Central Bank to limit amount banks lend for home purchase

handlemaster

CarpeDiem85 wrote: »

Do the new rules take into consideration if you work in the public sector?

ontop of special pensions guaranteed pay etc.. . why would public sector be treated differently ?

Balmed Out

Tobyglen wrote: »

Single people harshly dealt with.

Can't see why couple with kid/s have twice repayment capacity than single person. Both 3 1/2 times counted.

Banks take into account all dependencies when evaluating a mortgage proposal, there are also a lot of single parents in Ireland too.

I might be lambasted for this but I think there should be stricter criteria for young and especially young single people.
It could all be rumor but I often hear of two types of defaulter. The older BTL and the younger more likely single who has gone and bought a home before losing their job and emigrating or more often have bought and been moved to a different location with work. The more settled - couples, families etc are (at a guess) less likely to up sticks. None of this is based on facts and figures so I may be wildly wrong but it seems to me that along with BTL investors youth should also flag an increased risk. Perhaps it does already and it is far less of an issue since the end of 100% mortgages.

Balmed Out

handlemaster wrote: »

ontop of special pensions guaranteed pay etc.. . why would public sector be treated differently ?

They have less of a chance of losing their jobs and have great pensions so Id guess the banks love them. Far lower risk.

The_Conductor

Balmed Out wrote: »

They have less of a chance of losing their jobs and have great pensions so Id guess the banks love them. Far lower risk.

Great pensions? Its a defined benefit pension- but for the vast majority of current public sector employees- their pension is the contributory old age pension- i.e. the self same 12k that any PRSI paying employee is entitled to. Their vast majority of their pension is this.
People have to stop assuming that public sector employees are treated like politicians- the vast majority of public sector employees might get better treated were they employed in McDonalds.

dearg lady

P. Breathnach wrote: »

But how can you allocate 100 houses in, say, Dublin 6 between 150 purchasers? Whatever way you approach it, you will end up with 50 disappointed bidders. And you might end up with prices having been bid up wildly, enabled by easy credit. That's the sort of thing that has been happening. Because, however much money is made available to purchasers, the short-term supply is inelastic: the market will not conjure up 50 more houses in Dublin 6.

As always, an excellent way with words.i think you've summed up the need for the new restrictions in that paragraph perfectly!!

markpb wrote: »

Are you suggesting that some people should buy starter homes just to get on the property ladder? How very quaint

Of late the whole idea of a property ladder has (understandably) got some bad press but in a well functioning property market it's no bad thing. A young couple or single buy a cheap 1 or 2 bed apartment, live there for 5-10 years, build equity by paying down the mortgage. Use this equity when they sell to purchase a 3 or 4 bed house more suitable to their needs. It's not for everyone, but a viable option nonetheless.
I wish we lived in society where people trying to buy a place to live didn't feel like they were taking a massive gamble. You see threads on here every week, should I buy/sell now or wait.

Edit: Hopefully the new restrictions will go some way towards stabilising the housing market

handlemaster wrote: »

ontop of special pensions guaranteed pay etc.. . why would public sector be treated differently ?

Actually I wonder would they be extended smaller loans due to lower net pay

kippy

goz83 wrote: »

Nobody should be priced out of a market for the sake of inflating the property market, which is what is happening. If the property market were properly balanced, prices would be almost half of what they are now. The 2012 prices, were for the most part, spot on.

By all means, be prudent.....but keep in mind that your own circumstances are not the only ones in existence. I may be wrong, but the impression I get is that you are a single professional looking for a property at a price you see as reasonable. That's fair enough, but throw into the mix a couple of kids and rent increases and maybe you don't want to be tied into another year of renting, possibly in a new location, because the landlord is selling the property you are living in. These things are happening to people all over the country and where prudence is required in the purchase of a property, they might not all have the luxury of laying in a hammock, sipping a cocktail, while waiting patiently for the right property, at the right price.



What a load of tosh. The poster above already answered this though.

However, If we lived in a truly capitalist society, the bond holders would have been given the middle finger, the banks would have been left to sink, or swim and the tax payer would not be footing the bills of foreign investors.

The big issue in believing that prices should be half of what they are now, as they were in 2012 is that new houses getting built by developers for selling would most likely represent little profit.....

by the seaside

goz83 wrote: »

Nobody should be priced out of a market for the sake of inflating the property market, which is what is happening. If the property market were properly balanced, prices would be almost half of what they are now. The 2012 prices, were for the most part, spot on.

By all means, be prudent.....but keep in mind that your own circumstances are not the only ones in existence. I may be wrong, but the impression I get is that you are a single professional looking for a property at a price you see as reasonable. That's fair enough, but throw into the mix a couple of kids and rent increases and maybe you don't want to be tied into another year of renting, possibly in a new location, because the landlord is selling the property you are living in. These things are happening to people all over the country and where prudence is required in the purchase of a property, they might not all have the luxury of laying in a hammock, sipping a cocktail, while waiting patiently for the right property, at the right price.



What a load of tosh. The poster above already answered this though.

However, If we lived in a truly capitalist society, the bond holders would have been given the middle finger, the banks would have been left to sink, or swim and the tax payer would not be footing the bills of foreign investors.

An alternative view is that your last paragraph describes what would happen in a truly free market society and free market is not the same as capitalist. In a truly capitalist scoiety the capitalist class would have been bailed out from its lossed by its lackey governmental wing at the expense of ordicanry working people. The government would have to come up with some kind of BS re systemic failure and stability to sell it to the electorate. Sounds familiar?

I do agree, though, that letting the bondholders sink would have been a better outcome.

Balmed Out

The_Conductor wrote: »

Great pensions? Its a defined benefit pension- but for the vast majority of current public sector employees- their pension is the contributory old age pension- i.e. the self same 12k that any PRSI paying employee is entitled to. Their vast majority of their pension is this.

Fair enough I'm just going by what my spouse will get compared to what she puts in vs me and I know shes better off then many with the same job who started later.

The_Conductor wrote: »

People have to stop assuming that public sector employees are treated like politicians- the vast majority of public sector employees might get better treated were they employed in McDonalds.

I don't think most people think that but they do tend to forget about the lesser paid among the public sector but to be fair there's no way you have ever worked between the Golden Arches if you think that!

anyhow we digress

gaius c

goz83 wrote: »

I wonder how this could impact the birth rate negatively and the future of our economy. If people are trying to get a career which pays well, so they can afford something decent to buy, they are less likely to think about starting a family. Just a thought.

From Japan we know that another thing that impacts the birth rate is struggling to pay your parents' mortgage as well as your own. They are looking at the distinct possibility that the population will HALF from it's current level over the next century.
Likewise, buckling under the strain of a mortgage when one income is lost in a household is something else that would impact the birth rate negatively.

Too high debt levels are the problem. The CB rules are a sensible restraint on that and they should be applauded for their foresight.

PRAF wrote: »

Yes we have capitalism but Ireland is not an unfettered capitalistic society. Ours is a mixed economy where the govt had a moderate to large level of influence in the economy and where markets are regulated to curb market excesses.

Ah here. Ours is an economy where various VI's line up to fleece ordinary joes, usually with the aid and approval of the government.

matrim

The_Conductor wrote: »

Not necessarily- more people acquired mortgage approval in the last 6 weeks of 2014, than in the previous 6 months combined. Presumably a large proportion of these will try to use these approval's in principle quick before they expire. There could well be temporary spike- before things calm down to 'normal' levels.

If a typical approval or approval in principle- has a 6 month lifespan- you'd have to wait at least until Q3 of this year- to see things begin to migrate towards their new points of equilibrium..........

I see questions have already been asked in the Dáil about how the proposed regulations will cater towards those caught in inappropriate properties- and lambasting the lack of imagination (there are more people living in accommodation that Local Authority rules would define as unsuitable for them- than there are potential First Time Buyers). Not only are these properties, that would normally feature in the market, excluded from considerations for first time buyers- but you have large cohorts of people bringing up children in inappropriate settings etc- that has not been considered by the Central bank regulations.

If we are to afford a measure of comfort for first time buyers- why not something similar for those currently living in inappropriate accommodation- where they can show they would fail the suitability rules for their local authority housing- were they offered a similar property on their schemes?

In many cases those with inappropriate properties are actually paying less in mortgage payments than someone renting a similar place. Or in the case of someone like trish from earlier are renting the unsuitable place and coming out with no loss or even with a small profit

skallywag

PRAF wrote: »

If this kind of behaviour was repeated across the economy, it would be potentially disastrous. Nobody eating out, nobody taking a taxi, no smartphones, nobody leaves the island on their holidays, etc....

Do you work for Apple? :rolleyes:

TrishSimon

mrmitty wrote: »

I wouldn't call the posters "stupid".
More than likely, they are young and inexperienced.
What seems devastatingly important in ones twenties will be a source of amusement to them in their forties and onward.

:-)

Your incorrect I am not some stupid silly twenty something I am 38 years old and yes I am devastated because it puts back all my plans that I had in place with my husband about 2.5 years.
I don't think you should comment on people's situations that you know nothing about not everyone buying a house is a twenty something there are all ages and with all different situations.

Balmed Out

TrishSimon wrote: »

Your incorrect I am not some stupid silly twenty something I am 38 years old and yes I am devastated because it puts back all my plans that I had in place with my husband about 2.5 years.
I don't think you should comment on people's situations that you know nothing about not everyone buying a house is a twenty something there are all ages and with all different situations.

To be fair I think the point is one can be devastated by the death of a loved one or a very serious illness but putting back a house purchase by 2.5 years wouldn't quite be up there.

molloyjh

Kinet1c wrote: »

No different to how you put it earlier in your post. Save. Over 5 years it's about 660 each per month that should be saved. It shows you've a track record of saving and easily affordable by a professional couple earning 50k each. They could easily save more and not have to live too frugal a life.

I probably wasn't completely clear on the income bit. We haven't both been on that money all along, it's a more recent thing given the upturn in the economy in the last year.

If you factor in all the costs involved in living in Dublin at the moment though €660 is a hell of a lot of money to try and save every month. Our current mortgage costs us €1,200 a month. Commuting costs for us both are around €450 a month. Food and bills etc cost at least another €1,000 a month. As anyone who owns a house knows then as well they have a tendency to go through money in regular maintenance as well. We need a car so there's a car loan then as well. Plus tax and insurance. That's another couple of hundred a month. Then you need to factor in pensions which is at least another €3-400 a month. You're somewhere between €3,000 and €3,500 a month there now. You need to put some money aside for other things like clothes, medical bills (they come along every so often and you need to have the money there for them) and random stuff like that. So let's say that's €3,500 for arguments sake.

Then you need to consider other savings. Houses aren't the only thing that couples save for. If they are then they are being foolish. Maybe there's a wedding on the horizon or a family. Remember we haven't considered the possibility of children in all of the above. So add another €400 for general savings. We're now at €3,900. That leaves us with about €1,600. If we are now to try and save at least €1,300 a month that leaves us with €300, or €150 each.

Now forgive me for being a bit idealistic but I would think that a couple who have been working hard and paying their taxes for the last 15+ years should be afforded a certain quality of life. This idea that either you have a life or you spend your life saving for a home is a bit much. 5 years scrimping and saving is no way to spend a life. And it basically ensures that you can't do anything like go on holidays or start a family or have a night out with mates every once in a while. And while it may be easy for some to say "ah just save money" the reality is just not that simple.

And that also doesn't factor in that by spending years saving you're reducing a possible term for your mortgage and making the whole thing more expensive too...

by the seaside

TrishSimon wrote: »

Your incorrect I am not some stupid silly twenty something I am 38 years old and yes I am devastated because it puts back all my plans that I had in place with my husband about 2.5 years.
I don't think you should comment on people's situations that you know nothing about not everyone buying a house is a twenty something there are all ages and with all different situations.

I know this is the Internet and I don't want to inflame a squabble, but...

There are what I guess to be some perfectly decent hard-working people who have been saving hard to make a better life for themselves, and they had the rug pulled from under their feet yesterday. I happen to think the new policy is broadly right on a macro level, but I would be mightily pissed off if I was left in the position that some posters are, and I'm not really sure why there is the need to stick the knife in. Give 'em a break!

jester77

TrishSimon wrote: »

Your incorrect I am not some stupid silly twenty something I am 38 years old and yes I am devastated because it puts back all my plans that I had in place with my husband about 2.5 years.
I don't think you should comment on people's situations that you know nothing about not everyone buying a house is a twenty something there are all ages and with all different situations.

You are getting very emotional over what is just a house. At 38 you have over 15 years of savings, along with with your husbands, so you have a massive head start over a twenty something person in terms of finance. To call these new rules devastating is a little bit hysterical.

by the seaside

Balmed Out wrote: »

To be fair I think the point is one can be devastated by the death of a loved one or a very serious illness but putting back a house purchase by 2.5 years wouldn't quite be up there.

Could anyone be devastated by losing their job?

CarpeDiem85

I feel for you Trish, I think I'd be devastated too. To want a home to call your own is what a lot of people want and to put it out of reach so quick with these rules is very hard to digest. There are a lot of aggressive people on this thread who are so quick to jump down your throat. Relax people!

drumswan

CarpeDiem85 wrote: »

I feel for you Trish, I think I'd be devastated too. To want a home to call your own is what a lot of people want and to put it out of reach so quick with these rules is very hard to digest. There are a lot of aggressive people on this thread who are so quick to jump down your throat. Relax people!

Trish already owns an apartment which she doesnt want to sell and rents out for less than market value for some reason so shes not in the same boat as someone who 'just wants a home of her own'

desertcircus

molloyjh wrote: »

I probably wasn't completely clear on the income bit. We haven't both been on that money all along, it's a more recent thing given the upturn in the economy in the last year.

If you factor in all the costs involved in living in Dublin at the moment though €660 is a hell of a lot of money to try and save every month. Our current mortgage costs us €1,200 a month. Commuting costs for us both are around €450 a month. Food and bills etc cost at least another €1,000 a month. As anyone who owns a house knows then as well they have a tendency to go through money in regular maintenance as well. We need a car so there's a car loan then as well. Plus tax and insurance. That's another couple of hundred a month. Then you need to factor in pensions which is at least another €3-400 a month. You're somewhere between €3,000 and €3,500 a month there now. You need to put some money aside for other things like clothes, medical bills (they come along every so often and you need to have the money there for them) and random stuff like that. So let's say that's €3,500 for arguments sake.

Then you need to consider other savings. Houses aren't the only thing that couples save for. If they are then they are being foolish. Maybe there's a wedding on the horizon or a family. Remember we haven't considered the possibility of children in all of the above. So add another €400 for general savings. We're now at €3,900. That leaves us with about €1,600. If we are now to try and save at least €1,300 a month that leaves us with €300, or €150 each.

Now forgive me for being a bit idealistic but I would think that a couple who have been working hard and paying their taxes for the last 15+ years should be afforded a certain quality of life. This idea that either you have a life or you spend your life saving for a home is a bit much. 5 years scrimping and saving is no way to spend a life. And it basically ensures that you can't do anything like go on holidays or start a family or have a night out with mates every once in a while. And while it may be easy for some to say "ah just save money" the reality is just not that simple.

And that also doesn't factor in that by spending years saving you're reducing a possible term for your mortgage and making the whole thing more expensive too...

Food and bills at a thousand quid a month? If you don't have children, how do you do that?

molloyjh

RecordStraight wrote: »

Imagine a person earning 2500 per month after tax - not far off the average industrial wage. There's no reason why this person could not save 800-1000 per month if they are not going for expensive holidays or spending a couple of hundred euros on booze every weekend.

Now this right here is the kind of crazy nonsense I was talking about.

Income|

€2,500

|
Pension (a low one at 5%)|

€125

Rent (Dublin rent halved based on a couple)|

€450

Health Insurance (basic)|

€50

Mortgage Savings|

€1,000

|
Remaining Income|

€875

That seems like a lot for a month doesn't it? But what would the cost of living be in Dublin at the moment?

Commuting (public transport within the city limits)|

€100

Food (conservative estimate)|

€250

Bills (Water, Electricity, Gas/Heating, TV License etc halved based on couple)|

€100

Mobile Phone Bill|

€20

|
Remaining Income|

€425

This is all best case scenario here and we've yet to put clothes on our back or pay for a car or save for anything else other than a house. Nevermind go for a couple of drinks with friends or on a cheap holiday in Ireland.

This kind of crap about "expensive holidays" or "on the booze every weekend" is total and utter nonsense of the highest order. And shows a complete lack of understanding as to how much every day life costs, especially in cities.

Michael D Not Higgins

drumswan wrote: »

Trish already owns an apartment which she doesnt want to sell and rents out for less than market value for some reason so shes not in the same boat as someone who 'just wants a home of her own'

This is what I don't understand. The rules don't apply to those in negative equity (which she has said she's in on the apartment) but she's complaining about how the rules affect her because she wants to keep the apartment.

The apartment costs €600 in a mortgage but isn't covered by rent, even though the 5 D24 1 bed apartments on Daft are all going for €900+.

molloyjh

desertcircus wrote: »

Food and bills at a thousand quid a month? If you don't have children, how do you do that?

Food for 2 people for a month plus things like water charges (I know they aren't in yet but they will be soon so have to be budgeted for), electricity, gas, tv license, bins, management fees (which we have to pay), home insurance and the like add up very quickly. And let's be real here too, most people have mobile phones, broadband and a TV package of some description as well.

There are probably savings could be made in some areas. Maybe the food bill could be reduced a little but it really shouldn't be beyond us to have a cheap meal out once or twice a month. It's not like we're living the life of Reilly. We shop in Tescos and save where we can there, but we also get the odd bottle of wine or couple of beers every now and then. And by that I mean maybe once a month or twice if we're pushing it. We generally try and find a decent early bird once a month then as well. Again nothing extravagant but we shouldn't have to lock ourselves away with bread and water either.

handlemaster

Actually I wonder would they be extended smaller loans due to lower net pay[/quote]

same rule for all

TrishSimon

jester77 wrote: »

You are getting very emotional over what is just a house. At 38 you have over 15 years of savings, along with with your husbands, so you have a massive head start over a twenty something person in terms of finance. To call these new rules devastating is a little bit hysterical.

Oh so now I am hysterical am I ?? so you know when I met my husband do you, how long we have been together by your estimation it is since I was 23 ?? I had alot more cop on to be married at 23.
You should not post comments about people when you know nothing about them, who says I was saving from the age of 23 ?
Some assumptions here from you jester77.
It is hard to save and when you have been doing it for over 2 years and paying off anything you owed so you were debt free and you think you have your plans of purchasing a house all sorted only for it to be changed and most likely delayed another 2 years then yes I am devastated and what of it??

desertcircus

molloyjh wrote: »

Food for 2 people for a month plus things like water charges (I know they aren't in yet but they will be soon so have to be budgeted for), electricity, gas, tv license, bins, management fees (which we have to pay), home insurance and the like add up very quickly. And let's be real here too, most people have mobile phones, broadband and a TV package of some description as well.

There are probably savings could be made in some areas. Maybe the food bill could be reduced a little but it really shouldn't be beyond us to have a cheap meal out once or twice a month. It's not like we're living the life of Reilly. We shop in Tescos and save where we can there, but we also get the odd bottle of wine or couple of beers every now and then. And by that I mean maybe once a month or twice if we're pushing it. We generally try and find a decent early bird once a month then as well. Again nothing extravagant but we shouldn't have to lock ourselves away with bread and water either.

I live with my wife, and our bills barely clear 200 a month. Our food bill for eating at home is well under a hundred quid a week. I genuinely cannot understand how a childless couple can't spend less than 700 a month on groceries and bills.

Michael D Not Higgins

TrishSimon wrote: »

Oh so now I am hysterical am I ?? so you know when I met my husband do you, how long we have been together by your estimation it is since I was 23 ?? I had alot more cop on to be married at 23.
You should not post comments about people when you know nothing about them, who says I was saving from the age of 23 ?
Some assumptions here from you jester77.
It is hard to save and when you have been doing it for over 2 years and paying off anything you owed so you were debt free and you think you have your plans of purchasing a house all sorted only for it to be changed and most likely delayed another 2 years then yes I am devastated and what of it??

Sell your apartment Trish and you won't encounter the 20% rule, since you're in negative equity.

matt-dublin

she will be limited by the 3.5 times LTI though.

TrishSimon

Michael D Not Higgins wrote: »

This is what I don't understand. The rules don't apply to those in negative equity (which she has said she's in on the apartment) but she's complaining about how the rules affect her because she wants to keep the apartment.

The apartment costs €600 in a mortgage but isn't covered by rent, even though the 5 D24 1 bed apartments on Daft are all going for €900+.

Incorrect once again, the apartment will be sold but just not at the moment because the tenant still has some time on the lease 10 months in fact and any LL knows there are penalties if you break a lease and tenants also have rights, what the tenant pays me per month covers the mortgage, maintenance fee and life assurance. My plan has always been to sell the apartment and the tenant knows this but I did not want to sell the apartment and buy in the one year I was planning on buying a house in 2015 and in 2016 the apartment would be sold.
I have the apartment at a lower rent because the tenant herself owns and rents her place out its a very rural home and not suitable for her job in Dublin. I also don't charge the going rate on the place because she keeps it in brilliant condition, I never have any hassle from her and she always pays on time and this is more important then making a profit from it, plus the more money you make from it the more income tax you pay...did you ever think of that ??
I actually had it rented out full price to a couple before this girl who on leaving caused me 1800 worth of damage so you tell me which is more important ??

I am not cribbing about the apartment I know what has to be done with it I dont need or want it as an investment all I want is a home for me and my husband which we were saving towards for 2.5 years, because of the new rules this has now changed and it will be a few more years before we can buy a house nothing more nothing less. We have worked hard to save and pay off debt like most people. Everything is not as straight forward as you think it is Michael D not Higgins.

jester77

TrishSimon wrote: »

Oh so now I am hysterical am I ?? so you know when I met my husband do you, how long we have been together by your estimation it is since I was 23 ?? I had alot more cop on to be married at 23.
You should not post comments about people when you know nothing about them, who says I was saving from the age of 23 ?
Some assumptions here from you jester77.
It is hard to save and when you have been doing it for over 2 years and paying off anything you owed so you were debt free and you think you have your plans of purchasing a house all sorted only for it to be changed and most likely delayed another 2 years then yes I am devastated and what of it??

Where did I say anything about how long you are together? The average person enters employment around 21-23, so they would have 15 years of employment behind them by the time they are 38. 15 years accrues a lot of savings, even if it was only a small amount per month.

If you haven't been prudent with your spending, and only saving for the last 2 years, then it is a bit rich to be complaining about these new rules. These new rules are now in place for this exact reason.