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Should 100% mortgages return?

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Comments

  • #102
    fortwilliam
    Registered Users, Registered Users 2 Posts: 571 ✭✭✭fortwilliam


    Let me explain this:

    There are 5 houses in Sea-View Road
    There are 10 people who would like to buy them
    5 of them have 330k
    5 of them have 300k

    Therefore the price is 330k and the top 5 get the houses.

    Now we introduce 100% mortgages

    Now the bottom 5 have 330k for the houses with 100% Mortgages
    But the top 5 also take the 100% mortgage and now have 350k

    Now the price of the houses are 350k and the same people get them and the seller is richer.

    Clear?


  • #103
    Mint Sauce
    Registered Users, Registered Users 2 Posts: 29,293 ✭✭✭✭Mint Sauce


    monkeysnapper wrote: »
    Did i dream it or did they at one point chuck a 100% mortgage plus a brand new Rover car at people ...

    100% Mortgage, a car loan, and 0 repayments for the first three months, was what I was offered.


  • #104
    GreeBo
    Registered Users, Registered Users 2 Posts: 27,254 ✭✭✭✭GreeBo


    bluewolf wrote: »
    I think thinking of your upper limit as being the most you could ever pay back purely on salary is a very dangerous road to go down. Particularly given the sheer amount you pay back in interest, and more so for 100% mortgages
    300k over 25y is what, 400k - 450k?though rates for some banks were cut lately

    As opposed to renting for the rest of your life:

    60 years at 1500/month : €1,080,000?

    Or even:
    30 years at 1500/month + 30 years at 1000/month = €900,000

    But somehow we think that's more sustainable for people ignoring the fact that at the end of either approach they have no asset to dispose of or borrow against?:confused:


  • #105
    GreeBo
    Registered Users, Registered Users 2 Posts: 27,254 ✭✭✭✭GreeBo


    fortwilliam wrote: »
    Let me explain this:

    There are 5 houses in Sea-View Road
    There are 10 people who would like to buy them
    5 of them have 330k
    5 of them have 300k

    Therefore the price is 330k and the top 5 get the houses.

    Now we introduce 100% mortgages

    Now the bottom 5 have 330k for the houses with 100% Mortgages
    But the top 5 also take the 100% mortgage and now have 350k

    Now the price of the houses are 350k and the same people get them and the seller is richer.

    Clear?

    That only works if the banks are willing to lend both sets of people 350K based on their circumstances.
    100% mortgage doesnt mean that everyone is suddenly entitled to a mortgage, you still need to be able to afford it.

    Put it another way, are you against a %100 mortgage for a house worth €350K but you are ok with 90% mortgage for a house worth €390K?


  • #106
    RayCun
    Registered Users, Registered Users 2 Posts: 15,704 ✭✭✭✭RayCun


    The bank also has to consider what happens if/when the market crashes again.

    A mortgage is secured on the value of the house.

    If a house is bought for 300k and a year later it's worth 200K, then the bank's security is smaller than their exposure. If they gave a 100% mortgage then they are really exposed. If they gave a 90% mortgage they are less exposed.

    The ban on 100% mortgages is not just about keeping a lid on the market, it's about limiting the exposure of banks so we're not all left holding the bill if/when the market crashes again.


  • #107
    noodler
    Registered Users, Registered Users 2 Posts: 26,508 ✭✭✭✭noodler


    RayCun wrote: »
    The bank also has to consider what happens if/when the market crashes again.

    A mortgage is secured on the value of the house.

    If a house is bought for 300k and a year later it's worth 200K, then the bank's security is smaller than their exposure. If they gave a 100% mortgage then they are really exposed. If they gave a 90% mortgage they are less exposed.

    The ban on 100% mortgages is not just about keeping a lid on the market, it's about limiting the exposure of banks so we're not all left holding the bill if/when the market crashes again.

    Boom.

    My god this took a long time to come up.

    I don't want to pay for anyone else's failed loan ever again.


  • #108
    yenom
    Registered Users, Registered Users 2 Posts: 659 ✭✭✭yenom


    100% mortage is grand for ten year but then BANG. The crash will come again, it always happens again.There was a recession in the 70s, 80s, 90s and late 00s. There will be one in the 20s. The mortage payers will then get a pay cut or go on the dole. They will then proceed to blame everyone but themselves for getting a 100% mortgage.


  • #109
    Pinch Flat
    Registered Users, Registered Users 2 Posts: 7,767 ✭✭✭Pinch Flat


    Pah 100% mortgages are so 2006. Should be 200% available.


  • #110
    Fuzzytrooper
    Moderators, Arts Moderators Posts: 896 Mod ✭✭✭✭Fuzzytrooper


    All I need is about three fiddy


  • #111
    tobsey
    Registered Users, Registered Users 2 Posts: 1,275 ✭✭✭tobsey


    yenom wrote: »
    100% mortage is grand for ten year but then BANG. The crash will come again, it always happens again.There was a recession in the 70s, 80s, 90s and late 00s. There will be one in the 20s. The mortage payers will then get a pay cut or go on the dole. They will then proceed to blame everyone but themselves for getting a 100% mortgage.

    The latest recession was he only one hat had a material effect on property values though


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  • #112
    GreeBo
    Registered Users, Registered Users 2 Posts: 27,254 ✭✭✭✭GreeBo


    yenom wrote: »
    100% mortage is grand for ten year but then BANG. The crash will come again, it always happens again.There was a recession in the 70s, 80s, 90s and late 00s. There will be one in the 20s. The mortage payers will then get a pay cut or go on the dole. They will then proceed to blame everyone but themselves for getting a 100% mortgage.

    Which is why we have stress testing.

    Its not the fact of 100% mortgages that's the problem, it's any mortgage that cannot be repaid when circumstances change, coupled with a now below cost asset.


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