From 100% to 120%

MorningStar

delly wrote:

'Credit Unions - helping people hide loans from mortgage lenders for countless years '

Building societies were the same at one point but the new rules coming in will stop it. In 80s they couldn't even look at your bank accounts without major hassle. All the hidden money wasn't really hidden it was just in the building societies.

SkepticOne

MorningStar wrote:

That is an odd comment. They heard one is about to come out and they said it is a bad idea but they aren't going to do anything. They don't have to approve it as there is no requirement to.

I don't think anybody thinks this is a good idea ever let alone in our current environment.

The reason I thought the regulator's remarks odd was that they were saying in advance that they would approve such a product. I would have thought it would be more prudent, if they thought such a product was irresponsible, to say nothing thereby not encouraging such a product to appear in the first place. Not that it would make much difference of course.

thatkindofgirl

MorningStar wrote:

Well that's not quite fair. Many civil servants get paid the same no matter where they live! If you are from Dublin it is very hard to stay here due to cost. You can't have a low paying job and start on the property ladder in Dublin without state aid. You can do that in the country. Dublin isn't just a city where people work it is our home and family.
Wexford stops people from outside Wexford buying houses yet we can't do that here. That actually limits the Wexford house prices.

The vast majority of jobs are centralised in Dublin, therefore people are going to move here.

There are unemployed people in sligo, while there are companies begging for people in Dublin. So -- you could go live in Sligo and buy a cheap house, but you mightn't find a job.

Imposter

MorningStar wrote:

I just want the government to make sure the market doesn't fall apart. Just because you want to put yourself at risk doesn't give you the right to put others at risk.

Ok then I seem to have misunderstood what you are saying. Can you explain why exactly you think the governemnt should step in to protect a market that many think is overpriced? As for the bit on risk surely people who bought property realised there was a risk involved! Why should they be protected?

If the value of people's property drops that's their problem. Those who live in their houses have no problem as they have to pay the mortgage as they agreed for the duration of the mortgage. Their property doesn't rise in value (a least for a few years) but they still have their home. Those who have invested and are expecting and relying on prices to rise are hit, but that's the risk they've taken.

Yes there may be a minority in the market who don't fit into the above 2 categories who may be adversely effected by any drop or change in the market but there are also people who will benifit.

I just can't understand why you think the government should step-in to keep prices artificially high.

Gurgle

MorningStar wrote:

Far from it I am suggest the government restrict the amounts for mortgages, if people can't get the money house prices can't go up, it's that simple.

But rent charged is directly proportional to the mortgage - usually calculated to cover mortgage, tax, upkeep & a bit of pocket money.

If the government inflicted that type of control, you would be forcing those who can least afford it to pay ever-increasing rent.

Remember - rent goes up, mortgage repayments stay the same, so the value of the repayments drops. I'm already seeing this in my place, I pay €576pm mortgage on a house that would be €850pm to rent.

homeOwner

thatkindofgirl wrote:

There are unemployed people in sligo, while there are companies begging for people in Dublin. So -- you could go live in Sligo and buy a cheap house, but you mightn't find a job.

I would disagree with that.

Sligo is one of the best areas for employment oppertunities outside of the major cities. Garda, teachers, nurses, IT consultants, business consultants, engineers, healthcare staff, admin staff, outdoor persuits, hotel and catering, airport staff., retail. What area are these people in that they cant find employment?

We have the lowest unemployement rate in europe at 4.2%

I would gladly compromise on choice of place to work if it meant i could afford a house in the area I grew up or even close to it. But that is not an option for me, I am never going afford a house anywhere near my parents.

I am not complaining, it is not a given right for someone to buy a house where they grew up but there is no doubt that people from dublin are at a disadvantage if they want to live close to their family. Even if they live 6 miles away (hardly far in terms of distance) that could be over an hour driving time.

MorningStar

Imposter wrote:

Ok then I seem to have misunderstood what you are saying. Can you explain why exactly you think the governemnt should step in to protect a market that many think is overpriced? As for the bit on risk surely people who bought property realised there was a risk involved! Why should they be protected?

Yes there may be a minority in the market who don't fit into the above 2 categories who may be adversely effected by any drop or change in the market but there are also people who will benifit.

I just can't understand why you think the government should step-in to keep prices artificially high.

I have never said the government should keep prices artificially high. First off I don't think they are artificically high you do I don't. I think the government should not allow financial institutes to profit off people and force them into debit. The institues know alot more on property than people on the streets they use their knowledge to take advantage of them. It is the governments job to protect the public even the stupid ones. If the market crashed it would effect everybody to certain degree. Nobody lives in isolation.
The government should step in anytime the countries econonmy is put at risk or people are being screwed over. Who gets all the extra money? It's being spent on new houses as they are stamp duty exempt (governemnts method to encourage building) so it goes to builders. Teh extra intrest on the loan goes to the bank. As many of these companies now take the money out of the country nobody wins except them.

CiranC wrote:

I see your point, but I think you underestimate the lenghts people will go to to buy a place to live.

I understand that but it's finite. They can get 120% and then also borrow from all their other sources. The govenrment would be better off letting the FTB buy 2nd houses without stamp duty under the same cconditions that apply for new buildings.

scepticone wrote:

The reason I thought the regulator's remarks odd was that they were saying in advance that they would approve such a product.

They said they would not block it and said it was "irresponsible" a far cry from approving it. The whole interview I heard was that they wouldn't stop people taking foolish risks. It htink they should act as there are too many dumb people who don't understand personal finance. AS mentioned you don't buy a short life item on a long term loan.

MorningStar

Gurgle wrote:

But rent charged is directly proportional to the mortgage - usually calculated to cover mortgage, tax, upkeep & a bit of pocket money.

Who told you that? It's not true from my experience. Rent can be easily less than the mortgage or more. It depends when you buy and the current climate. A good property can make a lot more than it's mortgage. Location and quality of interrior are the real rent controlers.

Imposter

MorningStar wrote:

I have never said the government should keep prices artificially high. First off I don't think they are artificically high you do I don't.

I think the government should not allow financial institutes to profit off people and force them into debit.

That's why they exist! They make profits off people's debt!

The institues know alot more on property than people on the streets they use their knowledge to take advantage of them. It is the governments job to protect the public even the stupid ones. If the market crashed it would effect everybody to certain degree. Nobody lives in isolation.

So if these all knowlegdable institutes want to give people 120% loans you think the government should step in. Are the government more knowledgable than the banks? It is not up to the government protect against stupidity. Yes the market would effect everyone in some way but not all negative. If property once again became affordable, I believe the ones who really lose out are the ones who put too much money into property without considering the risks, for the most part.

The government should step in anytime the countries econonmy is put at risk or people are being screwed over.

They haven't done that yet even though the later is happening!

Who gets all the extra money? It's being spent on new houses as they are stamp duty exempt (governemnts method to encourage building) so it goes to builders. Teh extra intrest on the loan goes to the bank. As many of these companies now take the money out of the country nobody wins except them.

If developers take the money out of the country that is a different problem. It would also suggest that they think there is more value outside of Ireland which in turn would suggest that Ireland is overpriced.

MorningStar

Imposter wrote:

That's why they exist! They make profits off people's debt!

Really simple for you to understand there is normal profit and super normal profit. Normal profit is the amount of profit that below which nobody will provide the service. Supernormal profit is the difference between normal profit an the amount above which is being made. The banks are making super normal profits.

Imposter wrote:

So if these all knowlegdable institutes want to give people 120% loans you think the government should step in. Are the government more knowledgable than the banks? It is not up to the government protect against stupidity. Yes the market would effect everyone in some way but not all negative. If property once again became affordable, I believe the ones who really lose out are the ones who put too much money into property without considering the risks, for the most part.

Tha banks can de-stabilise the economy and make profit their concern. They don't care otherwise. It is the governments job to protect everybody in the state, it has a duty of care so yes it is the governments job to protect the stupid. More importantly it is meant to protect others from the greedy (banks) and risk takers (FTB with 120% mortgage)

Imposter wrote:

They haven't done that yet even though the later is happening!

Actually they have and do all the time. They are acting quickly enough at the moment. I have already mentioned though with the SSIAs maybe the logical use of a 120% mortgages. There may be hype about the risk at the moment and maybe that's what the govenrment are thinking too!

Imposter wrote:

If developers take the money out of the country that is a different problem. It would also suggest that they think there is more value outside of Ireland which in turn would suggest that Ireland is overpriced.

For somebody who is obviously under 30 you think in a very closed way on everything. The developers aren't Irish they come over do the work and leave taking the money with them. It's not Ireland is over priced it's they came for the money and left with it. The workers aren't Irish so a lot of the economic boom and wages is not circulationg in Ireland meaning we don't reap all the rewards of getting into credit.
Why do you care about the irish property market you don't own or live here, do you plan to come back to a place where your quality of life is worse?
Ask your friends over there what they think of 120% mortgages?

Gurgle

MorningStar wrote:

The developers aren't Irish they come over do the work and leave taking the money with them.

The points you were making earlier in the thread have all been rebutted.

Your arguements would have held water in the 80s or early 90s if a suggestion of 120% lending had been made then but they are totally meaningless now.

So now your're just blatantly making stuff up.

Of all the economic sectors in the country, only farming and building are totally dominated by the Irish.

I exits this discussion.

Imposter

MorningStar wrote:

Really simple for you to understand there is normal profit and super normal profit. Normal profit is the amount of profit that below which nobody will provide the service. Supernormal profit is the difference between normal profit an the amount above which is being made. The banks are making super normal profits.

Tha banks can de-stabilise the economy and make profit their concern. They don't care otherwise. It is the governments job to protect everybody in the state, it has a duty of care so yes it is the governments job to protect the stupid. More importantly it is meant to protect others from the greedy (banks) and risk takers (FTB with 120% mortgage)

The banks have made enormous profits for quite some time, and not just on mortgages, yet the government haven't stepped in yet.

It is also in their interest to get repaid on the loan so not thinking at least a few years down the line will cause them problems too.

Why do you care about the irish property market you don't own or live here, do you plan to come back to a place where your quality of life is worse?

Again this is none of your business but i'll respond ayways. Can a person not have an opinion on something if they are not directly involved? On a similar note it sounds like you don't need a mortgage (80%, 100% or 120%), yet you are still chiming in on these threads.

I still have friends and family in ireland who have recently bought or are thinking of it. At the moment I don't plan on coming back but you can never say never. I haven't gotten to the stage of really settling down so I could even return relatively soon (unlikely though). If that does happen then it would be very relevant to me.

Ask your friends over there what they think of 120% mortgages?

I've never said they or the 100% mortgages were a good idea. However for someone who is going to buy and borrow off the credit union as well they are a cheaper option.

What I do have is a problem with you constantly saying that it's time the government stepped in to keep prices high. You don't think they are overpriced but I and many others do. The government has not curbed the steep rise in values so why should it step in to soften any possible downswing in prices? Similarly stepping in to restrict 120% mortgages mightn't be a bad idea but if the banks feel like offering the product then the government at least has to consider their experience in the field. Such prodects are also available in other countries so there's obviously a market for them. You say any crash will affect everyone and you could be right (but maybe not negatively for everyone), but imo the ones who would be seriously affected would be investors and that is part of the risk they should have weighed up when deciding to invest.

MorningStar

Gurgle wrote:

The points you were making earlier in the thread have all been rebutted.

Your arguements would have held water in the 80s or early 90s if a suggestion of 120% lending had been made then but they are totally meaningless now.

So now your're just blatantly making stuff up.

Of all the economic sectors in the country, only farming and building are totally dominated by the Irish.

I exits this discussion.

What the hell are you talking about? Rebutted by who or what?

Name one thing I made up!

If the building trade is totaly taken up by the Irish I suggest you go talk to Gamma, you know the company that built some of our roads and had some trouble for not paying the correct wage. Go to a building site and see how many people there are Irish. I have no probalem with that just a fact.

Imposter wrote:

What I do have is a problem with you constantly saying that it's time the government stepped in to keep prices high.

You are actually an idot. I have never said this and it is not the first time you decided that I have said something without reading what I ACTUALLY said. I sepcifically pointed out I didn't suggest they keep it high already. You make comments on things you have no idea about or just completely ill informed. The govenrment has stepped in on the banks a ton of times. You seem to think a self centred view on everything I say yet all my suggestions have been about a greater good for all with extra taxes on me personally. Maybe if you could understand that somepeople actually are looking out for others and not just themselves and direct friends you might get close to understanding. But as I said you are an idiot so I doubt it! You complained about about the quailty of life here and I can tell you what makes it like that, the complete self centred view that once I get my piece I don't care what happens to others. That is you because you never undstood what real hardship was like and thought the 80s were great.

Imposter

MorningStar wrote:

You are actually an idot. I have never said this and it is not the first time you decided that I have said something without reading what I ACTUALLY said.

MorningStar wrote:

I just want the government to make sure the market doesn't fall apart.

MorningStar wrote:

I sepcifically pointed out I didn't suggest they keep it high already.

I said : "you constantly saying that it's time the government stepped in to keep prices high". Not what you've said above.

MorningStar wrote:

You seem to think a self centred view on everything I say yet all my suggestions have been about a greater good for all with extra taxes on me personally. Maybe if you could understand that somepeople actually are looking out for others and not just themselves and direct friends you might get close to understanding. But as I said you are an idiot so I doubt it!

You're wrong. And when exactly did you mention tax raises or more tax for you to pay?

That is you because you never undstood what real hardship was like and thought the 80s were great.

Again, try to understand, it's not difficult. I was comparing the fact that for people who were working, houses were affordable in the 80's.

MorningStar

Imposter wrote:

I said : "you constantly saying that it's time the government stepped in to keep prices high". Not what you've said above.
You're wrong. And when exactly did you mention tax raises or more tax for you to pay?

I didn't say yet you accused me twice of saying it and are now repeating it again. I mentioned taxes in the other thread where you accused me of make a similar satement several times also no matter how many times I pointed out I didn't say it. NOthing I have said even closely resemble a statement that I wan the govenrment to keep prices high. I have said in the past they should make it slow down. Huge differnce but maybe you don't understand.

Imposter wrote:

Again, try to understand, it's not difficult. I was comparing the fact that for people who were working, houses were affordable in the 80's.

I did understand but you cherry picked what you replied to. HGouses weren't affordable as I pointed out many social houses were provided so that people had places to live. Houses were only affordable to some. You either didn't know that or chose to ignore it.
Yoiu are commenting on details you have no first hand knowlege or involvement . All your views are completely theoretical based on media views and considering you can't follow what I am saying I doubt your reading of news papers is any way accurate either.
Instead of hoping for a crash that will prove you right and deviustate many lives maybe you should think about solutions. Many people would call your view begrudgery

rooferPete

Hi,

In the 80's I bought my first house for a portion of the Deposit on the very same house last year.

I was extremely lucky to get a loan at the time because "The Government" had imposed a lending / borrowing embargo on the Banks.

I moved some four years later with a similar embargo in place, within one year the house I bought had dropped 33% + some of our neighbours who had loans not exceeding £20,000 actually gave the keys back to the Building Society.

I remember one couple in particular who owed £17,500 they left the house with two suitcases and gave the keys back leaving everything behind, that house sold eventually for £18,000.

Our Govt tried to control the prices how many Bacon reports were there ? 1 ? 2 ? 3 ? the only one to benefit from trying to break the basic rules of economics was a top economist.

The rules of supply and demand are in play, the ones with the houses and the lending power hold the trump cards today, the lenders Never Lose.

I believe the only thing that may assist a soft landing as opposed to a crash is the fact that All the Banks are in the house lending business today whereas before it was left to the "Mutual Building Societies".

The one objection I have to 120% is history repeating itself, the same loans were available in the UK just before the big crash at the end of the 80's, the UK Govt were not one bit socially active at the time so people did lose their homes to the banks.

The Europe wide work force today should be thanked for coming here because without them if the laws of economics were followed new houses would cost much more because supply would not be able to keep up with demand.

The "experts" are giving us mixed signals some see a small slowdown others predict a drop in the market, I know that when I was in need of a home the ratio didn't matter to me neither did the fact that houses around me could not be sold, I still paid the high rates and kept the roof over my families head.

.

Victor

rooferPete wrote:

Our Govt tried to control the prices how many Bacon reports were there ? 1 ? 2 ? 3 ? the only one to benefit from trying to break the basic rules of economics was a top economist.

The rules of supply and demand are in play, the ones with the houses and the lending power hold the trump cards today, the lenders Never Lose.

Actually the goverment went soft on Bacons recommendations when prices stabilised for a few months in 2001. One of the big problems we have is the government is giving people tax credits to borrow inappropriate amounts of money.

Victor

MorningStar wrote:

You are actually an idot.

Is this "idot" one of them new mini i-pods?

Behave.

rooferPete

Hi Victor,

Was that the recommendation that removed the tax relief from mortgage interest for investors ?

I thought that was one good way to deal with what was a fight between the investor and the first time buyer for the same property.

If I remember correctly the reason for reinstating the mortgage interest relief for investors was the number of properties to rent had dropped with the existing rental stock increasing in cost per month.

I think the major items that Bacon or the Govt could not allow for was the low interest rates and the availability of soft loans on existing property to finance purchasing of more property for renting.

It would appear that for as long as the bigger euro zone countries need the low interest rates to try to stimulate their economies we should be ok if what we have today is ok.

Many do not realise that we were way behind our "euro" neighbours where property prices are concerned, even the South of England, London in particular recovered in a reasonably short time from the crash.

I think the problem today is the bar has been raised so high that even the investors are getting a little nervous and the lenders are looking at ways to get the borrowed money into the market thus maintaining their profit levels.

I just hope that greed doesn't kill what has been a very good time to have been young in this country, that is young enough not to need a home of your own.

At least the planes taking off today are only charter flights that will be coming back full of holiday makers instead of the emigration flights of the 80's and early 90's

.

Thomond Pk

rooferPete wrote:

If I remember correctly the reason for reinstating the mortgage interest relief for investors was the number of properties to rent had dropped with the existing rental stock increasing in cost per month.
.

Nope,

it was December 2001 and McCreevy simply lost his nerve, Part v was dropped three months later by Cullen

MorningStar

rooferPete wrote:

Hi Victor,
If I remember correctly the reason for reinstating the mortgage interest relief for investors was the number of properties to rent had dropped with the existing rental stock increasing in cost per month.

I think the major items that Bacon or the Govt could not allow for was the low interest rates and the availability of soft loans on existing property to finance purchasing of more property for renting.

I think you are right there but in general it can be said the Bacon reports were never really ever fully implemented. It was expert advise but it could have been wrong so some parts were thought to be too risky or unwise. They might have been right or wrong. Sometimes an unpopular action just can't be done due to politcs. It's understandable but they need to be reacting quicker now as the 120% may really be the final straw if given out too easily

Thomond Pk

Rents had already started falling from Q3 in 2000, there was plenty of product on the market at steady to mildly falling rates.

McCreevy simply reintroduced unrestricted mortgage relief to all residiential property because he was worried about the then emerging decline in the market. The decline was not sufficient to justify the blanket reintroduction of mortgage interest relief and certainly did nothing to encourage urban renewal which could have been made a special case.

[URL=] http://www.environ.ie/DOEI/doeipub.nsf/0/daac160e1d73c27d80256f0f003dbc05/$FILE/hsestatssept01.pdf[/URL]
A market that is tightly regulated is never allowed to rise further than it can sustain and permitting mortgages with purchasers providing zero security and actually allowing morgages to begin in negative equity is disaster myopia.

I.E. Blindness of risk, for this reason I disposed of my small number of Bank of Ireland shares today, any one got any hot equity tips?