Central Bank to limit amount banks lend for home purchase

Bob24

dr.fuzzenstein wrote: »

Well, we introduced rules that mean only moneybags can buy anything and normal people might be able to buy a shack for at most €200k if they forfeit having children or any kind of life until well into their 30's. We truly love the Dickensian lifestyle in this country.
Also we love punishing the people for the faults of the institutions. Then we stand on the resulting heap of rubble, banging our chests shouting "Hah! We showed them!"
Ireland. Deliberately doing it wrong and being proud of it.

Is it helping "normal people" to push them contract a very high level of debt though, or would it be more helpful to make properties more affordable so that they can get the same house while borrowing less?

dr.fuzzenstein

Bob24 wrote: »

Borrowing to gather a deposit to borrow more. What could possibly go wrong?

Well that's the thing. But not everyone has that secret vault in their house where they keep the gold bars, diamonds, pirate treasure chests and wall-safe with cash and bond papers.
And, and I realise that this might come as a shock to some people on this thread, so buckle up and hold onto your hat, some people have trouble saving €50-60k. I realise what I say here is highly controversial, but some people have to save, beg, borrow and even steal a little to get together a deposit for the house. For some of those who keep this sort of lose change in their arse pocket, this is a shock, but some people live in what is known as the real world, where everyone (businesses, state, banks, other people) is out to rob you blind at every opportunity and in Ireland we have certainly excelled at that. It is sometimes difficult to save money in a country with a costbase of Sweden and public services nowhere near that.
We should address the cost of living here, taxes paid, public services rendered and take a look at a proper housing strategy. Last time we just let the builders go wild and plonk developments any old where. And to fix the above, we introduced caps on borrowing. Hooray, all is sorted, off to the pub!

El_Dangeroso

dr.fuzzenstein wrote: »

Well, we introduced rules that mean only moneybags can buy anything and normal people might be able to buy a shack for at most €200k if they forfeit having children or any kind of life until well into their 30's. We truly love the Dickensian lifestyle in this country.
Also we love punishing the people for the faults of the institutions. Then we stand on the resulting heap of rubble, banging our chests shouting "Hah! We showed them!"
Ireland. Deliberately doing it wrong and being proud of it.

Yes how dare they put shotguns to people's heads to make them take out huge mortgages!

Apologies for the hyperbole, but you can't honestly think these rule are to 'punish' people for the faults of banks?

Sala

RecordStraight wrote: »

Might be worth a two-line email to the Central Bank.

Probably pointless until the legislation is signed. I wonder if a lot of AIP issued now will be withdrawn. Wish they'd just bring in the rules already- at least then I can look knowing my AIP figure is realistic as opposed to people bidding up prices with approval they might withdraw

the world wonders

dr.fuzzenstein wrote: »

Well that's the thing. But not everyone has that secret vault in their house where they keep the gold bars, diamonds, pirate treasure chests and wall-safe with cash and bond papers.
And, and I realise that this might come as a shock to some people on this thread, so buckle up and hold onto your hat, some people have trouble saving €50-60k. I realise what I say here is highly controversial, but some people have to save, beg, borrow and even steal a little to get together a deposit for the house. For some of those who keep this sort of lose change in their arse pocket, this is a shock, but some people live in what is known as the real world, where everyone (businesses, state, banks, other people) is out to rob you blind at every opportunity and in Ireland we have certainly excelled at that. It is sometimes difficult to save money in a country with a costbase of Sweden and public services nowhere near that.

Well this may come as a shock to you, but buying a house should be difficult. It should require scrimping and saving, and, yes, there are people who should not buy a house because they cannot afford it. You do not have a constitutional right to have a 3-bed semi fall into your lap on your 25th birthday.

Gumbo

Sala wrote: »

Probably pointless until the legislation is signed. I wonder if a lot of AIP issued now will be withdrawn. Wish they'd just bring in the rules already- at least then I can look knowing my AIP figure is realistic as opposed to people bidding up prices with approval they might withdraw

You get AIP in 15 mins or over the phone with the big banks now. It means nothing. You really need a letter of offer to do anything.

matrim

dr.fuzzenstein wrote: »

Well that's the thing. But not everyone has that secret vault in their house where they keep the gold bars, diamonds, pirate treasure chests and wall-safe with cash and bond papers.
And, and I realise that this might come as a shock to some people on this thread, so buckle up and hold onto your hat, some people have trouble saving €50-60k. I realise what I say here is highly controversial, but some people have to save, beg, borrow and even steal a little to get together a deposit for the house. For some of those who keep this sort of lose change in their arse pocket, this is a shock, but some people live in what is known as the real world, where everyone (businesses, state, banks, other people) is out to rob you blind at every opportunity and in Ireland we have certainly excelled at that. It is sometimes difficult to save money in a country with a costbase of Sweden and public services nowhere near that.
We should address the cost of living here, taxes paid, public services rendered and take a look at a proper housing strategy. Last time we just let the builders go wild and plonk developments any old where. And to fix the above, we introduced caps on borrowing. Hooray, all is sorted, off to the pub!

If you need a deposit of 62k, then you are borrowing about 420,000 and buying a house that is worth at around 480000.

To get that house you need a combined income of 120,000. With that combined income it should be possible to save at least 15k a year without much hassle even when renting.

hurlsey

the world wonders wrote: »

Well this may come as a shock to you, but buying a house should be difficult. It should require scrimping and saving, and, yes, there are people who should not buy a house because they cannot afford it. You do not have a constitutional right to have a 3-bed semi fall into your lap on your 25th birthday.

You are correct it should require work to own a home. However should you find yourself in the position you cannot afford a mortgage for your desired home, you shouldn't be forced to pay extortionate rent rates in the same area. Possibly double the monthly mortgage repayments for a house, on the same road, at today's market prices

Personally I agree with the CBs new rules, however the govt is failing to address the other 2 issues with Ireland's housing market.

1)A regulated rental market and
2)Site taxes for developers holding onto sites.

The fact is we have a supply problem which the government needs to address, which clearly they have no intention of doing. Instead they lobbied Prof Honohan not to bring in these rules so IMO they wouldn't have to.

Bob24

hurlsey wrote: »

You are correct it should require work to own a home. However should you find yourself in the position you cannot afford a mortgage for your desired home, you shouldn't be forced to pay extortionate rent rates in the same area. Possibly double the monthly mortgage repayments for a house, on the same road, at today's market prices

Personally I agree with the CBs new rules, however the govt is failing to address the other 2 issues with Ireland's housing market.

1)A regulated rental market and
2)Site taxes for developers holding onto sites.

The fact is we have a supply problem which the government needs to address, which clearly they have no intention of doing. Instead they lobbied Prof Honohan not to bring in these rules so IMO they wouldn't have to.

That is the problem yes ... the central bank is doing what is within its remit, but it has not power to control rents or to prevent developers to use the land they own.

The government is not doing its share, but I don't think it is a justification for criticising the CBI's decision as some here are doing. For once they are acting independently and proactively; and are resisting political pressure as well as lobbying from builders/EAs/banks/brokers. They might not do it again if the public buys into the propaganda and starts shouting at them.

gaius c

The deposit rules should have been in place yonks ago.
http://www.independent.ie/irish-news/woman-calls-the-gardai-over-bank-harassment-30973429.html
100% mortgage madness warning!

gaius c

hurlsey wrote: »

2)Site taxes for developers holding onto sites.

Or derelict buildings in city centres. Was in Collins Barracks today and wandering over to Smithfield, we marvelled at the number of empty abandoned buildings and a couple of empty sites. Just build on them FFS.

dr.fuzzenstein

gaius c wrote: »

Or derelict buildings in city centres. Was in Collins Barracks today and wandering over to Smithfield, we marvelled at the number of empty abandoned buildings and a couple of empty sites. Just build on them FFS.

I do believe it is hard to get credit if you're a builder. So if a builder cannot build because he has no money, taxing him will certainly not help the situation.
Of course on the other side it may convince a lot of them to move on property they can no longer afford, so I'm a bit on the fence on that one.

PRAF

dr.fuzzenstein wrote: »

I do believe it is hard to get credit if you're a builder. So if a builder cannot build because he has no money, taxing him will certainly not help the situation.
Of course on the other side it may convince a lot of them to move on property they can no longer afford, so I'm a bit on the fence on that one.

I think the government are finally going to move on this issue. There are plans for a vacant site tax in the new planning bill.

I'm not on the fence on this one at all. Have no sympathy for land hoarders who claim that they cannot get finance to build. If they have no capital or finance, they should sell to someone who does.

RecordStraight

dr.fuzzenstein wrote: »

I do believe it is hard to get credit if you're a builder. So if a builder cannot build because he has no money, taxing him will certainly not help the situation.

Someone sitting on land is not a builder. A builder is someone who builds. Someone sitting on land is a land banker.

RecordStraight

dr.fuzzenstein wrote: »

Well, we introduced rules that mean only moneybags can buy anything and normal people might be able to buy a shack for at most €200k if they forfeit having children or any kind of life until well into their 30's. We truly love the Dickensian lifestyle in this country.
Also we love punishing the people for the faults of the institutions. Then we stand on the resulting heap of rubble, banging our chests shouting "Hah! We showed them!"
Ireland. Deliberately doing it wrong and being proud of it.

Great, now 'ordinary people' can be outbid by moneybags, except at much higher prices, making those with property even wealthier.

hurlsey

RecordStraight wrote: »

Great, now 'ordinary people' can be outbid by moneybags, except at much higher prices, making those with property even wealthier.

In the short term yes, however this is a supply issue and has nothing to do with a wealthy elite buying up all the property!!

It's the lack of supply coupled with a largely amateur and unregulated rental market!! (There are other factors but addressing these two would go a long way to solving the issue)

RecordStraight

hurlsey wrote: »

In the short term yes, however this is a supply issue and has nothing to do with a wealthy elite buying up all the property!!

Agreed. The notion that wealthy people are suddenly going to ignore every other asset class and hoover up crummy Irish property at already inflated prices is a bit silly.

hurlsey wrote: »

It's the lack of supply coupled with a largely amateur and unregulated rental market!! (There are other factors but addressing these two would go a long way to solving the issue)

Agree re. lack of supply. I'd love to know how much land the government and its agencies are sitting on.

hurlsey

RecordStraight wrote: »

Agreed. The notion that wealthy people are suddenly going to ignore every other asset class and hoover up crummy Irish property at already inflated prices is a bit silly..

House prices are still way over priced, greater Dublin area especially, this is unfortunate for those who invested or bought at the height of the boom but IMO it's a reality

RecordStraight wrote: »

Agree re. lack of supply. I'd love to know how much land the government and its agencies are sitting on.

Banks are also sitting on repossessed property! But they are not going to release it into the market as, I would suggest, they are waiting until the price exceeds the value of the debt owed!!

Again an increase in supply, coupled with the CBs new rules, and a regulated rental market, would bring house prices down!!

MarkAnthony

gaius c wrote: »

Or derelict buildings in city centres. Was in Collins Barracks today and wandering over to Smithfield, we marvelled at the number of empty abandoned buildings and a couple of empty sites. Just build on them FFS.

There are crazy amounts of listed buildings all the way from there to the city centre. I personally was looking at a listed building in D3, got almost zero co-operation from the council. I was basically told if I didn't know what I was going and wasn't willing to spend the money to get lost. This was a house that has no roof just off the North Strand road. Who is going to do a house like that up using victorian roof tiles!

I was quite willing to engage a conservation architect, meet reasonable expenses and restore it as best we could within a budget consummate to the area but expecting more than 250K to be sink into a house there was madness.

Glenbhoy

Jacoby Yellow Quota wrote: »

You will love this, can't quote the whole thing as I'm on the phone but here's the link.

http://m.independent.ie/business/personal-finance/property-mortgages/credit-unions-hatch-plan-to-thwart-new-mortgage-cap-30973432.html

Hurray, the credit unions will help buyers thwart the bad new mortgage rules by allowing buyers parents get themselves into debt.

Dear God, what was the point of that complete non-story, it's like the nonsense story way back when about the govt issuing mortgage insurance, absolute ****e.
If parents want to do this, so be it, as long as the lender is happy that the borrower has repayment capacity, who cares? If the borrower subsequently gifts that unsecured loan to a child for the purposes of buying a property, the bank issuing the mortgage won't care and the CBI guidelines and aims will have been complied with. The exposure of the issuing bank will have been reduced. The parents will have to provide a letter declaring the money to be a gift, in the old days, it used to be common to check parents bank statements for the source of the gifted funds, but I'm not sure they'd even see the need anymore. My guess is that the story was published in a desperate attempt to make people aware that there could be a means of accessing the funds needed to keep the market propped up for another few months, pure desperation at this stage.

um7y1h83ge06nx

Completely agree, that avenue always existed. It's the whole tone of the article that grates me, it may as well say ”great, here's a way that you can circumvent these rules putting your family member in possible financial risk and putting more money into the pockets of the banks and the construction industry ".

Why should the general public feel good about something that will ultimately help fuel price inflation?

The_Morrigan

Folks there is a dedicated thread to the CU article - please keep all discussion of that in the relevant thread.

http://www.boards.ie/vbulletin/showthread.php?t=2057377525

dearg lady

So I should have about 15% of what I'm hoping to borrow in the next few months, and I was thinking of applying at that stage, and see what the bank come back with, since we obviously don't know what way they will use the 'exceptions'. My thought was I might get approved for less, and then I'll see what's available for that, keep saving, and if necessary apply again another 6 months after that with the higher deposit. However a friend suggested it might look bad on my credit history if I get refused. I don't anticipate being refused, so I think its no harm to apply and see. There shouldn't be any negative feedback for applying with less than 20% saved should there?

Michael D Not Higgins

dearg lady wrote: »

So I should have about 15% of what I'm hoping to borrow in the next few months, and I was thinking of applying at that stage, and see what the bank come back with, since we obviously don't know what way they will use the 'exceptions'. My thought was I might get approved for less, and then I'll see what's available for that, keep saving, and if necessary apply again another 6 months after that with the higher deposit. However a friend suggested it might look bad on my credit history if I get refused. I don't anticipate being refused, so I think its no harm to apply and see. There shouldn't be any negative feedback for applying with less than 20% saved should there?

From the Irish Credit Bureau:

Your credit report includes:

• your name, date of birth, address(es) used by you in relation to financial transactions
• the names of lenders and account numbers of loans you currently hold, or that were active within the last five years;
• repayments made or missed for each month on each loan;
• the failure to clear off any loan;
• loans that were settled for less than you owed; and
• legal actions your lender took against you

American credit reports can be more comprehensive and cover a list of credit inquiries (i.e. those looking for your credit score). Too many might indicate a higher risk, either because you keep getting rejected or you have a number of other loans that have required banks to check your credit report. I don't think this applies in Ireland.

jmayo

dr.fuzzenstein wrote: »

Well, we introduced rules that mean only moneybags can buy anything and normal people might be able to buy a shack for at most €200k if they forfeit having children or any kind of life until well into their 30's. We truly love the Dickensian lifestyle in this country.
Also we love punishing the people for the faults of the institutions. Then we stand on the resulting heap of rubble, banging our chests shouting "Hah! We showed them!"
Ireland. Deliberately doing it wrong and being proud of it.

And we wonder why we are where we are. :rolleyes:

Of course you think people should be allowed borrow anything they want and then you will blame the institutions that gave it to them when it goes tits up.

Perhaps you should change your last statement to read ... "Ireland where everyone has a god given right to be able to buy property. Oh and debts are all the fault of the lender"

RecordStraight wrote: »

Great, now 'ordinary people' can be outbid by moneybags, except at much higher prices, making those with property even wealthier.

If you have to borrow you are probably always in a worse position than someone who has the cash.
That is a fact of life and another one is people with money have a greater chance of making even more money.

Have you ever thought that because there isn't the massive lending then borrowers won't be competing driving prices even higher ?

The Spider

RecordStraight wrote: »

Agreed. The notion that wealthy people are suddenly going to ignore every other asset class and hoover up crummy Irish property at already inflated prices is a bit silly.

Agree re. lack of supply. I'd love to know how much land the government and its agencies are sitting on.

Builders wont build with the new rules in place, simple as, irregardless of land, there has to be a significant profit to out weigh the risks, who's going to build all these houses and realise it cost more to build them than you can sell them for?

It's funny that as the new rules were announced that building has slowed for the first time in a year.

http://www.irishexaminer.com/business/building-sector-growth-slows-311504.html


You can talk about supply all you want, but the people responsible for creating that supply won't do it for a minimum profit.

Builders were burned in the last collapse a lot went out of business, so any that are still around are going to be ultra cautious and are not going to take on the level of risk required, even if they can get the money, when it looks like they can't get a return on the investment.

Bob24

The Spider wrote: »

You can talk about supply all you want, but the people responsible for creating that supply won't do it for a minimum profit.

Builders were burned in the last collapse a lot went out of business, so any that are still around are going to be ultra cautious and are not going to take on the level of risk required, even if they can get the money, when it looks like they can't get a return on the investment.

I think it is only part of the story though.

In some areas of Dublin you can sell decent and new 2 beds apparent for 300-450k or a nice house for 600k. The same properties in less desirable areas of Dublin or in the country would go for less than half that price (and were never above even at the highest of the boom).

Are we really saying there is no profit to be made for building housing in these areas?

The Spider

Bob24 wrote: »

I think it is only part of the story though.

In some areas of Dublin you can sell decent and new 2 beds apparent for 300-450k or a nice house for 600k. The same properties in less desirable areas of Dublin or in the country would go for less than half that price (and were never above even at the highest of the boom).

Are we really saying there is no profit to be made for building housing in these areas?

If there's profit to be had with acceptable risk, then builders will build there, it's economics 101, if there's no activity in those areas then the potential builders/developers have looked at it and decided the risk is too great, versus the profit potential.

In my opinion this will only change when building seems like a no brainer to profit, after the last crash left the construction industry decimated, anyone left will not take on risks that could leave them millions in debt or at the very least hundreds of thousands.

At the end of the day unless houses are bought off plans then the builder has taken all the risk and is hoping to sell at a certain pricepoint, if it looks anyway shaky they won't engage with it.

jay0109

The Spider wrote: »

It's funny that as the new rules were announced that building has slowed for the first time in a year.

http://www.irishexaminer.com/business/building-sector-growth-slows-311504.html

It's funny! but I heard someone on the radio last week (think it was Frank McDonald of the IT) saying the level of planning applications etc in Q4 was at it's highest for some time....but we all pick the reports/sats that best suit our own points of view :rolleyes:

RecordStraight

The Spider wrote: »

If there's profit to be had with acceptable risk, then builders will build there, it's economics 101, if there's no activity in those areas then the potential builders/developers have looked at it and decided the risk is too great, versus the profit potential.

In my opinion this will only change when building seems like a no brainer to profit, after the last crash left the construction industry decimated, anyone left will not take on risks that could leave them millions in debt or at the very least hundreds of thousands.

At the end of the day unless houses are bought off plans then the builder has taken all the risk and is hoping to sell at a certain pricepoint, if it looks anyway shaky they won't engage with it.

It's rather odd that building is now only 'profitable' at prices that threaten the peak of the property bubble - especially when you consider you can throw up a house in the middle of Longford and in the middle of Dublin for more or less the same price, excluding the cost of the site.