Income Multiple Limits on Mortgages

jank · 24-10-2014 2:00pm

There is plenty of development land in Dublin to house tens of thousands in and around the canals. The idea of land scarify is nonsense. Travel to Asia and see how they live FFS.

mariaalice · 24-10-2014 2:13pm

FreudianSlippers wrote: »

It's not the same. We have huge swaths of the city which are prime for an urban regeneration project; restoration of buildings to family homes, demolition of buildings not fit for purpose (1950s-1990s) and construction of new work/life areas (apartments, offices, retail, restaurants and parks - all fit for purpose).

Just our of curiosity what areas in Dublin would you do try such a development in , for me I would start with the area from the five lamps to Connelly station.

FreudianSlippers · 24-10-2014 2:28pm

mariaalice wrote: »

Just our of curiosity what areas in Dublin would you do try such a development in , for me I would start with the area from the five lamps to Connelly station.

Yep: http://www.gmapgis.com/index.htm?wemWTDzFTl.gmp

I think that area is one of the best candidates for such a project. It has some very poor post 1950s building there, it's ripe for mixed-use projects, there are some open spaces, big roads and period properties.

mariaalice · 24-10-2014 2:53pm

jank wrote: »

There is plenty of development land in Dublin to house tens of thousands in and around the canals. The idea of land scarify is nonsense. Travel to Asia and see how they live FFS.

I should have said development land for the type of house Irish people have a preference for.

You are right if you go up the grand canal to Inchiore there are lot of little areas that could be developed.

Dublin is not in Asia.

jank · 25-10-2014 1:37am

Yes, I am well aware that Dublin is not Asia but some people seem to think that Dublin is a high density city where there is no land to develop. Its a myth and we should look at building proper family oriented buildings in the centre of the city rather then trying to build outside the m50.

And tbh, Irish housing is boring and drab. Rows upon rows of the same house, style, colour and so on.
If people have a preference for the semi d, thats fine but it is not the Central Banks role to facilitate this.

Larry Wildman · 25-10-2014 10:26am

I read somewhere that there is more vacant undeveloped land inside the M50 than there is land in Tokyo.

djpbarry · 25-10-2014 5:49pm

mariaalice wrote: »

All that would happen then is that people could possible live in the area they want but not in the accommodation they want...

Eh, tough?

mariaalice wrote: »

...we are Irish...

...and have some sort of divine right to own a 2 - 3 bed semi-detached house with a nice big garden?

Icepick · 26-10-2014 12:30pm

We need to build apartments. Their appreciation outpaced houses' appreciation significantly in the last year so it's quite obvious they are in high demand.
They just have to be better than a lot of the bubble years ones, and we only need to look at countries where living in apartments is common to find out how to do it.

Larry Wildman · 26-10-2014 12:36pm

Icepick wrote: »

We need to build apartments. Their appreciation outpaced houses' appreciation significantly in the last year so it's quite obvious they are in high demand.
They just have to be better than a lot of the bubble years ones, and we only need to look at countries where living in apartments is common to find out how to do it.

Pretty easy to address really...storage and clothes drying are the two main issues

Icepick · 26-10-2014 10:06pm

Larry Wildman wrote: »

Pretty easy to address really...storage and clothes drying are the two main issues

Learning not to buy crap we don't need should be part of the solution.

Larry Wildman · 26-10-2014 11:51pm

Icepick wrote: »

Learning not to buy crap we don't need should be part of the solution.

What relevance does that have?

There are plenty of things that require storage and that aren't superfluous.

mariaalice · 28-10-2014 10:46am

djpbarry wrote: »

Eh, tough?
...and have some sort of divine right to own a 2 - 3 bed semi-detached house with a nice big garden?

No one has a divine right to anything, however they are perfectly entailed to have a preference its not obtuse or perverse to have a preference for a garden.

djpbarry · 28-10-2014 1:35pm

mariaalice wrote: »

No one has a divine right to anything, however they are perfectly entailed to have a preference its not obtuse or perverse to have a preference for a garden.

You didn't say anything about preferences in your last post. You referred to people not being able to live in the house they wanted in the area they liked as "a problem".

You also tried to identify this as some sort of uniquely Irish problem, because, apparently, Irish people are special or culturally different or something and can't possibly live without a garden.

It's all patent nonsense.

draiochtanois · 28-10-2014 3:55pm

This post has been deleted.

Scofflaw · 28-10-2014 5:51pm

Larry Wildman wrote: »

No, it's an example of the State actually doing something for its people.

People who contribute to society...people who ARE society rather than freeloaders and gobsh1tes.

In many cases there are couples who are paying high rents, childcare costs and the austerity taxes and managing to save a deposit for their own home. Telling that person that at the stroke of some fat cat civil servant's pen, it'll tale them 8 years instead of 4 to put together their deposit is devastating.

Which is a fine illustration of how populism works. There's even a "fat cat civil servant" featured.

amused,
Scofflaw

gaius c · 29-10-2014 12:58pm

Larry Wildman wrote: »

I read somewhere that there is more vacant undeveloped land inside the M50 than there is land in Tokyo.

Giro D'Italia race in Dublin was filmed with an overhead helicopter and it's quite remarkable just how much green and empty space there actually is in Dublin. And that's before you noted how many of the buildings are derelict.

The folks claiming we've limited space for housing are either dumb or vested interests.

gaius c · 29-10-2014 1:00pm

Larry Wildman wrote: »

No, it's an example of the State actually doing something for its people.

People who contribute to society...people who ARE society rather than freeloaders and gobsh1tes.

In many cases there are couples who are paying high rents, childcare costs and the austerity taxes and managing to save a deposit for their own home. Telling that person that at the stroke of some fat cat civil servant's pen, it'll tale them 8 years instead of 4 to put together their deposit is devastating.

I rarely say this - Fair play to Enda Kenny.

Or house prices could drop to a level that they can afford?

PAUL62 · 29-10-2014 4:10pm

Victor, you are correct when you say that most of the tax incentives are gone, but only this morning I heard an advert on one of the big radio stations advertising the sale of fully occupied section 23 properties, so they are still out there. Also, it is still possible to offset interest payments against tax liabilities from rental income, the taxman helping people to buy second homes to rent out does not make sense. Paul.

ardmacha · 29-10-2014 4:47pm

PAUL62 wrote: »

Victor, you are correct when you say that most of the tax incentives are gone, but only this morning I heard an advert on one of the big radio stations advertising the sale of fully occupied section 23 properties, so they are still out there. Also, it is still possible to offset interest payments against tax liabilities from rental income, the taxman helping people to buy second homes to rent out does not make sense. Paul.

Interest is a cost of doing business and surely it is a principle of taxation that businesses are taxed on their profit, not their gross income?

Dannyboy83 · 08-11-2014 11:22pm

http://www.independent.ie/business/personal-finance/property-mortgages/first-time-buyers-to-benefit-from-central-bank-uturn-on-20pc-mortgage-deposit-scheme-30728787.html
Was never going to be accepted, altho it was probably a good idea to start at 20%, they should have no problem getting 10% in stone now.

hmmm · 08-11-2014 11:59pm

I can't see in that piece any indication that the 20% is being changed.

gaiscioch · 09-11-2014 4:04pm

Honohan's warning of a climbdown on the 20% deposit is typical of the cowardice which has symbolised regulators of the Irish financial industry when faced with the myriad of property-boom advocating lobby groups. Is Honohan's impending surrender to political lobbying any different to John Hurley's ignoble reign as Central Bank governor? How will history judge Patrick Honohan if he doesn't hold the line here?

As for the potential purchasers who are upset about the 10% being raised to 20%, perhaps they should put a check on their impatience and irrationality, step back and realise that if there is less demand for property (because of the 20% requirement) then house prices will go down - down, not up - and that this will benefit them in the long run. They might also reflect that if they save 20% rather than 10% they will have less to pay off their mortgage. The sheer short-sightedness of these impatient people is a good indicator of why we will have another boom unless the Irish state intervenes to protect such people from themselves (and by extension protect us all from our state being held to ransom by another property bubble).

I write this as somebody who is renting, who is saving hard and who is hoping to buy next year, a hope which will be extended for a while more but which is in my interest (for the above two reasons) in the long run. Wake up, first-time buyers. Please.

hfallada · 09-11-2014 4:09pm

gaiscioch wrote: »

Honohan's warning of a climbdown on the 20% deposit is typical of the cowardice which has symbolised regulators of the Irish financial industry when faced with the myriad of property-boom advocating lobby groups. Is Honohan's impending surrender to political lobbying any different to John Hurley's ignoble reign as Central Bank governor? How will history judge Patrick Honohan if he doesn't hold the line here?

The central bank is independent of the Government. There is no reason why they would listen to lobbying groups. Its like it like 2006 where there is 80k houses being built a year that most be sold. There is very little to lobby about as there is little to sell.

They have nothing to gain like a traditional TD would gain from listening to Lobbying. I imagine the central bank realised that 20% introduced rapidly wasnt going to work as well as it being introduced over night. The central bank is full of highly educated economist who can see past BS of a lobbyist unlike most TDs

andrew · 09-11-2014 4:41pm

gaiscioch wrote: »

Honohan's warning of a climbdown on the 20% deposit is typical of the cowardice which has symbolised regulators of the Irish financial industry when faced with the myriad of property-boom advocating lobby groups. Is Honohan's impending surrender to political lobbying any different to John Hurley's ignoble reign as Central Bank governor? How will history judge Patrick Honohan if he doesn't hold the line here?

As for the potential purchasers who are upset about the 10% being raised to 20%, perhaps they should put a check on their impatience and irrationality, step back and realise that if there is less demand for property (because of the 20% requirement) then house prices will go down - down, not up - and that this will benefit them in the long run. They might also reflect that if they save 20% rather than 10% they will have less to pay off their mortgage. The sheer short-sightedness of these impatient people is a good indicator of why we will have another boom unless the Irish state intervenes to protect such people from themselves (and by extension protect us all from our state being held to ransom by another property bubble).

I write this as somebody who is renting, who is saving hard and who is hoping to buy next year, a hope which will be extended for a while more but which is in my interest (for the above two reasons) in the long run. Wake up, first-time buyers. Please.

It's not really a climb down. The LTI ratio - the one which is meant to make it so that people who can't afford mortgages don't get them - is still there. The point of the LTV ratio limit is to make it so that the loss banks face in the event of default is reduced. To that end, some form of insurance still achieves that goal.

Mongfinder General · 09-11-2014 4:46pm

hfallada wrote: »

The central bank is independent of the Government. There is no reason why they would listen to lobbying groups. Its like it like 2006 where there is 80k houses being built a year that most be sold. There is very little to lobby about as there is little to sell.

They have nothing to gain like a traditional TD would gain from listening to Lobbying. I imagine the central bank realised that 20% introduced rapidly wasnt going to work as well as it being introduced over night. The central bank is full of highly educated economist who can see past BS of a lobbyist unlike most TDs

Interesting that you say the Central Bank is independent of the Government. I think the following legislation suggests otherwise;

CENTRAL BANK ACT, 1942.

9.—(1) The capital of the Bank shall be the sum of forty thousand pounds whereof the sum of twenty-four thousand pounds shall be paid to the Bank by the Minister on the appointed day or as soon thereafter as may be and whereof the residue shall be paid to the Bank by the Minister at such time or times as may be agreed upon by the Board and the Minister.

(2) All moneys payable to the Bank by the Minister under the foregoing sub-section of this section shall be charged on and paid out of the Central Fund or the growing produce thereof.

andrew · 09-11-2014 4:57pm

Mongfinder General wrote: »

Interesting that you say the Central Bank is independent of the Government. I think the following legislation suggests otherwise;

CENTRAL BANK ACT, 1942.

9.—(1) The capital of the Bank shall be the sum of forty thousand pounds whereof the sum of twenty-four thousand pounds shall be paid to the Bank by the Minister on the appointed day or as soon thereafter as may be and whereof the residue shall be paid to the Bank by the Minister at such time or times as may be agreed upon by the Board and the Minister.

(2) All moneys payable to the Bank by the Minister under the foregoing sub-section of this section shall be charged on and paid out of the Central Fund or the growing produce thereof.

How is that relevant to the Central Bank today, given it contributes money to the Exchequer and not the other way around?

Anyway, to the extent that the Central Bank isn't independent, it's because the Secretary General of the Dept. of Finance sits on the Central Bank commission. As far as I know this is something that the IMF has pointed out before as being not ideal.

Mongfinder General · 09-11-2014 5:22pm

andrew wrote: »

How is that relevant to the Central Bank today, given it contributes money to the Exchequer and not the other way around?

Anyway, to the extent that the Central Bank isn't independent, it's because the Secretary General of the Dept. of Finance sits on the Central Bank commission. As far as I know this is something that the IMF has pointed out before as being not ideal.

How is it relevant to the Central Bank today? It's written into extant legislation!

So, the conclusion that I draw from the legislation is that the Minister for Finance is the sole shareholder in the Central Bank. Do you have information to suggest that he is not?

Also Section 6 of the 1942 Act states

6.—(1) In addition and without prejudice to the functions, powers, and duties vested by law in the Commission immediately before the appointed day and to such functions, powers, and duties as are specifically conferred or imposed by this Act on the Bank, the Bank shall have the general function and duty of taking (within the limit of the powers for the time being vested in it by law) such steps as the Board may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole.

(2) The Minister may, on such occasions as he shall think proper, request the Governor on behalf of the Board or the Board to consult and advise with him in regard to the execution and performance by the Bank of the general function and duty imposed on the Bank by the foregoing sub-section of this section, and the Board shall comply with every such request.

Free from government intervention my swiss roll!

andrew · 09-11-2014 5:30pm

Mongfinder General wrote: »

How is it relevant to the Central Bank today? It's written into extant legislation!

So, the conclusion that I draw from the legislation is that the Minister for Finance is the sole shareholder in the Central Bank. Do you have information to suggest that he is not?

Also Section 6 of the 1942 Act states

6.—(1) In addition and without prejudice to the functions, powers, and duties vested by law in the Commission immediately before the appointed day and to such functions, powers, and duties as are specifically conferred or imposed by this Act on the Bank, the Bank shall have the general function and duty of taking (within the limit of the powers for the time being vested in it by law) such steps as the Board may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole.

(2) The Minister may, on such occasions as he shall think proper, request the Governor on behalf of the Board or the Board to consult and advise with him in regard to the execution and performance by the Bank of the general function and duty imposed on the Bank by the foregoing sub-section of this section, and the Board shall comply with every such request.

Free from government intervention my swiss roll!

Those particular provisions have been changed by the Central Bank reform act 2010. Section 6 now reads:

6. (1) The Bank shall perform all functions imposed, and exercise all powers conferred, on the Bank by or under the Rome Treaty or the ESCB Statute.

(1A) Nothing in the Central Bank Acts 1942 to 2010 affects the independence of the Bank, the Governor and the Commission required by the Rome Treaty and the ESCB Statute.

(1B) Without limiting the generality of subsection (1A), nothing in the Central Bank Acts 1942 to 2010 authorises any person or authority to give any direction to, or require any action (including the provision of information) by, the Bank, the Governor or the Commission if compliance by the Bank, the Governor or the Commission (as the case may be) with the direction or requirement would be inconsistent with the Rome Treaty or the ESCB Statute.

(2) This section is subject to section 19A.

(3) Section 9 of the Ministers and Secretaries Act 1924 does not apply to the Bank.

Mongfinder General · 09-11-2014 5:46pm

andrew wrote: »

Those particular provisions have been changed by the Central Bank reform act 2010. Section 6 now reads:

6. (1) The Bank shall perform all functions imposed, and exercise all powers conferred, on the Bank by or under the Rome Treaty or the ESCB Statute.

(1A) Nothing in the Central Bank Acts 1942 to 2010 affects the independence of the Bank, the Governor and the Commission required by the Rome Treaty and the ESCB Statute.

(1B) Without limiting the generality of subsection (1A), nothing in the Central Bank Acts 1942 to 2010 authorises any person or authority to give any direction to, or require any action (including the provision of information) by, the Bank, the Governor or the Commission if compliance by the Bank, the Governor or the Commission (as the case may be) with the direction or requirement would be inconsistent with the Rome Treaty or the ESCB Statute.

(2) This section is subject to section 19A.

(3) Section 9 of the Ministers and Secretaries Act 1924 does not apply to the Bank.

Thanks for the update, at least that removes the consultative obligation. One of the reasons why I challenge the wiely held belief that the Central Bank is autonomous is because the Minister is, I believe, the sole shareholder.

I also remember the case when the Central Bank employees took the government to court.

http://www.ifg.ie/content/media-and-news/industry-news/10-06-18/Bank_unions_seek_to_quash_refusal_on_pension_levy.aspx

They lost but what else did they expect in a domestic court.

andrew · 09-11-2014 6:17pm

Mongfinder General wrote: »

One of the reasons why I challenge the wiely held belief that the Central Bank is autonomous is because the Minister is, I believe, the sole shareholder.

There's no indication that that's anything other than an accounting/technical fact. How, in practice, could that affect the independence of the bank?

Mongfinder General · 09-11-2014 6:42pm

andrew wrote: »

There's no indication that that's anything other than an accounting/technical fact. How, in practice, could that affect the independence of the bank?

Well there's the annual dividend paid to the exchequer which you've highlighted already. It's an interesting question in terms of what other functions of the Central Bank could be leaned upon by the Minister of Finance. I think it would very much depend on the motives of the Government of the day. A Sinn Fein led coalition would be all over the Central Bank and Dept of Finance from Day 1. They simply wouldn't give a toss about the ESCB and would pull any domestic lever available to gain as much control as possible.

Any tenuous link could be used. Take Section 114 of the Central Bank Act, 1989, for example. The Minister has a clear say in the revocation of a money broker. Small snippets like this could be manipulated. I suppose in practice future appointees to the Central Bank's Commission is where the real influence could foment. This is where the cloak and dagger comes in handy.

gaius c · 12-11-2014 12:13am

Dannyboy83 wrote: »

http://www.independent.ie/business/personal-finance/property-mortgages/first-time-buyers-to-benefit-from-central-bank-uturn-on-20pc-mortgage-deposit-scheme-30728787.html
Was never going to be accepted, altho it was probably a good idea to start at 20%, they should have no problem getting 10% in stone now.

Honohan's speech in full.
http://www.centralbank.ie/press-area/speeches/Pages/HonohanMABSHouseholdIndebtedness.aspx
Markedly different in tone to what the media are reporting.

Dannyboy83 · 13-11-2014 12:30pm

Some interesting stories today

Troika to look at the housing supply issue

http://www.irishtimes.com/business/economy/troika-to-raise-property-market-policies-and-water-debacle-1.1998506
Given the rapid advance in residential property values in Dublin particularly, the troika officials are likely to examine whether sufficient steps are being taken to increase the supply of housing in big urban areas of the State.
Their visit comes amid discord over Central Bank plans to dampen down the property market with new restrictions on mortgage lending. With mortgage debt crisis still unresolved, the visiting officials will take stock of ongoing efforts by the banks to deal with non-performing loans.
As part of this exercise they will scrutinise the development of arrears, banks’ engagement with defaulting borrowers and the flow of repossession cases.

Brian Hayes comments on very high variable rates

http://www.irishtimes.com/business/sectors/financial-services/variable-rates-charged-by-irish-banks-are-a-disgrace-1.1996208?utm_source=lunchtime-digest&utm_medium=email&utm_campaign=digests
Mr Hayes, who is a member of the economic and monetary affairs committee of the European parliament, told a banking conference in Dublin that standard variable rates (SVRs) being charged by Irish banks are too high compared with the rest of the euro zone and called for the Government to explore a solution with the European Central Bank to dilute the impact of loss-making tracker mortgages on their balance sheets.

Despite the overcharge, the Irish Banks are in a league of the own

13/11/2014: Irish Banks: In a Bad League of Their Own
Posted by Dr. Constantin Gurdgiev
Ireland's banking system is faring the worst - by a mile - in the sample. In fact, by S&P measure, it is in the league of its own.
https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1368807&SctArtId=278508&from=CM&nsl_code=LIME&sourceObjectId=8903789&sourceRevId=1&fee_ind=N&exp_date=20241111-15:36:58

I'm expecting Irish Variable rates will increase, not decrease...

Mongfinder General · 13-11-2014 9:51pm

Dannyboy83 wrote: »

Some interesting stories today

Troika to look at the housing supply issue

Brian Hayes comments on very high variable rates

Despite the overcharge, the Irish Banks are in a league of the own

I'm expecting Irish Variable rates will increase, not decrease...

Why?

Larry Wildman · 13-11-2014 10:27pm

Nah...interest rates are likely to stay low for a long time.

Dannyboy83 · 14-11-2014 12:21am

Mongfinder General wrote: »

[/B]
Why?

Could be wrong, but it looks like this has the potential for more balance sheet drama:
http://www.independent.ie/business/personal-finance/property-mortgages/thousands-to-take-on-lenders-over-rates-30634246.html
And I assume if it has, then they will follow the precedent set with trackers and just load the cost onto the rest of us.

Larry Wildman wrote: »

Nah...interest rates are likely to stay low for a long time.

ECB rates will, until there is some kind of recovery in Europe I think

gaius c · 17-11-2014 10:59am

Dannyboy83 wrote: »

Some interesting stories today

Troika to look at the housing supply issue

Posted this on A&P as well:

Had reason to walk through the Square in Tallaght on Wednesday night around 9pm. I estimate that only a third of the apartments looked occupied but would they think of dropping the price on the other two thirds to get them filled?

That's hundreds of apartments empty when there is a rental crisis in Dublin!

There is so much obvious messing with the market that it'll be blatantly obvious to anybody with an eye in their head that much of the current "scarcity" in the capital is entirely as a result of policy.

djpbarry · 17-11-2014 2:13pm

gaius c wrote: »

That's hundreds of apartments empty...

According to you?

Larry Wildman · 17-11-2014 8:31pm

djpbarry wrote: »

According to you?

Very scientific alright...hundreds

gaius c · 18-11-2014 11:17am

Yeah, I just made up the apartments facing the street with layers of dust in their windows, no furniture and no lights that are clearly empty.

And I also made up the fact that NAMA are trying to flog 500 of them as social housing.
http://www.irishtimes.com/news/social-affairs/nama-considers-offering-500-apartments-as-social-housing-despite-council-decision-1.1818143

Qualitymark · 18-11-2014 12:38pm

I certainly see a lot of houses around here empty; one, a huge late-Georgian or early-Victorian redbrick house, south-facing on a gracious square, has been gradually becoming derelict over 20 years or so, and is now causing damage to the rest of the houses on its terrace.
Others are former Corporation houses, which seem to have been bought out by their tenants and through some piece of ill-luck left empty, the curtains rotting behind the windows and the gardens returning to ragwort and wild sycamore, buddleia growing out of the chimneys.
One solution is to seek to have these houses added to the derelict sites list - if this is done, the owner pays a fine of 3% of the house value per year as long as the house is derelict, empty and untenanted.

Dannyboy83 · 18-11-2014 2:18pm

Not sure of present situation, but when I was house hunting last year, I couldn't believe how many empties there were around inner Cork/doughnut effect - due mainly to executor sales

Income Multiple Limits on Mortgages

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