Central bank mortgage lending rate changes

goz83

Michael D Not Higgins wrote: »

If you have negative equity the rules do not apply to you, just the bank's standard mortgage underwriting.

I'm not irked about the changes to the rules and I know they don't directly affect me. I was talking about the previous boom/bust, which resulted in the current NE.

The current rules are so inflexible that they do not (in my case) allow the same loan to be carried over to a larger property. Moving from employed, to self employed has made an application less favourable, even though a payment has never been missed on the mortgage. I mentioned this in another thread, but I was offering to bridge the NE gap on the current mortgage and add the additional capital to purchase the larger, higher value property, but the banks just hear "negative equity" and "self employed" and they cover their ears at "MORE CHILDREN". The fact that we are paying the mortgage under our current circumstances does not enter the equation at all. It's bonkers and a whole load of unnecessary red tape.

Floppybits

mahoganygas wrote: »

Floppybits wrote:

Not only is it a disaster for single income earners, it is also a disaster for families bought starter homes in the 2000's and now have families and want to upgrade. There is nothing here for those folks. Most of these folks have now become accidental landlords where they have had to rent out the starter home and then rent a house for themselves. Now with these rule changes there is now way these families can compete with FTB's. Everything that has been done is for FTB's, does no one else matter?

I hate the term accidental landlord.

If somebody bought a 2 bed apartment in 2000's with the full knowledge they would start a family in the future then that apartment was not a starter home, it was an investment. With any investment you accept the chance of values rising as well as falling.

If somebody bought a small home and then ended up with a larger unexpected family, then they are not accidental landlords. They are accidental parents.

It irks me that some people expect government intervention to ease the blow of their poor investment decisions. And let's be honest here, they were investments.

As a soon to be FTB, I have inherited a broken housing market from speculators in the 2000's. I have little sympathy.

I have to disagree with you there. A lot of people bought starter homes or apartments not as investments but as a place to live rather than live with mam and dad. Also a lot of single people bought apartments because they wanted to move out of the parents home. Then they got stuck because they met someone and the arse fell out of the market which meant they were stuck. Most of these folks would gladly sell their starter home so they can move on but again it comes down to supply and there is nothing out there and if there is there are queues of people mainly FTB's who are getting all the help over others who are being cast aside.

mahoganygas

sbsquarepants wrote:

Your ire is a little misplaced - as a first time buyer now - you're getting that home at roughly half the price it was in the mid 2000's - what exactly are you moaning about?

As a FTB I am looking for a 3 bed house that I can start a family in. I am not concerned with the value going up as ideally I will be in this home forever.

My ability to get a mortgage has been restricted in the past number of years due to CB lending restrictions, and a broken housing market where there is very little supply. Both of these are as a result of speculators in the 2,000s. I am not moaning about that. I've taken it on the chin and now welcome the assistance coming to FTB couples.

But I am angry at the suggestion that people who put their foot on the property ladder, which broke under them are somehow entitled to government intervention ahead of FTB's who have been waiting and saving for years to buy a house.

Buying a 'starter home' or 'getting your foot on the ladder' needs to be called out for what it is - speculation. If you buy an asset with the intention of increasing its value and selling it at a later date to fund the purchase of more assets then you are engaging in leverage. It's an investment decision.

Michael D Not Higgins

goz83 wrote: »

I'm not irked about the changes to the rules and I know they don't directly affect me. I was talking about the previous boom/bust, which resulted in the current NE.

The current rules are so inflexible that they do not (in my case) allow the same loan to be carried over to a larger property. Moving from employed, to self employed has made an application less favourable, even though a payment has never been missed on the mortgage. I mentioned this in another thread, but I was offering to bridge the NE gap on the current mortgage and add the additional capital to purchase the larger, higher value property, but the banks just hear "negative equity" and "self employed" and they cover their ears at "MORE CHILDREN". The fact that we are paying the mortgage under our current circumstances does not enter the equation at all. It's bonkers and a whole load of unnecessary red tape.

Blame the banks then, this isn't regulation that's stopping you getting a loan, it's the bank underwriting.

If anything it should show you the banks were lending way beyond everyone's means during the boom and they're lending more responsibly now.

mahoganygas

Floppybits wrote:

I have to disagree with you there. A lot of people bought starter homes or apartments not as investments but as a place to live rather than live with mam and dad. Also a lot of single people bought apartments because they wanted to move out of the parents home. Then they got stuck because they met someone and the arse fell out of the market which meant they were stuck. Most of these folks would gladly sell their starter home so they can move on but again it comes down to supply and there is nothing out there and if there is there are queues of people mainly FTB's who are getting all the help over others who are being cast aside.

Why not move out of mam and dad's home and rent a place? They could then invest their deposit money into something a little less volatile than the roulette wheel that is our property market.

It amazed me that twenty somethings, starting their careers felt the need to engage in a massive investment decision lasting 30+ years.

Floppybits

mahoganygas wrote: »

Floppybits wrote:

I have to disagree with you there. A lot of people bought starter homes or apartments not as investments but as a place to live rather than live with mam and dad. Also a lot of single people bought apartments because they wanted to move out of the parents home. Then they got stuck because they met someone and the arse fell out of the market which meant they were stuck. Most of these folks would gladly sell their starter home so they can move on but again it comes down to supply and there is nothing out there and if there is there are queues of people mainly FTB's who are getting all the help over others who are being cast aside.

Why not move out of mam and dad's home and rent a place? They could then invest their deposit money into something a little less volatile than the roulette wheel that is our property market.

It amazed me that twenty somethings, starting their careers felt the need to engage in a massive investment decision lasting 30+ years.

Ever hear of the saying that rent is dead money. This is why so many folks want to buy and not rent, it has been beaten into people for generations. It may be turning now but the renters here are very few protections still and the government is trying to catch up. But if you look at the people who are renting their property and then renting another these are the people that bought in the boom between 2004 and 2008 when they were told that prices are only going to go up and you need to buy to get on the ladder so that in a couple of years you can sell and move to another property, but as well all know the arse fell out of the market and they couldn't sell at the time.

mariaalice

Eric Cartman wrote: »

attempting to buy any property in habitable parts of leinster on a single income is almost impossible. you'd have to be under 30 and on 100k+ to buy a damn 3 bed terraced gaf over 35 years. Even with the rates change , you still need 35k of a deposit, which isn't the easiest saved either.

https://www.myhome.ie/residential/brochure/16-chapel-farm-copse-lusk-county-dublin/3729601?RegionId=1463&MinPrice&MaxPrice=250000&MinBeds&MaxBeds&MinSize&Ma

mahoganygas

Floppybits wrote:

Ever hear of the saying that rent is dead money. This is why so many folks want to buy and not rent, it has been beaten into people for generations. It may be turning now but the renters here are very few protections still and the government is trying to catch up. But if you look at the people who are renting their property and then renting another these are the people that bought in the boom between 2004 and 2008 when they were told that prices are only going to go up and you need to buy to get on the ladder so that in a couple of years you can sell and move to another property, but as well all know the arse fell out of the market and they couldn't sell at the time.

I agree completely. Rent is dead money. I know this first hand as I've had to rent for several years longer than expected because I now require a larger deposit.

Who told these people that prices see only going to go up? I read about it in the media but knew it was codswallop. So I rented.

This all boils down to personal responsibility. People need to accept that they were sold a lie, they made bad investment decisions and now the taxpayer won't be the ones picking up the tab.

Funnily enough I don't read this line of reasoning in the media. I hear plenty of blame aimed at the banks and their reckless lending. Rightly so. But I hear silence when people are asked why did they get that second or third home on a 100% mortgage?

Graham

mahoganygas wrote: »

If somebody bought a 2 bed apartment in 2000's with the full knowledge they would start a family in the future then that apartment was not a starter home, it was an investment. With any investment you accept the chance of values rising as well as falling.

If somebody bought a small home and then ended up with a larger unexpected family, then they are not accidental landlords. They are accidental parents.

That's a rather bizarre outlook to be honest. You appear to be suggesting first time buyers should only jump on the property ladder when they're in a position to buy a house that's going to accommodate not only their current needs but any future needs that may/may not have.

ted1

paulb06 wrote: »

Just wondering can anyone point me in the right direction, been getting different answers everywhere.

We are looking for a 310,000 house, under old rules we needed 10% of the 220,000 (22,000) and 20% of the remaining 90,000 (18,000) so total 40,000.

Under new rules we need only 10% of the house price (31,000).

In regards to the help to buy grant we were getting 5% of the 310,000 (15,500) and we were told it would be offset to our deposit so under old rules we would need 24,500 more to get our deposit up.

Now under new rule does this mean 15,500 will be offset off our new lower required deposit of 31,000 meaning we now only need 15,500 to reach our deposit?

Our combined income is 54,000 and we were told we could get an exception to the LTV rule (something like that?) so the 3.5 times the joint income rule didn't come into it on our case.

You're looking at a house that is close to 6 times your salary. Your going to be killing yourseif with regards mortgages, in threee years you could likely have a kid and could well drop to 1 salary with bigger living costs.

Cina

it's painful for me, in Dublin. I've been saving for eight years, since the moment I left uni and started working, and after all that I'm finally able to get the sort of place I was because of all the saving I did for my deposit, except with this, people who haven't gone anywhere close to saving as much as I have will now be able to get the same places I'm going for and thus drive up the prices and limit the availability further.

I get the idea here, make mortgages more accessible to everyone, but christ, they've really c*cked things up for those of us who've been making a conscious effort to save enough money to get a place in one of the most expensive cities in the world.

(and yes, I realise there is a selfishness to this and understand many won't agree)

ted1

sbsquarepants wrote: »

Your ire is a little misplaced - as a first time buyer now - you're getting that home at roughly half the price it was in the mid 2000's - what exactly are you moaning about?

Or twice as much as it was in 2012.

mahoganygas

Graham wrote:

That's a rather bizarre outlook to be honest. You appear to be suggesting first time buyers should only jump on the property ladder when they're in a position to buy a house that's going to accommodate not only their current needs but any future needs that may/may not have.

That's precisely what I'm suggesting.

It's the largest purchase I'll ever make in my life. I'll be paying for it for 30 years. I can't predict how many kids I'll likely have. But it's plainly obvious a 1 bed shoebox outside the M50 isn't an ideal home for a family.

Irish people need to get out of this mentality of proper ladders and automatic rights to being a landowner. Buying is not for everyone.

Graham

ted1 wrote: »

Or twice as much as it was in 2012.

So you're upset you missed the major property slump more than anything else?

Graham

mahoganygas wrote: »

That's precisely what I'm suggesting.

It's the largest purchase I'll ever make in my life. I'll be paying for it for 30 years. I can't predict how many kids I'll likely have. But it's plainly obvious a 1 bed shoebox outside the M50 isn't an ideal home for a family.

In a properly functioning property market, the 1 or 2-bed starter home is just that. A smaller step onto the property ladder that owners can trade-up from when their income and needs dictate and hopefully after they've paid off some of their mortgage and built up some equity.

The suggestion that it's imprudent to start anywhere other than a 3-bed semi with space for non-existent children is impractical and inappropriate.

ted1

Graham wrote: »

So you're upset you missed the major property slump more than anything else?

No I bought in 2012. I've friends and family who are buying now. Upset they missed out.

Floppybits

mahoganygas wrote: »

Floppybits wrote:

Ever hear of the saying that rent is dead money. This is why so many folks want to buy and not rent, it has been beaten into people for generations. It may be turning now but the renters here are very few protections still and the government is trying to catch up. But if you look at the people who are renting their property and then renting another these are the people that bought in the boom between 2004 and 2008 when they were told that prices are only going to go up and you need to buy to get on the ladder so that in a couple of years you can sell and move to another property, but as well all know the arse fell out of the market and they couldn't sell at the time.

I agree completely. Rent is dead money. I know this first hand as I've had to rent for several years longer than expected because I now require a larger deposit.

Who told these people that prices see only going to go up? I read about it in the media but knew it was codswallop. So I rented.

This all boils down to personal responsibility. People need to accept that they were sold a lie, they made bad investment decisions and now the taxpayer won't be the ones picking up the tab.

Funnily enough I don't read this line of reasoning in the media. I hear plenty of blame aimed at the banks and their reckless lending. Rightly so. But I hear silence when people are asked why did they get that second or third home on a 100% mortgage?

Well besides the media and politicians, people could see the price of housing increasing year on year from 2004 - 2008 with no sign of a slow down until mid 2008. Anyone looking to start a home in that period would have been looking at the prices and saying we need to buy soon or else any sort of accommodation would be outside of their price range. They would have needed to be able to predict the future to know that the arse would fall out of the marking in Mid 2008/2009.
Its great looking back in hindsight and saying they should have waited another couple of years and then bought but at the time that was not the case. Yes some people got lucky and sold just before the crash and then had their pick of houses at a reasonable price during the crash but that is nothing but luck.

ted1

Graham wrote: »

In a properly functioning property market, the 1 or 2-bed starter home is just that. A smaller step onto the property ladder that owners can trade-up from when their income and needs dictate and hopefully after they've paid off some of their mortgage and built up some equity.

The suggestion that it's imprudent to start anywhere other than a 3-bed semi with space for non-existent children is impractical and inappropriate.

When you buy a home you take out a 25-30 year mortgage and should look long term rather than short term, buying a 1 bed or even a 2 bed might be considered daft.
Taking out a 25-30 year mortgage for an investment you plan to keep for 3 years is crazy. It costs a couple Of k alone to buy and sell property (stamp duty, agents fees, advertising fees, soliciters fees, moving costs, redecoration etc) you also better hope that the market has not left you in negative equity.

mahoganygas

Graham wrote:

In a properly functioning property market, the 1 or 2-bed starter home is just that. A smaller step onto the property ladder that owners can trade-up from when their income and needs dictate and hopefully after they've paid off some of their mortgage and built up some equity.

The suggestion that it's imprudent to start anywhere other than a 3-bed semi with space for non-existent children is impractical and inappropriate.

I agree entirely. But the property market in the 2,000's was so obviously not a properly functioning market.

I completely support anybody who buys a 1 or 2 bed when they are young, and then continue to save more equity to eventually trade up to a bigger home.

But anybody who is relying on the capital appreciation of their asset to fund the new purchase was misguided to put it mildly.

That's what separates a speculator and a cautious buyer in my opinion.

When / if I eventually buy a home I will do so on the understanding that the market could crash, and I could be forced to live there forever. I accept that risk. But to mitigate it, I'm making sure it's large enough for a family, if I eventually have one.

AsianDub

Disaster for us. More competition for the same supply.

mahoganygas

Floppybits wrote:

Well besides the media and politicians, people could see the price of housing increasing year on year from 2004 - 2008 with no sign of a slow down until mid 2008. Anyone looking to start a home in that period would have been looking at the prices and saying we need to buy soon or else any sort of accommodation would be outside of their price range. They would have needed to be able to predict the future to know that the arse would fall out of the marking in Mid 2008/2009. Its great looking back in hindsight and saying they should have waited another couple of years and then bought but at the time that was not the case. Yes some people got lucky and sold just before the crash and then had their pick of houses at a reasonable price during the crash but that is nothing but luck.

I did exactly this. Several of my friends too. We saw a market spiraling out of control and decided not to jump on. I've been renting and saving ever since.

I predicted nothing. But 6% and 8% price increases per quarter was an obvious sign of overheating.

Graham

ted1 wrote: »

When you buy a home you take out a 25-30 year mortgage and should look long term rather than short term, buying a 1 bed or even a 2 bed might be considered daft.
Taking out a 25-30 year mortgage for an investment you plan to keep for 3 years is crazy. It costs a couple Of k alone to. It and sell property (stamp duty, agents fees, advertising fees, soliciters fees, moving costs, redecoration etc) you also better hope that the market has not left you in negative equity.

People don't tend to buy a 1 bed and find themselves 3 years later with a requirement to house a wife, 2.2 children, a dog and a volvo. It happens over time.

A 2 bed apartment/shoebox close to town is an entirely appropriate starting place for many people. Market crashed excepted, it wouldn't be unreasonable to think 3 - 7 years of occupation before trading up at which point there should be some equity in the property through mortgage repayments and property price increases (real of as a result of inflation).

There's just no way any reasonable property market is going to be able to support every homeowner starting with a 3 bed semi in the burbs.

q85dw7osi4lebg

mahoganygas wrote: »

I did exactly this. Several of my friends too. We saw a market spiraling out of control and decided not to jump on. I've been renting and saving ever since.

I predicted nothing. But 6% and 8% price increases per quarter was an obvious sign of overheating.

How much have you spent on rent in the last 9 years?

Graham

Mya Swift Back wrote: »

How much have you spent on rent in the last 9 years?

This, exactly.

Now I don't particularly subscribe to the theory that rent is dead money but at the same time you can't ignore the cost of rent when making proper informed decisions around the economics of property buy/rent decisions.

brownej

Outkast_IRE wrote: »

I am currently bidding on a property. As a first time buyer am i now clear to bid on the basis of needing only 10% (whilst meeting the other bank rules) as realistically by the time it goes sale agreed, a survey is done, a solicitor gets involved etc. it will be well into jan or feb at that stage.

You should only bid on a property based on the mortgage you have been approved for.
Reducing the deposit means that you will need to bridge that gap with more mortgage. If you are already borrowing at the 3.5x limit then reducing the deposit will but you over the threshold.

Just because the the rules have changed from the central bank doesn't mean that the banks are going to follow. The current rules serve to ensure that the banks have <90% LTV which is a nice place for them when it comes to negative equity.

appfry

Everybody is a genius in hindsight.
And we are all right all the time on the internet.
Rules of the internet.

Simple fact is some people got burned, some did well.
If it was predictable then we would all be rich and never make any mistakes.

I hear the same people telling me how they predicted the crash of the late 00s and that they decided to always rent for the rest of their lives and what great deals they were getting in rent. Sure why would you ever buy and how smart they were, if they say so themselves. Same people now complaining about rent prices and not being able to get on the property ladder.

While the people who the were laughing at in 2005,6,7 are now half way through their mortgages at nice low interest rates.
All just the luck of the draw. No expertise to it at all.
Look at the predictions threads on here from 2012, 2013 and all the armchair experts were telling you how rents were still falling and house prices were still spiralling and would continue and they were going to make a killing.

Of course now they are here telling us all why special f*cked up market conditions was the cause of them being wrong.
Well thats the markets for you folks. Big unforseen events cause the most impact. If they are easily seen coming then they wont have as big an effect.

appfry

Mya Swift Back wrote: »

How much have you spent on rent in the last 9 years?

Even better question how much will they spend over the next 50 years?

mahoganygas

Mya Swift Back wrote:

How much have you spent on rent in the last 9 years?

A lot! More so since housing supply grinded to a halt, and rents increased. Another hangover from the poor lending and borrowing decisions made in the 2,000's.

Look, I'm not spiteful. I don't think anybody should be punished for borrowing too much.

But I find it really hard to swallow that people want government intervention for investors ahead of first time buyers.

We're all in a sh!tty housing market together. But I've been patiently renting and saving for more than a decade. Bailing out those in negative equity is a slap in the face to those of us who were cautious.

Michael D Not Higgins

Mya Swift Back wrote: »

How much have you spent on rent in the last 9 years?

Well let's say they got a 300k property in 2007 for a 35 year loan at 4.5%.

The monthly cost would be 1419 for a lifetime cost of just under 600k.

On the other hand, let's say they've rented shared accommodation for 9 years at €700 per month (fair average considering the drops around 09/10/11), then bought the same house for 250k for 26 year loan at 4.5% (1360/month). That's a lifetime cost of just under 500k.

q85dw7osi4lebg

And that is why loan term is key.