Central Bank to limit amount banks lend for home purchase

ffactj · 19-10-2014 1:27pm

makeorbrake wrote: »

http://www.independent.ie/irish-news/central-bank-urged-to-relax-mortgage-rules-on-20pc-deposits-30674896.html

Finally the CB shows signs of doing something positive and immediately, it looks like .gov are going to fudge it!

Banana republic in action...

Interference --> more interference -->even more interference and around we go.

Should of left it be in the first place. Now how is the market supposed to find equilibrium?

NZ_2014 · 19-10-2014 1:27pm

makeorbrake wrote: »

http://www.independent.ie/irish-news/central-bank-urged-to-relax-mortgage-rules-on-20pc-deposits-30674896.html

Finally the CB shows signs of doing something positive and immediately, it looks like .gov are going to fudge it!

Banana republic in action...

The CB should have said 25%, then the pressure may have been to reduce to 15 or 20%.

I really hope for the future of the country that the 20% rule goes ahead; although I do think that people who pay a lot of rent will find it very hard to save 20% unless prices drop back.

ffactj · 19-10-2014 1:31pm

NZ_2014 wrote: »

The CB should have said 25%, then the pressure may have been to reduce to 15 or 20%.

I really hope for the future of the country that the 20% rule goes ahead; although I do think that people who pay a lot of rent will find it very hard to save 20% unless prices drop back.

That was probably the idea in the first place. Say 20% and settle for 15% in the end.

makeorbrake · 19-10-2014 1:53pm

ffactj wrote: »

Interference --> more interference -->even more interference and around we go.

Should of left it be in the first place. Now how is the market supposed to find equilibrium?

I'd make the distinction between regulatory 'interference' and political interference. If the former is carried out effectively, it's likely to be in the interests of the people. If the latter is carried out effectively, it's not likely to be in the long term interests of the people.

ffactj · 19-10-2014 2:15pm

makeorbrake wrote: »

I'd make the distinction between regulatory 'interference' and political interference. If the former is carried out effectively, it's likely to be in the interests of the people. If the latter is carried out effectively, it's not likely to be in the long term interests of the people.

I wouldnt make that distinction at all.
Regulators are lapdogs to whoevers lap is flavour of the month.

gaius c · 19-10-2014 3:59pm

ffactj wrote: »

I doubt it.
Developers know what the price is now, and what it costs to build a house and how long. Thats all they know.

Many of them ended up with riches beyond their wildest dreams at one point.
They were building, and guessing future trends, not predicting and it paid off for them.
And then many ended up ruined because they found they couldnt actually predict future prices after all.

Property prices are made up of so many variables its just impossible to predict them.

So let's all agree that we don't know, therefore we shouldn't talk about it and close up the forum?

gaius c · 19-10-2014 4:03pm

ffactj wrote: »

That was probably the idea in the first place. Say 20% and settle for 15% in the end.

But here's the thing. Not only do the government have no control over the CB, the CB actually answers to Europe, who are almost certainly behind this move.

vinylbomb · 19-10-2014 5:38pm

Giblet wrote: »

They would have child care costs if they had children either of about 900 euro a month.

If they had an auntie and she had balls she'd be their uncle.

Giblet · 19-10-2014 6:13pm

vinylbomb wrote: »

If they had an auntie and she had balls she'd be their uncle.

Yes, i forgot, what I stated is an edge case and has no bearing to banks whatsoever.

makeorbrake · 19-10-2014 7:51pm

ffactj wrote: »

I wouldnt make that distinction at all.
Regulators are lapdogs to whoevers lap is flavour of the month.

Strangely enough, I kind of guessed you wouldn't

That's not how they should function but of course that has been the irish experience to date. I think its fair enough to say that in other countries, they may be that much more likely to stick to script and do exactly what they are supposed to do i.e. REGULATE.

But then, in other countries policians trying to interfere in the working of a regulator - such as this - wouldn't be something that would be acceptable...

mr_seer · 19-10-2014 8:55pm

makeorbrake wrote: »

Strangely enough, I kind of guessed you wouldn't

That's not how they should function but of course that has been the irish experience to date. I think its fair enough to say that in other countries, they may be that much more likely to stick to script and do exactly what they are supposed to do i.e. REGULATE.

But then, in other countries policians trying to interfere in the working of a regulator - such as this - wouldn't be something that would be acceptable...

That's because in other countries the media don't collectively and unquestioningly spin high house prices as a good thing

ffactj · 19-10-2014 10:49pm

gaius c wrote: »

So let's all agree that we don't know, therefore we shouldn't talk about it and close up the forum?

Talk about it all you want. Just dont pretend you actually know what will happen though.
SUre the thread about a glut of reposessions driving property prices down, which reading through it had a lot of posts from your good self was closed because ... well how long can you keep saying something is going to happen and be wrong before you give up.

The_Conductor · 20-10-2014 6:56am

ffactj wrote: »

Talk about it all you want. Just dont pretend you actually know what will happen though.
SUre the thread about a glut of reposessions driving property prices down, which reading through it had a lot of posts from your good self was closed because ... well how long can you keep saying something is going to happen and be wrong before you give up.

If you have an issue with moderating- or want to question why I or one of my co-moderators has closed a thread- take it to us directly and we will respond in due course. It is not acceptable or appropriate to question moderator's decisions on thread.

Regards,

The_Conductor

handlemaster · 21-10-2014 7:17am

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.19706

It seems approval now is valid in 6mths time. This might change the sales demand up early next year.

NZ_2014 · 21-10-2014 7:34am

handlemaster wrote: »

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.19706

It seems approval now is valid in 6mths time. This might change the sales demand up early next year.

Article linked requires a subscription? Maybe you were logged in at the time. Think this is the article...

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.1970686

Barely Hedged · 21-10-2014 8:31am

handlemaster wrote: »

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.19706

It seems approval now is valid in 6mths time. This might change the sales demand up early next year.

If you get mortgage approval now, its generally valid for 6 months.

21-10-2014 8:37am

'Beat the regulator'. That's the spirit!

Maybe the banks will approve a few extra 80-85% loans to good customers well able to repay.

But they would be mad to push through a rake of new 90% mortgages which, if prices fall 10% in the wake of the new rules, would give them a brand new negative equity problem on top of the existing one.

NZ_2014 wrote: »

Article linked requires a subscription? Maybe you were logged in at the time. Think this is the article...

http://www.irishtimes.com/business/personal-finance/early-approval-can-beat-new-mortgage-rules-1.1970686

El_Dangeroso · 21-10-2014 9:37am

We won't see price drops (if any) until May/June 2015 I'd say.

Deco99 · 21-10-2014 9:51am

Sorry if this has been asked but I'm trawling the net to see what the predictions for property prices outside of Dublin are because of the new rules. There doesnt seem to be much discussion. Some feel the prices may actually go up.

gaius c · 21-10-2014 9:57am

El_Dangeroso wrote: »

We won't see price drops (if any) until May/June 2015 I'd say.

Activity in the sector in Dublin was actually dropping before the CB announcement as even the recent REA press release admitted.

gaius c · 21-10-2014 9:59am

Deleted User wrote: »

'Beat the regulator'. That's the spirit!

Maybe the banks will approve a few extra 80-85% loans to good customers well able to repay.

But they would be mad to push through a rake of new 90% mortgages which, if prices fall 10% in the wake of the new rules, would give them a brand new negative equity problem on top of the existing one.

People seem to miss that not all 90% mortgages are banned. The bank simply need to loan €6.50 at <80% LTV for every €1 they loan at >80% LTV. Entirely reasonable and buyers need to cop that these moves will help them in the long run.

El_Dangeroso · 21-10-2014 10:24am

gaius c wrote: »

Activity in the sector in Dublin was actually dropping before the CB announcement as even the recent REA press release admitted.

Do you reckon the announcement would bouy prices back up for a time as people panic buy?

gaius c · 21-10-2014 11:34am

El_Dangeroso wrote: »

Do you reckon the announcement would bouy prices back up for a time as people panic buy?

Truthfully, I think there's too many variables at play to make short-term predictions. Don't forget that CGT exemption is ending this year and this will probably have an effect too.

decco1981 · 21-10-2014 4:06pm

I think everyone is under estimating the effect of the incentive to investors which ends 31 Dec 2014. Don't think any serious investor will enter the market for at least two years - no incentive to do so.
With very little investors, demand will reduce and prices will fall from Feb/March 2015.
2015 we'll see - 5% for house prices.
If the new rules come in it'll be -10%

There are many variables but would be surprised if prices increase for 2015.

21-10-2014 4:25pm

decco1981 wrote: »

I think everyone is under estimating the effect of the incentive to investors which ends 31 Dec 2014. Don't think any serious investor will enter the market for at least two years - no incentive to do so.
With very little investors, demand will reduce and prices will fall from Feb/March 2015.
2015 we'll see - 5% for house prices.
If the new rules come in it'll be -10%

There are many variables but would be surprised if prices increase for 2015.

Fair play decco1981, pinning your predictions to the mast there! I'd broadly agree but wonder if the impact of the LTV/LTI rules will take a couple more months to fully kick in given that some FTBs could get 6-months approval in december?
(On that, am I right to say that BoI doesn't give approval in principle? I applied last year and was told I had to make a concrete application on a specific house which would then go thrpugh full underwriting process)

Do you assume that a lot of the cash in the market is investor money? I'd guess it is but don't have much to base that on.

I'd say the CGT change will have bigger impact on some areas amd minimal on others. What do investors buy and where? They want rental yield so it's apartments and smaller houses in cities and near hospitals/universities. Perhaps not so big on 4-beds in suburbia.

El_Dangeroso · 21-10-2014 5:56pm

Deleted User wrote: »

I'd say the CGT change will have bigger impact on some areas amd minimal on others. What do investors buy and where? They want rental yield so it's apartments and smaller houses in cities and near hospitals/universities. Perhaps not so big on 4-beds in suburbia.

That's something that I've thought about. The bubble seems to be mainly in houses that are desirable to FTB's (3/4 bed semis) there has been a rise in apartments sure, but no where near as much, surely an investor would get better yield on a 2 bed apt than a 3 bed semi in suburbia, and yet we're not seeing the same rises.

Makes me wonder how much of this boom in investor-led to begin with.

quadrifoglio verde · 21-10-2014 8:41pm

Deco99 wrote: »

Sorry if this has been asked but I'm trawling the net to see what the predictions for property prices outside of Dublin are because of the new rules. There doesnt seem to be much discussion. Some feel the prices may actually go up.

My crystal ball to my left says they'll fall, my one on the right says they'll rise. Sorry to be so blunt but do your own sums.
If you've found a house that you can afford to buy and can happily see yourself living there until death do yee part, then buy. Yes you might overpay, but you might underpay relative to what someone pays next year. family homes aren't property investments, they're a place to raise a family. Who cares if it falls in value in 5 years time, once you're happy with the house, the area and the repayments.

Deco99 · 21-10-2014 10:41pm

quadrifoglio verde wrote: »

My crystal ball to my left says they'll fall, my one on the right says they'll rise. Sorry to be so blunt but do your own sums.
If you've found a house that you can afford to buy and can happily see yourself living there until death do yee part, then buy. Yes you might overpay, but you might underpay relative to what someone pays next year. family homes aren't property investments, they're a place to raise a family. Who cares if it falls in value in 5 years time, once you're happy with the house, the area and the repayments.

No problem with you being blunt but I only asked if anyone had seen any discussion or articles related to outside of dublin. Whilst certainly not looking for an investment it could be a case of needing to sell in 5 years due to work or otherwise. I can do sums and if prices did drop isnt it better have an extra few grand in my pocket than someone elses? Sorry for derailing the dublin thread, I started another one elsewhere which was more constructive than I dont have a crystal ball.

quadrifoglio verde · 21-10-2014 10:51pm

Deco99 wrote: »

No problem with you being blunt but I only asked if anyone had seen any discussion or articles related to outside of dublin. Whilst certainly not looking for an investment it could be a case of needing to sell in 5 years due to work or otherwise. I can do sums and if prices did drop isnt it better have an extra few grand in my pocket than someone elses? Sorry for derailing the dublin thread, I started another one elsewhere which was more constructive than I dont have a crystal ball.

Here's the thing, I don't know what way the market is going to go, no one knows. It's no more than looking at stats, figures and long term trends and taking a guess as to how things will go.
I won't tell people my crystal ball gazing results because I don't want people to hold me liable for their financial decisions if they go the wrong way.
Buying a house that you might need to sell in 5 years time is risky, the price can fall and then you're trapped.
Which is why I'm saying if you're happy living there/owning it for the rest of your life, then buy, if not, then don't. It's that kind of crap that has people raising families in two bed shoeboxes

bluemartin · 22-10-2014 10:59am

irishtimes.com/business/sectors/commercial-property/nama-to-sell-hundreds-more-apartments-around-dublin-1.1971637

NAMA are making a good job in attracting foreign buyers, no doubt this practise will keep prices very high in the Dublin market.

Central Bank to limit amount banks lend for home purchase

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