Central bank mortgage lending rate changes

chubbs2011

chubbs2011 wrote: »

ok, I'm not the smartest when it comes to these things but as a homeowner (mortgage) I would like to move house but finding it hard to come up with the 20% deposit. Is this 20% not stopping a lot of people like me (who have a house but wish to move) from moving house so not allowing these houses on the market?

It is stopping you from borrowing, not from moving.

awec

This is huge news for me and my wife. It knocks about a year off our saving requirements.

mahoganygas

chubbs2011 wrote:

ok, I'm not the smartest when it comes to these things but as a homeowner (mortgage) I would like to move house but finding it hard to come up with the 20% deposit. Is this 20% not stopping a lot of people like me (who have a house but wish to move) from moving house so not allowing these houses on the market?

This applies to First Time Buyers only.
Some would argue that FTB are stuck in rental accommodation / parent's home whereas people who already own a property do not need assistance.

A potential FTB is paying rent to fund somebody else's mortgage whereas an existing homeowner is paying for their own asset, which in theory will free up equity enabling them to sell and buy a new home.

There are many caveats to this explanation, such as the large number of homeowners in negative equity.

chubbs2011

oh I wish, we are just about out of negative equity so any profit we make will be just enough to cover solicitor fees and estate agent fees. Anyway will keep saving for a few more years and keep buying the lotto tickets

Cuddlesworth

chubbs2011 wrote: »

oh I wish, we are just about out of negative equity so any profit we make will be just enough to cover solicitor fees and estate agent fees. Anyway will keep saving for a few more years and keep buying the lotto tickets

Odds are the deposit reduction will increase prices in the 250k to 350k house price range by increasing the number of people with the funds required but not directly effecting the supply. So if you intend to move to a bugger house, might work out in your favour.

uberwolf

mahoganygas wrote: »

There are many caveats to this explanation, such as the large number of homeowners in negative equity.

who are exempt from the Regs anyway.

whiskeyman

awec wrote: »

This is huge news for me and my wife. It knocks about a year off our saving requirements.

For you and probably lots more like you.
However, supply isn't changing.

Therefore, what's to stop prices rising as further demand (mortgage approvals) come on stream and are competing for the same thing?
Perhaps you'll ultimately still have to save to keep up with rising prices, depending on the price bracket you were hoping for.

mahoganygas

ADO wrote:

Will the whole 3.5 times salary still apply to the above news?

I believe this still applies.

Daith

mahoganygas wrote: »

I believe this still applies.

Yes 3.5x still applies.

mahoganygas

whiskeyman wrote:

Therefore, what's to stop prices rising as further demand (mortgage approvals) come on stream and are competing for the same thing? Perhaps you'll ultimately still have to save to keep up with rising prices, depending on the price bracket you were hoping for.

From a macro point of view, builders may now take on some extra risk and build more houses as there is certainty that demand is there.

Commercial Banks will also feel more comfortable financing these developers.

Yes , prices will rise, but maybe supply will increase also.

jaja321

awec wrote: »

This is huge news for me and my wife. It knocks about a year off our saving requirements.

Us too.. its huge.

lau1247

awec wrote: »

This is huge news for me and my wife. It knocks about a year off our saving requirements.

It might knock of the period you need to save but with 3.5 times still applied. it doesn't make much of a difference unless you fit within a certain narrow band from what I can see.

E.g. Lets say you have 38K saved today, if you and your wife earn 70K combined and you plan to buy a 300K house.

Up to now: Deposit is 22K+16K = 38K. You can borrow 3.5 times of 70K = 245K. You effectively need to save another 17K to buy that house.

New rule: Deposit is 30K. You can borrow 3.5 times of 70K = 245K. Now you have extra 8K in cash to put towards your home but you effectively still need to save another 17K to buy that house.


Unless I'm missing something (Feel free to tell me), it only fits into a very narrow band of people that would benefit where their earnings is sufficiently high but low deposit.

Paul_Mc1988

So if I have this right as a first time buyer for a 400k house I only now need a 40k deposit as opposed to 58k on the precious rules?

whiskeyman

mahoganygas wrote: »

Yes , prices will rise, but maybe supply will increase also.

Which is likely to happen first?

I really feel many of those who think this is great for them over the coming year or so will be sorely disappointed.
It may even work against them.

Yes, it makes sense in the long run but only when the supply issue is tackled.

JaimeLannister

If the 3.5 x Salary cap still applies then this will make no difference for a person (or couple) with an income of <75k

mel123

I certainly dont want another boom, but i would have liked to see some kind of lee way for the non first time buyers, maybe also 10% deposit

MrMorooka

Meh, useless to me with no LTI changes, still means it's very difficult for an average person to afford Dublin as a single applicant. I highly doubt that the mortgage repayments + management fee etc. would be more than the €1000 a month in rent I currently pay(that will probably go up next year), but oh well.

Will just stick to my ongoing plan, keeping saving until I have something like a 40/50% "deposit" since that's the only way I can buy what I want with the mortgage I am likely to get. Would be different if I could make a joint application of course, but that's unlikely to happen.

bazery

I'm confused, if a house costs say 270 what deposit is required, is it 90% to 220 and 80% on everything after.
so 22k and 10k is that correct or has the ltv ceiling changed??

catrionanic

RE: exemptions being reduced from 15% to 5% - is this universal to everyone or just to first time buyers?

My husband and I are hoping to move on from our existing very small 2-bed in the next year or two (pregnant with first child now and it'll be a tight squeeze, then next to impossible when baby number 2 comes along). We were hoping to get an exemption. I assume that we are now a lot less likely to get one?

MrMorooka

JaimeLannister wrote: »

If the 3.5 x Salary cap still applies then this will make no difference for a person (or couple) with an income of <75k

Exactly, exactly. The LTI cap is the real problem in Dublin.

awec

lau1247 wrote: »

It might knock of the period you need to save but with 3.5 times still applied. it doesn't make much of a difference unless you fit within a certain narrow band from what I can see.

E.g. Lets say you have 38K saved today, if you and your wife earn 70K combined and you plan to buy a 300K house.

Up to now: Deposit is 22K+16K = 38K. You can borrow 3.5 times of 70K = 245K. You effectively need to save another 17K to buy that house.

New rule: Deposit is 30K. You can borrow 3.5 times of 70K = 245K. Now you have extra 8K in cash to put towards your home but you effectively still need to save another 17K to buy that house.


Unless I'm missing something (Feel free to tell me), it only fits into a very narrow band of people that would benefit where their earnings is sufficiently high but low deposit.

We have no problem with the 3.5x limit really. The problem has been the high deposit requirement, it's taken longer to save than we'd like because we're paying high rent at the same time.

zl1whqvjs75cdy

So house prices through the roof then?

Idbatterim

This is huge news for me and my wife. It knocks about a year off our saving requirements.

it is certainly helpful if you are currently being done on rent, have mortgage approval and are good to go, before it pushes up prices...

Michael D Not Higgins

MrMorooka wrote: »

Exactly, exactly. The LTI cap is the real problem in Dublin.

The LTI cap is the only thing holding back the tide. People are dying to indebt themselves with too much cheap credit again. I welcome the CBI preventing them from doing so.

MrMorooka

Michael D Not Higgins wrote: »

The LTI cap is the only thing holding back the tide. People are dying to indebt themselves with too much cheap credit again. I welcome the CBI preventing them from doing so.

Yes, people are dying to indebt themselves to escape the frankly awful rental market. That's the problem, so either make renting a better option or relax mortgage rules, as the current limbo is not great either.

Cuddlesworth

bazery wrote: »

I'm confused, if a house costs say 270 what deposit is required, is it 90% to 220 and 80% on everything after.
so 22k and 10k is that correct or has the ltv ceiling changed??

10% of 270k. So 27k. Down 5k in requirements. You will still need a income of 70k with that deposit.

Paul_Mc1988 wrote: »

So if I have this right as a first time buyer for a 400k house I only now need a 40k deposit as opposed to 58k on the precious rules?

If you earn 102k per year, then sure.

Idbatterim

Dont think the prices are that bad. You can still get three bed semi s below 200k in dublin. Try that in any other europen capital city.

where can you get a 3bed semi in dublin that isnt a shell in a kip of an area?

these similar properties in other cities would be a hell of a lot cheaper!

Paul_Mc1988

Cuddlesworth wrote: »

10% of 270k. So 27k. Down 5k in requirements. You will still need a income of 70k with that deposit.



If you earn 102k per year, then sure.

Currently combined income of 97K so shouldn't be too much hassle;)

Shelga

Don't see how this helps anything. All of this stuff- rent control, first time buyer scheme, changing lending rules, is just a distraction from lack of supply.

What can be done to make it more attractive for builders to build? I get that it's not easy but we never seem to hear anything about incentives to improve supply. I could be wrong?

Just moved back from UK yesterday, which in my experience isn't massively better/cheaper to buy anywhere you'd actually want to live. Especially as a single applicant.

Will just live at home for a while, save, hope for the best. Can maybe afford a 2 bed apt in a meh area of Dublin next year. But not if prices skyrocket.

appfry

Single applicants are soon to be an extinct breed.
That road to extinction started the minute the powers that be decided to apply ongoing pressure to have both halves of a couple out at work.

Now single applicants just cant compete with double incomes.