New mortgage rules will they change for 2016 and going forward??

Pac2015

L1011 wrote: »

If it was "saved ages ago", they're clearly not currently or even recently able to save and can't afford it.

This reads more and more like a case of the new rules saving someone from over-stretching themselves and being the people on the front pages of the tabloids in the next crash complaining that its the banks fault.

" Saved ages ago " means they have been saving for a few years and had it all ready to go earlier in 2015 it does not mean they cant afford it or save it in fact they are just adding to it to fall in line with the new rules but they are bitterly disappointed that it will take them another 2 years to save the balance.
You find me a family with 3 kids that already have a mortgage and all the expenses that go along with kids that can save over 30K not alot of people can but my friends did they have good jobs are sensible people and saved gradually over 2-3 years.
They are just saving more now.

Michael D Not Higgins

I agree that the deposit doesn't demonstrate affordability. That's what the LTI is for. The LTV is to protect the bank from exposure. Arguing that someone can afford the repayments isn't the point, the Central Bank are trying to prevent another bubble and collapse.

Of course there will be people caught out, but let's say the old lending continued and prices increased faster than they have recently. Your friends may now be able to get that house they want, but what about the low end of the market? The first time buyers will continue over-extending just to get a one bed that's completely unsuitable and the cycle begins again.

The macroprudential lending rules protects the whole market, not just individual buyers. Complaining about how individual cases are affected ingores the protection these rules give to everyone.

Pac2015

I think the price of the houses are going up in my area in 2014 a house was going for 245K now they are up around the 290K and 310K its crazy also houses were my parents are and I grew up are at the low end 220K which seems okay but others ones with not even a garden as the people have extended are 250K which is crazy as most are 3 bed terraced in Millbrook Lawns.

gosplan

alastair wrote: »

That's all well and good, but it's not as if the 'property ladder' is a complete myth. Generally it's the case that your property will increase in value, and while your 'trading up' property will probably have increased in value too, you've the benefit of a big lump of capital that will help fund the purchase of that, more expensive, property. Now, you might well claim that saving/investing elsewhere over the same time would provide the same capital, but that's in a scenario where rental costs will probably have been more of a drain on your ability to save. If you're lucky enough (in your twenties!) to afford a place that serves your long-term needs from the get-go, then obviously that's even better, but it's less realistic now than it was in 1972.

We're selling/buying at the moment, and I know that we could never have afforded to consider the place we're looking at, without having a place to 'trade up' from. We simply wouldn't have got the loan needed.

I agree with you but having a whole population obsessed with buying their 'first property' as opposed to their home brings problems with it.

Some people will always look towards investments and that's fine, but pressurising people to buy properties they don't want long term is unhealthy.

mel123

I totally agree with the LTV rate, and all the stress testing that comes with it, however I don't agree that you cant afford a mortgage if you cant save the 20% deposit. Its all very well and good saying start saving in your 20's. In hindsight if we all did this we'd be sitting on a nice stash. Me personally I didn't get stung by the crash (thank god), I got out just in the nick of time, but many of my friends and family were stung. They are now living in places they don't want to live, houses they don't like etc. So I defiantly think its right that something is being done about not getting ourselves into that crazy situation again.
If your not living at home with mammy and daddy, ie your either already on the property market paying a mortgage, or your renting, unless you've a very above average salary, its very very hard to save a 20% deposit.

I Am The Law

mel123 wrote: »

I totally agree with the LTV rate, and all the stress testing that comes with it, however I don't agree that you cant afford a mortgage if you cant save the 20% deposit. Its all very well and good saying start saving in your 20's. In hindsight if we all did this we'd be sitting on a nice stash. Me personally I didn't get stung by the crash (thank god), I got out just in the nick of time, but many of my friends and family were stung. They are now living in places they don't want to live, houses they don't like etc. So I defiantly think its right that something is being done about not getting ourselves into that crazy situation again.
If your not living at home with mammy and daddy, ie your either already on the property market paying a mortgage, or your renting, unless you've a very above average salary, its very very hard to save a 20% deposit.

But not if house prices are at a realistic level.

mel123

I Am The Law wrote: »

But not if house prices are at a realistic level.

Yes this is true. Im on the market for a house, so im all for them going down!!!

gaius c

Michael D Not Higgins wrote: »

I agree that the deposit doesn't demonstrate affordability. That's what the LTI is for. The LTV is to protect the bank from exposure. Arguing that someone can afford the repayments isn't the point, the Central Bank are trying to prevent another bubble and collapse.

Of course there will be people caught out, but let's say the old lending continued and prices increased faster than they have recently. Your friends may now be able to get that house they want, but what about the low end of the market? The first time buyers will continue over-extending just to get a one bed that's completely unsuitable and the cycle begins again.

The macroprudential lending rules protects the whole market, not just individual buyers. Complaining about how individual cases are affected ingores the protection these rules give to everyone.

Slight clarification. The CB cannot prevent housing bubbles & busts. Nor are they trying to do that. What they are doing is protecting the banks in the event of a downturn. As long as it's only real money being lost, there won't be any damage to the banking system.

Sono

Anyone on here got a mortgage recently and an exception was applied? If so would you give me an idea of the exception in % compared to original approval amount? Thanks!

alibab

Like others I don't agree with the fact that if you can't save 20 percent etc that you can't afford the mortgage. A lot got caught out with the new rules as others have pointed out especially people in unsuitable family homes and apartments that were paying a existing mortgage plus saving for 10 percent to trade up .

In my case I was very lucky in that I literally bought just before the new rules . My mortgage is more than manageable and to rent same house would be 300 euro more a month and I am not in Dublin .

Under the new rules I would not have been able to buy . I was not a first time buyer as I had a house but it had to be sold as part of divorce and there was no equity at all . I saved hard working with 2 kids and managed to save to start again . When they introduced the new rules I was sale agreed and had my 10 percent plus legal fees etc . It's all well and good saying I could have kept saving another few years for the 20 percent but I was just turning 40 and time was not on my side .

I am well able to service the mortgage bank would not have given me a mortgage as a sole applicant with 2 kids if they were not sure . I do feel for people with the new rules that are now stuck

Unearthly

Sono wrote: »

Anyone on here got a mortgage recently and an exception was applied? If so would you give me an idea of the exception in % compared to original approval amount? Thanks!

I got an exception approved in the 3.5 salary rule. The basis was that I had such a large amount of savings the ltv would be 63% and that I demonstrated over a 6 month period I could save the mortgage amount repayments

I got 4.5 times my salary

The J Stands for Jay

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

If they can't afford to save, how can they afford the mortgage repayments?

Santy2015

We're saving 1150k a month nearly half way to our target of 16k and going for approval in January February next year. Would you move outside of Cork City? Some great value to be had in North Cork? I think the rules should stay as they make you set a goal and stick to it. It'll be worth it in the end.

Sono

Unearthly wrote: »

I got an exception approved in the 3.5 salary rule. The basis was that I had such a large amount of savings the ltv would be 63% and that I demonstrated over a 6 month period I could save the mortgage amount repayments

I got 4.5 times my salary

Thanks for that, good to know this info, hopefully find out first if we are approved and then if they can apply an exception.

markpb

McGaggs wrote:

If they can't afford to save, how can they afford the mortgage repayments?

We're paying €1,300 a month in rent and trying to save another €1,000 a month towards a deposit. €2,300 a month means we could afford a stinking great mortage (far more than we need) but in terms of doubling our deposit (we had enough for a house last year, prices haven't fallen in Dublin so now we need the same amount again), it'll take us over several years. If rents keep rising or when baby number two comes along, our ability to save will fall but our ability to afford a mortgage would hardly be affected.

I totally agree with the intention behind the new rules and am not at all in favour of rolling back on them. What I'm not in favour of is posts like yours which fail to see how the rules could actually be tough on people.

Standard Toaster

Unearthly wrote: »

....

I got 4.5 times my salary

Which bank was that if you don't mind me asking?

lainey316

EBS told me they have no exceptions left, but will in January (on the LTI). BoI said they could make an exception on LTI, I know a friend who got an exception from KBC. The size of deposit does seem to be a factor in where they will consider being more flexible on LTI.

It seems a bank can apply LTI exceptions to up to 15% of transactions, and EBS for example used theirs up in q1 2015 (I was told - I was encouraged to come back in Jan if I don't find something) Santy2015 it would be worth kicking off your application early in 2016 if you are hoping to go that route.

Michael D Not Higgins

lainey316 wrote: »

EBS told me they have no exceptions left, but will in January (on the LTI). BoI said they could make an exception on LTI, I know a friend who got an exception from KBC. The size of deposit does seem to be a factor in where they will consider being more flexible on LTI.

It seems a bank can apply LTI exceptions to up to 15% of transactions, and EBS for example used theirs up in q1 2015 (I was told - I was encouraged to come back in Jan if I don't find something) Santy2015 it would be worth kicking off your application early in 2016 if you are hoping to go that route.

For clarity, it's 15% of the value of the mortgage book, not on number of transactions.

McGaggs

McGaggs wrote: »

If they can't afford to save, how can they afford the mortgage repayments?

Peoples circumstances can change, new job on better money giving them the ability to easily make a mortgage payment but up to now only having a small amount saved and dont want to spend ages saving up the required amount.

As other have also said people paying over a thousand per month in rent and then saving a bit on top when the mortgage repayment could be 700 or 800 per month so their outgoing would actually be much less with a mortgage than rent+saving.

Jen44

Sono wrote: »

Anyone on here got a mortgage recently and an exception was applied? If so would you give me an idea of the exception in % compared to original approval amount? Thanks!

We got an exemption we only had 10% deposit and we are second time buyers

Sala

We got an exception late February shortly after the rules came in but because we didn't find a property and had to reapply we are now under the new rules as Ulster Bank used all exceptions. I am curious with a few property sales falling through I am seeing as to whether people are bidding with AIP based on an exception, but they can't actually get the money when they go sale agreed

Sala

And to answer the OP, I don't think the rules will be amended yet. It will take time for them to have an impact we can see, I presume if house prices started to fall in any significant way there would be a lot of pressure put on the CB to water them down.

I suspect sales will stall from now until the year and we will see a massive rush of applications in January for mortgage approval from people who can afford a mortgage but will spend another few years saving the deposit unless they get an exception (which will be available in January).

Santy2015

lainey316 wrote:

It seems a bank can apply LTI exceptions to up to 15% of transactions, and EBS for example used theirs up in q1 2015 (I was told - I was encouraged to come back in Jan if I don't find something) Santy2015 it would be worth kicking off your application early in 2016 if you are hoping to go that route.

yeah early 2016 is our plan. Should have 12k come end of January and that when we'll go for approval. So we should more then meet our target of 16k or even go above it.. The sickbed for us will be the furnishings of the house

Sono

So if there is a huge amount of mortgage applications in January with the exceptions all available again you'd imagine the market will be absolute carnage and there will be bidding wars again, so hard to know what is the best thing to do.

We have submitted our application today so will see how it goes whether they say yes or no and take it from there.

Thanks all for the help it's much appreciated.

markpb

Jen44 wrote: »

We got an exemption we only had 10% deposit and we are second time buyers

Would you mind telling us the grounds for the exemption?

MarkAnthony

KBC were able to help us out based on me being PT and retraining, wife being on contract and negative equity. We had a large deposit which I think helped things along.

Aka Ishur

Threads like these genuinely scare me. In a time where supply has never been scarcer, demand never so unsated, people want to open the money taps. Do you genuinely think that the 300k house would still be 300k if buyers had access to more funds? Buyers will somehow restrain themselves from bidding their max, while fearing both being priced out of the market and paying an ever rising rent?

Don't get me wrong, this enthusiasm to join the lemmings jump off the cliff is good news for myself and most home owners. It is just dismaying that lessons clearly have been forgotten.

(ps; if you 'don't want to spend ages saving because you just got a great new job', remember the great new job can quickly to into the great old job)

MarkAnthony

Aka Ishur wrote: »

Threads like these genuinely scare me. In a time where supply has never been scarcer, demand never so unsated, people want to open the money taps. Do you genuinely think that the 300k house would still be 300k if buyers had access to more funds? Buyers will somehow restrain themselves from bidding their max, while fearing both being priced out of the market and paying an ever rising rent?

Don't get me wrong, this enthusiasm to join the lemmings jump off the cliff is good news for myself and most home owners. It is just dismaying that lessons clearly have been forgotten.

(ps; if you 'don't want to spend ages saving because you just got a great new job', remember the great new job can quickly to into the great old job)

Prices in Dublin are still undervalued in a lot of areas. There is an issue with supply but that's not going to be solved in the medium term. The LTV ratios have very, very little to do with protecting people from themselves and everything to do with offsetting risk to damaged banks. LTI is perfectly able to keep the market in check. There was nothing wrong with sensibly allocated 100% mortgages and the use of guarantors. It personally made me better off buying as a student and not paying money into rent. This was in a functioning market in Scotland to be fair. When I sold the equity I had could have been used as a deposit for my family home.

In regard to second, third or investment properties, of course a deposit should be required. People's first property though assistance should be there and the state should have some involvement in offsetting risk. It's simply ridiculous to have people paying 20-50% more in rent than they would be if had a mortgage and then saying you can't repay because you can't save. It's too blunt an instrument. I understand because of the Irish culture of chancerism why it's there of course.

The argument always seems to be if they rent and lose there jobs they can move to a small caravan in Mayo. The flaw in that logic is if the country gets into the state it was in again, or worse and their are no jobs we're all fecked anyway. What do people expect, everyone living in caravans in Mayo and nobody in Dublin?

There is nothing wrong with encouraging more prudent financial decisions. But you can't expect a cultural U-turn on a 1 cent coin overnight.

Aka Ishur

MarkAnthony wrote: »

There is nothing wrong with encouraging more prudent financial decisions. But you can't expect a cultural U-turn on a 1 cent coin overnight.

100% right, which is we need the rules to stay as they are for now. When the supply problem is solved then you let the cash flow sure. If you open the taps now, fear will drive people to spend the max on a property. Getting the state to provide a kickstart is lunacy as we have seen in the UK. Banks will again rely on the state to insure risky loans.

I disagree on the undervaluation point although there are artificial prices due to both the lack of funding and supply.

All of this comes from the supply issue. Solve supply and the rest follows. Easy fixes like opening the taps and rent control will only make the problem last longer and cause more suffering.

Anyways whatever happens I hope people dont lose too much (be it through rent or neg equity).

MarkAnthony

Aka Ishur wrote: »

100% right, which is we need the rules to stay as they are for now. When the supply problem is solved then you let the cash flow sure. If you open the taps now, fear will drive people to spend the max on a property. Getting the state to provide a kickstart is lunacy as we have seen in the UK. Banks will again rely on the state to insure risky loans.

I disagree on the undervaluation point although there are artificial prices due to both the lack of funding and supply.

All of this comes from the supply issue. Solve supply and the rest follows. Easy fixes like opening the taps and rent control will only make the problem last longer and cause more suffering.

Anyways whatever happens I hope people dont lose too much (be it through rent or neg equity).

We don't want the supply problem fixed. We want the country to continue to grow faster than we can build houses. At some point, and I concede this needs to be controlled, equilibrium will be reached that Ireland is expensive enough to be an attractive place to build (not only houses but infrastructure) but not so expensive that people can't afford to live in any profession (a la London).

Supply is not the massive issue people think it is either. Supply in certain areas is, people need to start looking in the traditionally 'less desirable' areas which has the knock on effect of bringing a higher proportion of people invested in their properties and the local community. We also need to look at building suitable and well thought out social housing and moving a proportion of people out of central Dublin areas who are never going to find (read look for in some cases) work.

When a couple on minimum wage can service a mortgage on a three bedroom house on the outskirts of the capital city I simply don't agree houses are too expensive. I grant you that other areas like Cork may have gone bonkers, I admit I don't know enough about the landscape outside of Dublin. I also concede areas of South Co. Dublin are also bonkers but frankly entering into that lunacy you deserve to get burned.

D5, D15, Areas of D3 and D7 have a long way to go before they're overpriced in my opinion.

I don't think we're actually that far apart in our opinions or sentiments and I don't wish to come across as aggressive in my opinions either. I just don't think there are any simple fixes.