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Lending to Income Ratios

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  • 19-06-2007 1:15am
    #1
    ctc_celtic
    Closed Accounts Posts: 234 ✭✭


    if the housing market does crash, and interest rates continue to rise, how available will mortgages be to buyers? in particular FTBs

    before this boom, i always remember talk about the maximum mortgage you will get is 3 times the main yearly income (or something like that). at the moment i can get a mortgage well in access of this. what level would interest rates have been when people were only getting mortgages for 3 times their income?

    i know the future is uncertain and it will all depend on interest rates, but is there a good chance in a year or two when i go to get my first mortgage that i wont be able to purchase anything i would want?

    p.s i dont live in dublin or a city


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    #2
    Victor
    Registered Users Posts: 78,298 ✭✭✭✭Victor


    Mortgage to Income Ratios aren't used on a case to case basis, they tend to use ratios of about 35% of disposable income.


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    #3
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,279 Mod ✭✭✭✭The_Conductor


    Well- average income to lending ratios in the UK are 3.6 at the moment- and that is considered extremely worrying.

    Rather than using a defined income to lending ratio- its proposed to raise the stress testing threshold here- to ECB +3% (from 2% at present) for all lenders. Its thought this would reduce the average amount a FTB would qualify for by about 45k- to about 240k (note: thats an average figure- some will qualify for much more, some for much less).

    I know what you're saying about not being able to purchase anything that you would want in a few years time- to be quite honest- I think that you'd be in a far better position to get something that you'd really like than most people who purchased apartments/townhouses in the past few years with the intention of trading up at some point in the future. People have been desperate to get on the "property ladder" at any cost whatsoever- and have made massive compromises in their expectations- solely because they felt they could always sell them a little down the line and trade up. Those are the people who are going to be extremely dissappointed......


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