyone can help me out or might know a bit more about the situation than I do. Myself and my partner were approved for a mortgage in September (10% deposit and house is less than 3.5 times our salary). We got full sanction and deposit has been placed on a new build house. Unfortunately the builder has been slow getting the house finished and now looks like we have to apply for an extension to the mortgage offer. Will these new rules come into effect for us or because we have already received sanction and the deposit is paid are we ok? Thanks for your help, Joe

I would imagine you are okay Joe because you have contracts in place and signed the mortgage agreement with the banks, this is for people who are just starting off in the process.

matt-dublin

johnp001 wrote: »

It is significantly more coherent than the situation proposed in your post.
Lots of threads on here and elsewhere recently with people asking "should I sell now or hold out for more next year?" If the introduction of these new rules makes up their mind for them then the alternative scenario in my post becomes quite likely.
May I ask, exactly why do you think it won't happen?

because you will find out that people who were planning on selling had enough equity to cover their deposits for new homes. now they wont.

zl1whqvjs75cdy

the kelt wrote: »

In other words the forgotten damned generation.

The generation most hit in recent years and once again most hit again. Nothing been done to help this generation again.

I firmly believe this government/regulators do not realise how many people are in this exact situation or just arent bothered about them. They may just realise come election time i feel.

You mean the generation that caused the mess in the first place?

RoboRat

the kelt wrote: »

In other words the forgotten damned generation.

The generation most hit in recent years and once again most hit again. Nothing been done to help this generation again.

I firmly believe this government/regulators do not realise how many people are in this exact situation or just arent bothered about them. They may just realise come election time i feel.

Could you image the clusterfcuk the country would be in if this generation had decided to go down the route of good 'oul Seanie Quinn? We didn't and once again we get the arse ripped off ourselves because rather than being petulant self entitled cnuts, we sucked it up and paid our dues.

mrmitty

matt-dublin wrote: »

noone is looking (well me certainly) for capital appreciation, im more than happy to buy the house i was looking at in south dublin for the current proposed price.

Based on deposit and existing LTI it was going to be coming out at less than 35% of our nett income.

We have a deposit waiting and ready to go. We're just waiting to sell my apartment that i purchased in the boom 8 years ago and is just breaking even.

now, we won't be able to buy it.

now it sounds like my best option will be to drop the price by 20k, avail of the negative equity mortgage rules and see if we can get through that way.

I thought you said that prices were going to rise?

Kinet1c

This move by the CB will force the Govt (current or future) to actually act on the housing situation as opposed to just grandstanding, as they usually do, in the hope the next person (sucker) will look after it.

matt-dublin

donkeyoaty0099 wrote: »

You mean the generation that caused the mess in the first place?

your perception here is wrong, we didn't cause the mess. Developers & banks caused the mess, supported by our government.

If you offer 110% & 100% mortgages people will take them. (I personally didn't, I got 85% and still ended up in negative equity)
Give a dog a bone and he'll chew it.

I don't see the developers being punished by this.
I don't see the banks getting a slap either.
Anglo's board of directors should have received jail time for their parts.