Central Bank to limit amount banks lend for home purchase

TrishSimon

RoboRat wrote: »

Can anyone clarify if this is true? I bought my house by myself and my name is only on the application as we were not together when I purchased. Could my wife apply and we get the 10% FTB rate?

Unfortunately no RoboRat, once married your wife is now classed as a non FTB the same for my husband it states it in the Irish Times article

http://www.irishtimes.com/business/economy/what-will-the-new-central-bank-mortgage-regime-mean-to-you-1.2082519

by the seaside

TrishSimon wrote: »

No I am a non FTB, husband is a FTB as I purchased a property in 2009 6 months after I met my husband via the affordable housing scheme so its a one bed in D24 not a huge mortgage and the rent from it covers the cost of mortgage so I am not profiting from it which doesn't bother me as I never planned on it being an investment but I never planned on renting for 2.5 years either but we did and saved the 10% deposit but with new rules we will fall into the higher bracket as he is now classed as a non FTB as he is married to me unfortunately. We did start the mortgage process before xmas but were told to save a few more quid by AIB that is what we were doing but now these new plans have changed everything.
Calculations on a 230K house we now need € 50,476.00 which nearly makes me laugh its so ridiculous and I know I am never going to be able to save that amount so as someone else said I hope I win the lotto !!

You have my sympathy - it's a tough position. Guessing you don't have equity in other house to make it worth selling?

Is it possible for your hubby to get a mortgage on his own to cover the repayments (would salary cover it and is it allowed?? Edit: you've already answered above.

Is it worth applying anyway as they can have up to 15% of their loan value at <20% deposit? It sounds like you've already talked to their AIB and can show you are taking their advice. It may take some time for the banks to work out what to do with this 15%, so you may have to be patient over the next few months. But best of luck.

TrishSimon

RoboRat wrote: »

Can anyone clarify if this is true? I bought my house by myself and my name is only on the application as we were not together when I purchased. Could my wife apply and we get the 10% FTB rate?

A first time buyer is defined as a borrower to whom no housing loan has ever before been advanced. According to the Central Bank: “Where the borrower under a housing loan is more than one person and one or more of those persons has previously been advanced a housing loan, none of those persons is a first-time buyer.”

ghostdancer

RoboRat wrote: »

Can anyone clarify if this is true? I bought my house by myself and my name is only on the application as we were not together when I purchased. Could my wife apply and we get the 10% FTB rate?

yes, presumably she could apply on her own for a single mortgage.
of course, then it would be assessed for her financial situation only, so whatever you're earning couldn't be put toward getting a higher amount.
she would presumably have to name you as a dependent too.

TrishSimon

by the seaside wrote: »

You have my sympathy - it's a tough position. Guessing you don't have equity in other house to make it worth selling?

Is it possible for your hubby to get a mortgage on his own to cover the repayments (would salary cover it and is it allowed?? Edit: you've already answered above.

Is it worth applying anyway as they can have up to 15% of their loan value at <20% deposit? It sounds like you've already talked to their AIB and can show you are taking their advice. It may take some time for the banks to work out what to do with this 15%, so you may have to be patient over the next few months. But best of luck.

Thanks for your advice someone else previously told me I was poor mouthing no real equity in the apartment at the moment I bought for 123,500 and its worth about 100K I owe 117K at this point we have been told in the next two years when the whole complex is up and running it might go up to 145K but I wont count my chickens.
Husbands salary is 33K he would only get max 115K with new rules so possibly I could buy a barna shed with that lol..
We are just going to save there is also the option of the Home Choice Loan so we are looking into that at the moment.

Kinet1c

CarpeDiem85 wrote: »

Do the government have any schemes to help first time buyers get on the property ladder?

There is no ladder anymore, if you're buying now then you should expect to stay there for 10+ years unless you increase your earnings massively or come in to a windfall. The idea of getting on the ladder is one of many small reasons the CB has brought this in. I've already pointed out, there's plenty of 2-3 bed apartments in Dublin for under 150k which are quite nice and affordable for a single applicant.

ghostdancer

TrishSimon wrote: »

Unfortunately no RoboRat, once married your wife is now classed as a non FTB the same for my husband it states it in the Irish Times article

http://www.irishtimes.com/business/economy/what-will-the-new-central-bank-mortgage-regime-mean-to-you-1.2082519

not so. that's only if it's a joint application.
if his wife was applying as a single applicant, his status as a FTB/non-FTB wouldn't be relevant.

as i said above though, the amount that the lender will be willing to lend will likely be much less than a joint application.

TrishSimon

ghostdancer wrote: »

not so. that's only if it's a joint application.
if his wife was applying as a single applicant, his status as a FTB/non-FTB wouldn't be relevant.

as i said above though, the amount that the lender will be willing to lend will likely be much less than a joint application.

Yes I suppose if she is on a really good wage she will get 3.5 times it and it again depends on the price of the house they want to buy.

TrishSimon

Kinet1c wrote: »

There is no ladder anymore, if you're buying now then you should expect to stay there for 10+ years unless you increase your earnings massively or come in to windfall. The idea of getting on the ladder is one of many small reasons the CB has brought this in. I've already pointed out, there's plenty of 2-3 bed apartments in Dublin for under 150k which are quite nice and affordable for a single applicant.

No so true there is the Home Choice Loan for FTB its a government loan and it was in the Irish Times this week BUT you have to have been refused a mortgage from 2 financial institutions to be accepted for this one its a 92% loan and has some conditions.

Here is the link :

http://www.homechoiceloan.ie/

CarpeDiem85

Just re read the rules and I'm hoping that property prices stay in around the €200,000 mark in the area I hope to buy in. Hopefully I'll get in by the skin of my teeth as a FTB.

RoboRat

Going to have to hope they see some sense and add a caveat for those who are stuck in a predicament where they are looking to move house, have the 10%, can only achieve parity on what is owed and what they get, so will not get any positive equity from the sale.

Otherwise I am hoping that if I go to the bank and tell them I am looking to buy a house for less than what is outstanding that they can put me into that small percentage bracket and approve based on the fact that I have a proven track record.

Realistically, I probably wont even get parity so it might not be a bad thing although I really didn't want to carry negative equity over. I can't believe that this I may end up hoping I don't achieve parity or equity, thats how fcuked up this is.

MayBea

johnp001 wrote: »

Interesting data. Another way of looking at it would be that some portion of those 3,620 sellers would have accepted the lower offers that the market was able to provide and the wildly out-of-line property price inflation last year would have been lower as a result.

It's difficult to say, as in the hypothetical situation where some STB was aiming at 350K house with 35K deposit and 315K loan, he would only be left with 175K loan (and 35K deposit) totalling to 210K only. There are hardly any houses in this region..
All in all, Cash is still King and I wonder what is ahead of us in 2015 from this perspective.

RoboRat

Yes I suppose if she is on a really good wage she will get 3.5 times it and it again depends on the price of the house they want to buy.

She is on a reasonable wage (about €42k) so that would be €147k. We do have land so from talking to the bank, we can offset the value of the land against the mortgage deposit but we were veering away from building as the land is quite remote and not ideal for me.

gaius c

mrmitty wrote: »

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?

Most ridiculous strawman on the thread and that takes some doing.

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.

Or they can sell at a profit but only if they move now before falls come in and there's a rush for the exits...
At this stage, if they paid their mortgage, only people who bought from 2003-2004 onwards should be in negative equity. That's a tiny sub-section of the market.

The Spider wrote: »

I think you'll find that people would rather have the asset rented out paying for itself than crystallising the debt, and finding that they then have to pay the remaining outstanding debt, when they could have had a tenant paying it.

They can't get their 20% deposit unless they sell it first...

TrishSimon wrote: »

No I am a non FTB, husband is a FTB as I purchased a property in 2009 6 months after I met my husband via the affordable housing scheme so its a one bed in D24 not a huge mortgage and the rent from it covers the cost of mortgage so I am not profiting from it which doesn't bother me as I never planned on it being an investment but I never planned on renting for 2.5 years either but we did and saved the 10% deposit but with new rules we will fall into the higher bracket as he is now classed as a non FTB as he is married to me unfortunately. We did start the mortgage process before xmas but were told to save a few more quid by AIB that is what we were doing but now these new plans have changed everything.
Calculations on a 230K house we now need € 50,476.00 which nearly makes me laugh its so ridiculous and I know I am never going to be able to save that amount so as someone else said I hope I win the lotto !!

Sorry if this seems cruel but if you can't save that amount on two incomes, you probably can't afford the house either.

CarpeDiem85 wrote: »

Do the government have any schemes to help first time buyers get on the property ladder?

I think this country has had enough schemes to get FTB's tied up in debt to last a lifetime.

TrishSimon wrote: »

No so true there is the Home Choice Loan for FTB its a government loan and it was in the Irish Times this week BUT you have to have been refused a mortgage from 2 financial institutions to be accepted for this one its a 92% loan and has some conditions.

Here is the link :

http://www.homechoiceloan.ie/

Or as they used to be called "sub-prime mortgages".

RoboRat

only people who bought from 2003-2004 should be in negative equity.

Wrong, people who bought in 2005/ 2006/ 2007 and early 2008 would be in a far worse position as prices were only going up.

gaius c

My post is edited.

TrishSimon

gaius c wrote: »

Most ridiculous strawman on the thread and that takes some doing.


Or they can sell at a profit but only if they move now before falls come in and there's a rush for the exits...
At this stage, if they paid their mortgage, only people who bought from 2003-2004 onwards should be in negative equity. That's a tiny sub-section of the market.


They can't get their 20% deposit unless they sell it first...


Sorry if this seems cruel but if you can't save that amount on two incomes, you probably can't afford the house either.


I think this country has had enough schemes to get FTB's tied up in debt to last a lifetime.


Or as they used to be called "sub-prime mortgages".

Thanks for your wisdom Gias on everyone situation you obviously know us all so well, please dont quote on something you know nothing about I pay rent on a property plus a mortgage as stated on a small property so in fact we can afford a mortgage on a house worth 230K !! We pay rent € 1100, I pay mortgage 601.88 and we also save approx 1100.00 per month so yes we can afford to pay a mortgage.

RoboRat

Thanks for your wisdom Gias on everyone situation you obviously know us all so well, please dont quote on something you know nothing about I pay rent on a property plus a mortgage as stated on a small property so in fact we can afford a mortgage on a house worth 230K !! We pay rent € 1100, I pay mortgage 601.88 and we also save approx 1100.00 per month so yes we can afford to pay a mortgage.

Never let facts get in the way of a good assumption though :-P

gaius c

You know you're not supposed to be renting out a house purchased under the affordable homes scheme?

Flem31

johnp001 wrote: »

For completeness, the 2015 pricing should also include stamp duty at 1%
I do not see that there is a threshold to raise the market towards €220k. It is not comparable to the stamp duty threshold above. The price vs deposit graph is a continuous function with an angle at €220k not discontinuous like the old stamp duty.

Ok fair point re the stamp duty, so in 2015 26.3k was needed versus 25.3k needed in 2002.

Once a figure is mentioned like 220k, it will affect behaviour as rightly or wrongly a state body has set an amount above which, a premium is required to be paid. This will have an impact as sellers know that below 220k FTB only needs 10% but above it, the percentage creeps up and it is more uncertain in the short term. Above 220k the buyer will be looking at ways to get it back closer to that amount as every 1k drop saves 100 off a deposit.

Re your continuous and discontinuous lines, the old stamp duty rates had a awful kick in the teeth for anyone the wrong side of a limit. So the initial step up's were a lot steeper than the gradual process we have now.

Old Stamp Duty limit was 190,455.
If you paid 190,000 zero stamp
if you paid 191,000 paid over 5,700

The point I am making is that even with these nasty step up's in the stamp duty thresholds, the market quickly overcame them and made them meaningless as any deterrent from mad house price increases.

At 230k, there is only a 1k difference between 2002 and 2015 requirements so the amount needed is back to old levels, one difference being is the amount wasted on a pointless tax is much less now.

The_Conductor

As for negative equity and prices- I am not in negative equity- however, the townhouse in which I'm currently living- is now worth less than when I bought it in 1998- 17 years ago.........

TrishSimon

gaius c wrote: »

You know you're not supposed to be renting out a house purchased under the affordable homes scheme?

Actually Gaius your wrong in certain circumstances you are allowed again you dont know anything about my personal situation nor have you asked did I seek permission to rent it.

handlemaster

TrishSimon wrote: »

Alot of people are I think, personally my plan was to buy a house this year as I had the 10% but now I am looking at 2017 when I will be 41 either that or leave and emigrate to Canada or Australia where there is a better chance in life.

you obviously havent looked at house prices there

Kinet1c

The new CB regulations are the equivalent of putting "Do not eat" on packs of silica gel because a lot of stupid people need protecting from themselves. Many posts on here (and elsewhere) have proved that Honohan was right.

TrishSimon

handlemaster wrote: »

you obviously havent looked at house prices there

I've looked into Australia not Canada its just an option as this country everytime you get yourself on top of things you get whacked in the face with something else financially.
I have friends in both Australia and Canada so we can look into it further after we decided where to go from here.

I just dont think the CB have thought this through properly.

daheff

1 point I would make (that I think has been forgotten), is that in the boom times most FTB people did put down 8-10% deposits on houses/apartments. What was the average house price? If I remember correctly it was in the region of 300K for your average FTB (so a deposit of 24K to 30K)

So FTB put 10% on up to 220K properties...so thats 22K....it stretches up to 20%. If your average FTB home is 300K (which it isnt), then by my calcs the deposit is a max of 38K**

So theres a max of 8k difference between good days and now. At an average 500 saving per month thats an extra 16mths of savings.


So on a like for like basis, yes people are putting more down now as a deposit/save for longer, but with lower sales prices I'd reckon the deposit amount now is similar to what it was 5 odd years ago.

I know people are annoyed that they will have to save more now to buy a property, but over the long term I reckon people buying now are still at an advantage to people who bought in the boom. Lower price now/lower LTV makes it easier for people buying starter homes now to move to bigger homes as they & their families get older in the future.

The people who bought in the boom times are losing out here as price inflation has been cut so the time when they get out of negative equity is delayed


**(pretty sure its lower due to tiering of the deposit, but dont have specifics to hand so I'm taking worst case scenario)

RoboRat

The_Conductor wrote: »

As for negative equity and prices- I am not in negative equity- however, the townhouse in which I'm currently living- is now worth less than when I bought it in 1998- 17 years ago.........

Not sure what you are trying to point out? Of course you are not in negative equity because you have 17 years of your mortgage paid off.

I can only assume that you are telling people to hold onto their properties until they can are not in negative equity but then you hit another wall because you then are older and the banks will only give you a shorter term mortgage.

RecordStraight

daheff wrote: »

So theres a max of 8k difference between good days and now.

Minor point: the 'good days' were actually the bad days - a bubble that ruined hundreds of thousands of people, and bankrupted the country. The last genuinely 'good days' were probably the 90s. Anyway...

daheff

The most serious consequence of this latest piece of meddling by the CB is that we'll see more and more property owned by investment funds (rather than landlords).

Investment funds will have the cash to buy up chunks of real estate (like they do in other countries). so as long as rents keep increasing, the yield will be higher for them so they will look to invest more. Over time this will mean that the average person will be priced out of the market more & more (at least of the popular places to live)- dont believe me? look at Germany /france/italy etc. People rent more there than here....why? Not because they want to, but because they cant afford to buy in the areas where they want to. As people in Germany/France/Italy are more open to renting to live in areas they want to (better rental laws etc), they are prepared to rent in the areas where they want to live.

handlemaster

TrishSimon wrote: »

I've looked into Australia not Canada its just an option as this country everytime you get yourself on top of things you get whacked in the face with something else financially.
I have friends in both Australia and Canada so we can look into it further after we decided where to go from here.

I just dont think the CB have thought this through properly.

it will all balance out in the end. it will help prevent another elt down in the future. pastures abroad always look greener. its the same really different place