Is it fair to blame the Banks & Government if you cant get mortgage approval?

Cookie_Monster

Oymyakon wrote: »

Mortgage approval isn't the issue - It's the cost and lack of availability of housing. If mortgage lending rules loosened, house prices would soar even higher if we don't tackle the root issue - supply.

That's not the actual issue either. The root issue is uncontrolled population growth. but nobody is willing to bother doing anything about that so...

Former Former Former

Montage of Feck wrote: »

What is so wrong with negative equity anway? Its a home not an investment, buying and selling at the market rate would ensure that it doesn't effect moving or upgrading home; well in a fair market anyway, the current one is a bit skewed.

That's a bit like asking "what's the problem with renting your whole life, sure don't you have a roof over your head?"

As someone who spent much of the last 15 years in negative equity, I can assure you it is not a nice situation to be in.

Like, I've a lot of sympathy for anyone who is working and saving and still finds it hard to buy a house, but this generation is by no means unique in facing challenges.

My own parents were two secondary teachers with permanent jobs when they bought in 1974 and the best they could do was a 4-bed in Dublin 15. In 1974, that was the equivalent of buying in Enfield or Navan in 2021 btw.

notAMember

MadYaker wrote: »

My parents were able to get a mortgage in the 80s and buy a house when one of them was working part time and the other was basically on minimum wage and that was without help from their parents who had nothing. Good luck trying that today. Also the house they bought increased in value about 150% over the 30 years that they owned it. Good luck with that as well. Some things are easier for my generation and other things are harder, one of the things that is harder is owning a home.

That is also because women were mostly excluded from the workforce at the time. When you have half the population not allowed to work, affordability looks very different.

Sleeper12

notAMember wrote: »

That is also because women were mostly excluded from the workforce at the time. When you have half the population not allowed to work, affordability looks very different.

In what way were women excluded from the workforce in the 80s? Women worked right throughout the 80s. Most women opted to stay at home to raise their children granted but nothing stopping them working & many did. I do remember quite a few of my school friends had to get the dinner ready , that mammy already prepared, before she got home from work.


I think you are mixing up the 60s & maybe the early 70s with the 80s

almostover

SnuggyBear wrote: »

Isn't that his point? You didn't do those things and you bought a house. I didn't do those things and I bought a house too.

Yes but I was shocked at the affordability issues that we faced. We were looking to buy a 2nd hand detached home but the value for money simply isn't there. There's 100 sqm bungalows built in the 1970s in need of major re-decoration and insulation upgrade being sold within 20 mins of Cork city for over €300k. We went for a new build eventually because it allowed us claim €30k of our tax back and get a well insulated, modern newly built semi-D house. I had no issue compromising in the end.

What I have issue with, and it is a more general thing, is that 2 people with good incomes will struggle to buy many of the homes on sale today. Between the 2 of us we earn just over €100k gross per annum. According to CSO figures that places us in the top 14% of household income in Ireland. Granted these are 2016 figures but I'm guessing we're still in the top 20%.

https://www.cso.ie/en/releasesandpublications/ep/p-gpii/geographicalprofilesofincomeinireland2016/incomeinireland/

The median gross income is a shade over €45k. Again, 2016 figures but in today's terms that figure would surely be around €50k. With central bank rules that allows the median household to borrow €175k for a mortgage. You're not going to buy much with that in any urban area.

I agree fully with the 3.5 x borrowing limit. It's the only thing stopping us going back to the halcyon days of the mid 2000s. The issue is prices, and the issue with that is simple supply and demand. The government needs to do 2 things.

1. Increase supply of homes to the market for private buyers. For families and for single people. Not investment funds.

2. Start putting some limits on inward migration. We have an unprecedented homeless and housing crisis. If we are having a net migration of 30k inward per annum we will never meet the demand for housing. This is one of the unintended consequences of large FDIs expanding in Ireland. We don't have the labour base to fill all the jobs so they are filled by migrants. Nothing wrong with that but how do we house them?

The problem has to be tackled from both ends. Increase supply and reduce demand.

GSBellew

GSBellew wrote: »

Not in Dublin, but only 40 minutes drive from the airport.

You've to buy where you can afford, same applies everywhere in the world, big cities tend to be more expensive, ironically I didn't want to be in the urban area, but I couldn't afford to buy in my local rural area, so I went with what I could afford at the time.

Ok. Could you buy there now? If not your anecdote is not useful.

Also you have “to buy what you can afford” is tautological but it doesn’t explain or fix any problem. If nobody could ever buy in Dublin and has to go to Kildare, or Kilkenny they could be lectured to buy what “they can afford”, there’s still an economic problem though.

Former Former Former

Former Former Former wrote: »

That's a bit like asking "what's the problem with renting your whole life, sure don't you have a roof over your head?"

As someone who spent much of the last 15 years in negative equity, I can assure you it is not a nice situation to be in.

Like, I've a lot of sympathy for anyone who is working and saving and still finds it hard to buy a house, but this generation is by no means unique in facing challenges.

My own parents were two secondary teachers with permanent jobs when they bought in 1974 and the best they could do was a 4-bed in Dublin 15. In 1974, that was the equivalent of buying in Enfield or Navan in 2021 btw.

The every generation has problems buying is clearly not true as the age of ownership and the rate of it has fallen.

And negative equity isn’t the same problem as renting. In fact it’s just a number in your head. And you probably weren’t in NE for 15 years. Did you not pay the mortgage. NE doesn’t mean lower than the price you paid but lower than your remaining loan.

It does look like those who bought in the boom think it’s their birthright to get those prices back and keep them. That’s bad policy.

Former Former Former

fvp4 wrote: »

The every generation has problems buying is clearly not true as the age of ownership and the rate of it has fallen.

And negative equity isn’t the same problem as renting. In fact it’s just a number in your head. And you probably weren’t in NE for 15 years. Did you not pay the mortgage. NE doesn’t mean lower than the price you paid but lower than your remaining loan.

It does look like those who bought in the boom think it’s their birthright to get those prices back and keep them. That’s bad policy.

FFS. I can assure you that negative equity was not just a number in my head and I can assure you that I understand only too well the difference between negative equity and not getting back what I paid.

There were many times that I would gladly have taken the hit and sold at a loss but couldn't do so because I wouldn't have cleared the mortgage. There were many times when we had to make our life plans around the mortgage, because we were trapped there.

No-one forced me to buy the place, no-one forced me to take out a 100% mortgage. It was stupid and I don't blame anyone but myself, nor did I go looking for anyone to solve the problem for me.

But dismissing the trouble and pain that NE caused for thousands of people as an abstract concept that doesn't really matter is incredibly stupid.

It's about as valid as saying that all young people need to do is buy fewer organic avocado smoothies and they'll be able to afford a house big enough to fill with unicycles and vinyl records that they don't listen to.

I eventually was able to sell at a sum approx 20% less than what I paid, 15 years previously. However, I now have a much larger mortgage on my new house than most people at my stage in life would historically have had after trading up so the NE will impact my financial situation for the rest of my life.

I didn't think it's my birthright to get back my Celtic Tiger purchase price. In fact, I didn't want to get it back as it would have meant my next purchase would be similarly inflated.

TLDR: You dismiss other people's situations because it didn't affect you. That's fine, self-centred people are a fact of life, but don't be a dick and tell me I don't understand the very thing that dominated my life for over a decade.

Also, I didn't say negative equity was the same problem as renting. I said dismissing it as a non-issue was as bad as dismissing long-term renting as a non-issue. And then you very kindly proved my point.

SnuggyBear

almostover wrote: »

What I have issue with, and it is a more general thing, is that 2 people with good incomes will struggle to buy many of the homes on sale today. Between the 2 of us we earn just over €100k gross per annum. According to CSO figures that places us in the top 14% of household income in Ireland. Granted these are 2016 figures but I'm guessing we're still in the top 20%.

https://www.cso.ie/en/releasesandpublications/ep/p-gpii/geographicalprofilesofincomeinireland2016/incomeinireland/

The median gross income is a shade over €45k. Again, 2016 figures but in today's terms that figure would surely be around €50k. With central bank rules that allows the median household to borrow €175k for a mortgage. You're not going to buy much with that in any urban area.

I don't buy this. If I can buy a house on my own anyone can. No it's not mansion but its what I could afford and I'm happy with it. I can't afford to buy a ferrari but I'm not going to blame anyone cos I cant. I but the car I can afford. Its never been easy to buy a house so people can either save hard and buy a house they can afford or piss away there money and complain about not being able to buy a mansion.

SnuggyBear

SnuggyBear wrote: »

I don't buy this. If I can buy a house on my own anyone can. No it's not mansion but its what I could afford and I'm happy with it. I can't afford to buy a ferrari but I'm not going to blame anyone cos I cant. I but the car I can afford. Its never been easy to buy a house so people can either save hard and buy a house they can afford or piss away there money and complain about not being able to buy a mansion.

Are you on minimum wage or a zero hour contract?

SnuggyBear

SnuggyBear wrote: »

I don't buy this. If I can buy a house on my own anyone can. No it's not mansion but its what I could afford and I'm happy with it. I can't afford to buy a ferrari but I'm not going to blame anyone cos I cant. I but the car I can afford. Its never been easy to buy a house so people can either save hard and buy a house they can afford or piss away there money and complain about not being able to buy a mansion.

God but I hate anecdotes. Why could you buy on your own, and where did you buy? The vast majority of single people in Ireland, and in particular the cities, cannot buy. Therefore your anecdote is just that.

And it clearly isn't easy now as it was before because property ownership levels are plummeting amongst the young.

There's an amazing amount of anecdotes presented as data here.

thomas 123

Ah this is the thread where everyone who buried their head in the sand is!

It’s almost like none of those in agreement with the OP read the news about the vast majority of housing units in the state being purchased on a buy to rent basis by massive investment firms.

mohawk

I used to rent a place in South Dublin. Tiny house small garden so limited room to expand. Third bedroom would make a small office. Poorly insulated etc. Those houses in that estate are going for €400k. They would be perfect starter homes for young couples but they are out reach for so many.

We are now in a situation where two people on a modest/middle income are priced out of the market. The likes of nurses, teachers, guards, many in my own industry would be earning between €30-€45k). In previous generations people on low incomes bought homes. This is not just a Dublin issue either it’s also the same in Cork, Limerick, Galway. I live in a village commuting distance to a city. There has been a huge increase in house prices here because people can’t buy in the suburbs/city due to no supply and high prices. People aren’t trying to buy mansions either just regular homes.

I know for some posters the solution is urban sprawl. Just keep buying further and further out from the city until you can finally find something within your budget. However that takes a toll on your health and a toll on the environment. Something has to give.

Former Former Former

thomas 123 wrote: »

Ah this is the thread where everyone who buried their head in the sand is!

It’s almost like none of those in agreement with the OP read the news about the vast majority of housing units in the state being purchased on a buy to rent basis by massive investment firms.

FWIW, I don't agree with the OP, but is it accurate to say that the vast majority of housing units are being bought by investors? I genuinely don't know if there are figures on this.

starkid

JizzBeans wrote: »

If the current generation of first time buyers have spent their 20's doing things like....

1. Traveling the world
2. Spending 3-6 years in college
3. Living in Australia for a couple of years
4. Buying new cars
5. Buying the latest smartphones
6. poor family planning
7. Going on expensive holidays every summer
8. Boozing every weekend
9. Moving out with friends to live the life

Then they shouldn't expect to get mortgage approval in their 30's now because they are "ready to settle down"



Are people really surprised at the recent ERSI report findings? There is nothing inherently wrong with these activities as such, but they are not exactly compatible with saving for a deposit either.


For most ordinary people, home ownership is a long and difficult journey, takes years of planning, saving, sacrifice etc. Its not something you decide to undertake on a whim because your are "getting on".


Cant blame the banks and government for everything, personal responsibility has to play a part, no?

you forgot avacado toast...

The issue is now even doctors and other professionals can't afford housing.

Its gone way beyond your point.

ELM327

DubInMeath wrote: »

Are you on minimum wage or a zero hour contract?

Please point me to any capital city where someone on minimum wage or a zero hour contract could purchase a property?

Sammy2012

The problem isn't mortgage approval. The problem is lack of supply and houses that are affordable by younger couples are bring bought by others for the purpose of renting. I know of someone who was looking to inves money. They went to a viewing in recent weeks and there was a young couple there. The asking price of the house was 220k. Outside Dublin within an hours drive. Young couple needed to go to the bank, older buyer was a cash buyer and bought the property that day.

gmisk

Former Former Former wrote: »

FWIW, I don't agree with the OP, but is it accurate to say that the vast majority of housing units are being bought by investors? I genuinely don't know if there are figures on this.

I don't know about the vast majority but it's definitely a decent chunk.

The one that really got publicity and highlighted the issue is the below.
https://www.irishtimes.com/news/politics/investment-firms-buy-estate-of-112-new-houses-in-dublin-to-rent-out-1.4554949
It is just not sustainable, FF/FG have had plenty of time to do something about it and have done sweet FA.

The above is not an isolated purchase either
https://www.irishtimes.com/business/seen-heard-450-dublin-homes-sold-in-pre-fund-deal-by-glenveagh-1.4189385?mode=amp

Between those two alone that 560 homes that could and should have been available to purchase gone from the market

the butcher

2019 - Just 8,000 out of 21,000 houses built offered for sale on open market, says CIF

Investment funds bought 95% of 3,644 apartments completed in 2019.

https://www.irishtimes.com/business/construction/just-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fconstruction%2Fjust-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876

So yes - very fair to blame gov policy.

gmisk

the butcher wrote: »

2019 - Just 8,000 out of 21,000 houses built offered for sale on open market, says CIF

Investment funds bought 95% of 3,644 apartments completed in 2019.

https://www.irishtimes.com/business/construction/just-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fconstruction%2Fjust-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876

So yes - very fair to blame gov policy.

Jesus that is even worse than I thought it would be!
An absolute disaster why the hell have FF/FG done nothing?!?

notAMember

While I do think it's completely nuts that funds are buying so many properties, I also know some people are using their private pensions to buy property, and rent it to their children. That's a "thing" if you're in your 50's or 60's at the moment. A kind of inheritance tax avoidance mechanism.

So the numbers might be skewed there , depending on what investment funds mean.

Varik

gmisk wrote: »

Jesus that is even worse than I thought it would be!
An absolute disaster why the hell have FF/FG done nothing?!?

Councils are the ones handing out the 20 year deals for these properties.

even without that, they'd still be grabbing up properties.

Former Former Former

the butcher wrote: »

2019 - Just 8,000 out of 21,000 houses built offered for sale on open market, says CIF

Investment funds bought 95% of 3,644 apartments completed in 2019.

https://www.irishtimes.com/business/construction/just-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fconstruction%2Fjust-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876

So yes - very fair to blame gov policy.

Well hang on now.

21,000 homes - 5,000 of which are one-off houses so they would nearly all have ended up in owner-occupier hands. 12,000 in new estates, 4,000 of which taken up by councils, leaving 8,000 houses on the open market.

Meaning 4,000, or just under 20% of the total, bought by investment funds.

While that is a lot, it is a million miles away from a vast majority.

The problem with those figures is the total completions of 21,000. Way too low and that's what needs to change.

SnuggyBear

[Deleted User] wrote: »

God but I hate anecdotes. Why could you buy on your own, and where did you buy? The vast majority of single people in Ireland, and in particular the cities, cannot buy. Therefore your anecdote is just that.

And it clearly isn't easy now as it was before because property ownership levels are plummeting amongst the young.

There's an amazing amount of anecdotes presented as data here.

I live in a smallish town. I moved back home to my parents and saved every penny I had. I was on 24k a year at the time. I never said it was easy.
Buying a house has never been easy. You can't have it all, you have to make sacrifices. You can't expect to buy a house in a city on minimum wage. There's plenty of small towns to chose from.

Donald Trump

SnuggyBear wrote: »

I live in a smallish town. I moved back home to my parents and saved every penny I had. I was on 24k a year at the time. I never said it was easy.
Buying a house has never been easy. You can't have it all, you have to make sacrifices. You can't expect to buy a house in a city on minimum wage. There's plenty of small towns to chose from.

Average price increase last year was 20k.


If you couldn't afford to buy a house this year, and moved back with your parents, took your 24k (net? gross? let's be generous and assume net), handed up 50 Euro a week to your parents and kept 30 Euro a week for your pocket money, you'd have still been as far behind this year as last year.

SnuggyBear

Yes and the house prices went up as I was saving too. You know what I did? I kept saving.
Meanwhile I'm looking at people going into their 30s still living at home with not a penny to their name cos they pissed it all away. Working for over 10 years and nothing to show for it.

Randle P. McMurphy

L1011 wrote: »

My parents bought a new 4 bed semi D on a commuter rail line from Dublin for a tad over 3x the median single salary in 1986.

The equivalent now - a new, smaller albeit better insulated house on a smaller site in the same town would be closer to 10x a median single salary.

Sure, interest rates were higher but that doesn't even vaguely cancel out the affordability difference. And your average 1980s buyers probably drank like fish and smoked like chimneys based on average consumption of each in Ireland back then; which have both fallen significantly - that's why there was no money for holidays and the like.

Your parents were extremely lucky to be in that position in those days. They were in the minority. Ireland was a ****show in 1986. Anyone who was lucky enough to have a decent job was on the pigs back. The rest of us had to emigrate or live in poverty. I didn't have the contacts or influence that was necessary to get a job back then. I emigrated, worked hard and saved all my cash. I came back in 1987 and paid cash for a nice house in Dublin for next to nothing in todays terms. It was a different time. Trying to equate the two is pointless.

the butcher

https://www.independent.ie/business/personal-finance/property-mortgages/more-difficult-to-buy-a-home-now-than-in-the-1980s-36321280.html

An article from 2017.

Using data on house prices and wages, it says that many people aged 25-34 are being priced out of the opportunity to buy a home today, compared with the late 1980s.

In 1987, a house cost an average of 3.1 times a young couple's net income, or the amount left after taxes were paid. At the height of the boom, in 2007, it had increased to 6.3 times, and stood at 4.1 times in 2014, the most recent year for which figures are available.

It finds that while wages have risen by 8pc since 2012, rents are up 60pc and house prices by 40pc in the same period. It means that the cost of renting a one-bedroom apartment in Dublin is unaffordable for any minimum-wage earner, and for half of Irish employees. This group can forget about buying a home in the near term.

RulesOfNature

The central bank has stated in its plans and in no uncertain terms that it wants to lessen homeownership in Ireland and increase renting. The government is literally the architect of this ‘crisis’ . Its their plan, because according to the central bank renters are more productive.

thomas 123

SnuggyBear wrote: »

Yes and the house prices went up as I was saving too. You know what I did? I kept saving.
Meanwhile I'm looking at people going into their 30s still living at home with not a penny to their name cos they pissed it all away. Working for over 10 years and nothing to show for it.

Good thing you had parents with the space for you. The struggle must have been real living off the tit for all those years.

Is your suggestion that all young people move back on with their parents if they have them?