Property Market 2019

alwald

Zenify wrote:

So the central bank should give people more money and less deposits to stimulate the property market? Does anybody else not see a problem with this?

The role of the CBI is to ensure of the stability of the financial institutions not to stimulate the housing market. Any changes to the current rules would be bad.

Zenify

The_Conductor wrote: »

The world and its dog are getting exemptions these days

Are they surpassing their threshold?

Mic 1972

Lending more money means inflating the bubble further, do we really want that again?

Dolbhad

The_Conductor wrote: »

The world and its dog are getting exemptions these days- the net effect of doing something like this will mean nothing whatsoever other than in the lower and middle segments of the market- where any increase in borrowing capacity will simply be incremented onto asking prices.

The bigger expectation is that the rules around deposit requirements for subsequent buyers will be looked at- rather than counter productive tinkering with lending multiples. Bringing the deposit requirement for subsequent buyers (other than investors) to 10% is arguably far more necessary in the current climate- than any other single action.

I would like to see the deposit requirements for second time buyers eased especially if trading up. Could free up more homes that would be suitable for first time buyers. It’s hard for those who bought right at the peak to trade up. They are probably only breaking even or making a small profit now

Kamili

Kamili wrote: »

Have you a source for this or is it just a hunch?

I think it's a bad move if they do this.

Just a hunch, reading the quotes I think something is coming. I'd prefer if they left it alone though.

19233974

Deleted User wrote: »

Just a hunch, reading the quotes I think something is coming. I'd prefer if they left it alone though.

There is definitely a big push from the vested interests involved, the mortgage brokers association have been fairly vocal and getting out there but cant see how this will sway the central bank.

The lending rules are one of the few things they have done right, tackle the other issues effecting affordability as opposed to just lending people more money

Kamili

[Deleted User] wrote: »

Just a hunch.....

This is how rumours and scaremongering starts tbh.

19233974

https://www.independent.ie/business/personal-finance/property-mortgages/central-bank-boss-says-he-will-withstand-pressure-to-relax-mortgage-rules-38712303.html

Mic 1972

19233974 wrote: »

https://www.independent.ie/business/personal-finance/property-mortgages/central-bank-boss-says-he-will-withstand-pressure-to-relax-mortgage-rules-38712303.html

not happening apparently

https://www.independent.ie/business/personal-finance/property-mortgages/central-bank-not-likely-to-loosen-mortgage-rules-despite-aibs-call-38590778.html

Empty_Space

If they relax lending rules it means we are even more corrupt then I thought.

The ironic thing is I've heard young first time buyers screaming for them to relax rules. They think it will allow them to afford a nicer house. They don't understand that they will end up with the same house, but they will pay more for it.

Of course the banks are pushing for it, allows them to create more debt from thin air.

Mic 1972

Empty_Space wrote: »

If they relax lending rules it means we are even more corrupt then I thought.

The ironic thing is I've heard young first time buyers screaming for them to relax rules. They think it will allow them to afford a nicer house. They don't understand that they will end up with the same house, but they will pay more for it.

Of course the banks are pushing for it, allows them to create more debt from thin air.

yep, i quote every word

hmmm

I think there's scope to relax the deposit rules for FTBs - people can't pay crazy rents and manage to save large deposits at the same time. We're forcing people into a dysfunctional rent market with far too little supply.

I hope there's no change to the other rules, I think they are doing what they should be doing.

Bigmac1euro

It would be absolute insanity if they relax the 3.5 rule.

beaz2018

Was the 3.5 rule not brought in when interest rates were higher and therefore was calculated on the basis of % of take home pay that would service mortgage payments? Im not advocating for a change that would mean people get into more debt but the current system is making it very difficult for certain people to ever buy a house - single people, divorced people etc. Surely there is a more sophisticated model that would allow for example someone in their forties single with no kids the ability to borrow more as they are less likely to have kids expenses - childcare etc. My understanding of the exemptions process is that these type of people are typically excluded.

Bluefoam

beaz2018 wrote: »

Was the 3.5 rule not brought in when interest rates were higher and therefore was calculated on the basis of % of take home pay that would service mortgage payments? Im not advocating for a change that would mean people get into more debt but the current system is making it very difficult for certain people to ever buy a house - single people, divorced people etc. Surely there is a more sophisticated model that would allow for example someone in their forties single with no kids the ability to borrow more as they are less likely to have kids expenses - childcare etc. My understanding of the exemptions process is that these type of people are typically excluded.

A more sophisticated model that may include exemptions for people who qualify?

mariaalice

beaz2018 wrote: »

Was the 3.5 rule not brought in when interest rates were higher and therefore was calculated on the basis of % of take home pay that would service mortgage payments? Im not advocating for a change that would mean people get into more debt but the current system is making it very difficult for certain people to ever buy a house - single people, divorced people etc. Surely there is a more sophisticated model that would allow for example someone in their forties single with no kids the ability to borrow more as they are less likely to have kids expenses - childcare etc. My understanding of the exemptions process is that these type of people are typically excluded.

Bussines analysists of the whole property market whould easily be able to catheterise risk of defaulting remember risk of deflauting is the same as defaluting. There would be uproar and moral hazard in any system based on individualising risk in the mortgage market and from that treating some much more favorable than other.

A small amount of that goes on better interest rates for those with a better loan to valuation rate.

Mickiemcfist

We've now got house prices relatively stagnant in the Dublin area, any reduction of lending constraints will just add buying power to the mix & prices will go up. Buyers are competing with other buyers, not with the central bank.

Interested Observer

beaz2018 wrote: »

Surely there is a more sophisticated model that would allow for example someone in their forties single with no kids the ability to borrow more as they are less likely to have kids expenses - childcare etc. My understanding of the exemptions process is that these type of people are typically excluded.

Banks want mortgages paid up by the time you're 65. Being older is a disadvantage in terms of the time you have to pay off the mortgage, and your wages are what they are no matter your age. I don't see how this makes sense.

Kamili

beaz2018 wrote: »

Was the 3.5 rule not brought in when interest rates were higher and therefore was calculated on the basis of % of take home pay that would service mortgage payments? Im not advocating for a change that would mean people get into more debt but the current system is making it very difficult for certain people to ever buy a house - single people, divorced people etc. Surely there is a more sophisticated model that would allow for example someone in their forties single with no kids the ability to borrow more as they are less likely to have kids expenses - childcare etc. My understanding of the exemptions process is that these type of people are typically excluded.

I think the issue here is not the mortgage rules, we need them in place.

The issue here is the severe lack of supply, so changing the mortgage rules will only force the prices up. Which will create even more issues for the type of person you mention trying to buy a property, they just will have to pay more and more for it, which puts it even more out of reach for them.

The_Conductor

beaz2018 wrote: »

Was the 3.5 rule not brought in when interest rates were higher and therefore was calculated on the basis of % of take home pay that would service mortgage payments? Im not advocating for a change that would mean people get into more debt but the current system is making it very difficult for certain people to ever buy a house - single people, divorced people etc. Surely there is a more sophisticated model that would allow for example someone in their forties single with no kids the ability to borrow more as they are less likely to have kids expenses - childcare etc. My understanding of the exemptions process is that these type of people are typically excluded.

Nope- the multiple rule was brought in 4-5 years ago.
Interest rates were already on the floor at that stage.

The bigger problem now- is the politicians have gotten it into their heads that a stagnation in price rises- is a bad thing. Nope, its not- its a natural balance point of affordability alongside availability having been met. That idiot from AIB who is calling for the abolition of the multiple rule- is in the same breath insinuating that we need 35-40k units per annum. If he wants to keep prices high- and build 35-40k units per annum- then of course he'll have to pump liquidity into the market- however, we all know how that ended the last time the band stopped playing.

We need large supplies of suitable affordable units to be built- in reasonable locations. We don't need more expensive tat that satisfies no-one but builders and bankers.

As for the rental sector- we have to stop with the Jekyl and Hyde approach and decide do we want to support tenants and landlords- or do we want the current system to prevail- which doesn't work for either tenants or landlords. The Minister has royally screwed around with the sector to the extent that it isn't fit for any purpose for anyone (aside from the Revenue Commissioners).

Billythekid19

hmmm wrote: »

I think there's scope to relax the deposit rules for FTBs - people can't pay crazy rents and manage to save large deposits at the same time. We're forcing people into a dysfunctional rent market with far too little supply.

I hope there's no change to the other rules, I think they are doing what they should be doing.

I fully agree, to put into context if I currently rent a 2 bed apartment in cork city for 1600 per month. I am in the process of buying a 4 bed semi-D in Douglas and will service a mortgage for 1,200 for month. Buying at the moment is a no-brainer, especially when I can rent out 3 rooms and get tenants to pay my mortgage repayments in full.

SozBbz

The_Conductor wrote: »

Nope- the multiple rule was brought in 4-5 years ago.
Interest rates were already on the floor at that stage.

Well yes the ECB rate and the FED etc have been at historic lows for a number of years now, but the rates borrowers were paying on mortgages in 2014/15 were high.

I got a mortgage in 2015 at say 60% LTV fixed for 3 years with BOI and it was still 3.6%. I'd had approval since 2013 and the rates then were slightly higher again, 3.8 IIRC.

I've since gotten that down to 2.7% and have another with another bank at a lower rate again.

If they're stress testing at the prevailing rate +2% for example, that does change the affordability a fair bit.

rightmove

The_Conductor wrote: »

As for the rental sector- we have to stop with the Jekyl and Hyde approach and decide do we want to support tenants and landlords- or do we want the current system to prevail- which doesn't work for either tenants or landlords. The Minister has royally screwed around with the sector to the extent that it isn't fit for any purpose for anyone (aside from the Revenue Commissioners).

All the small LL that left were a cheap and compliant way to get tax with minimal effort...but they are now gone and more to follow. Youd wonder what is going on in Murphy's head???

utmbuilder

I think Ireland is facing a real rental adjustment in the next 2 years and landlords will simply not be able to sustain what's coming.

Building will be gone from state funded to private in next 24 months.

handlemaster

utmbuilder wrote: »

I think Ireland is facing a real rental adjustment in the next 2 years and landlords will simply not be able to sustain what's coming.

Building will be gone from state funded to private in next 24 months.

The state are building nothing. .. have you made an error in your statement ? ?

OwlsZat

We are pishing away 5bn each year on interest payments despite record low interest rates to manage our bailout debt. We wasted 2bn on the on the Children's Hospital, we are wasting 3bn on the Rural Broad plan. On the other hand there has been no paying down of the actual bailout loan or little to no investment on the building of improved roads and rail networks or housing. We will regret the mismanagement of our corporate tax windfall.

heebusjeebus

OwlsZat wrote: »

We are pishing away 5bn each year on interest payments despite record low interest rates to manage our bailout debt. We wasted 2bn on the on the Children's Hospital, we are wasting 3bn on the Rural Broad plan. On the other hand there has been no paying down of the actual bailout loan or little to no investment on the building of improved roads and rail networks or housing. We will regret the mismanagement of our corporate tax windfall.

Whatever about the huge costs of the hospital and the broadband plan, they will last for generations and be useful for generations of Irish. This is the investment we need in Ireland, not paying down the bailout loan.

The Student

heebusjeebus wrote: »

Whatever about the huge costs of the hospital and the broadband plan, they will last for generations and be useful for generations of Irish. This is the investment we need in Ireland, not paying down the bailout loan.

if you dont pay down the bail out loan how do you expect to get future loans when we need them. If we default on loan agreements future loans will charge higher interest rates.

IAmTheReign

The Student wrote: »

if you dont pay down the bail out loan how do you expect to get future loans when we need them. If we default on loan agreements future loans will charge higher interest rates.

We have repaid a significant portion of the bailout loans. 23 of the original 67 billion has already been repaid. https://www.irishtimes.com/business/economy/ireland-still-owes-44-5bn-in-bailout-loans-after-paying-off-imf-early-1.3334972

National debt isn't like a car loan, you don't expect to ever have to pay it all back. You pay back or refinance the portion that carries a significant repayment cost (loans with high interest rates) and let inflation take care of the rest. If the economy is growing faster than the interest payments on the loan then the relative value of the debt decreases over time.

The Student

IAmTheReign wrote: »

We have repaid a significant portion of the bailout loans. 23 of the original 67 billion has already been repaid. https://www.irishtimes.com/business/economy/ireland-still-owes-44-5bn-in-bailout-loans-after-paying-off-imf-early-1.3334972

National debt isn't like a car loan, you don't expect to ever have to pay it all back. You pay back or refinance the portion that carries a significant repayment cost (loans with high interest rates) and let inflation take care of the rest. If the economy is growing faster than the interest payments on the loan then the relative value of the debt decreases over time.

Yes I understand you refinance the loans but if you dont adhere to the payment terms of the original loan why would a new loan rate be less than the existing rate.

If you are meeting your loan repayments then you are a good credit risk and the interest rate will reflect that, if you are not a good credit risk then the interest rate on any refinancing loan could be higher than you existing loan interest rate. So you are not saving any money.

We are a high cost economy and if inflation increases we become less competitive with our competition (if their inflation rate does not increase like ours).

We don't have the luxury of revaluing our currency what we need to do reduce our costs to be competitive.

Perhaps we are a society need to take a look at ourselves and re-evalue what we want and what we can actually afford. In my view the system is broken and it is not working for anyone.