Home Truths - Interesting read

jetski

Where will first-timers find the cash for a deposit now?
WHERE CAN first-time buyers raise deposits, now that lenders are closing the options? Yes, I know there is a shiver of déja vu from the height of the boom, when prices soared and couples were hard pushed to find the deposits.
Many, as you know, went double-jobbing and tweaked parents for the family savings.
Well, parents can brace themselves again, for the wheedling of younger siblings. Except now, the family savings are reduced, if in bonds, insurance policies or share portfolios, devalued by about half in the past 18 months.
Not much point in cashing those at a loss, as parents look to their own inheritance, to save for themselves. No consolations there for the first-time buyers and younger siblings, who may feel, as younger siblings are wont to, that life has again dealt them the bitter blow of - well, being a younger sibling.
Their victimhood is more pressing than during the boom. Then, earnings were higher and credit was profligate. Now, the credit market is resonant with the panic banging of stable doors, after bolting horses, all of them named "subprime". Never mind that within recent memory, lenders were practically dragging first-time buyers off the streets, dragooning them with 100 per cent mortgages and press-ganging them into 35-year loans.
That was then. This is now - a time of a different complexion. Now credit managers are scrutinising applications for evidence of those extra earnings which before they took at face value. Now, they want to see the bank statements and overtime pay slips to support the claims of the hapless first-time buyers, who may have, in the wonder of the volatile market, actually found a genuine bargain of a property.
Because, for the same reasons that credit is tight, value is out there, developers are facing difficult times unless they shift the properties, so are cutting their profits to the bone. But, again for the same reason, from the lenders' perspective, 100 per cent monies advanced on a property of say, €480,000 two years ago is now a lesser security to the lender of, say, €380,000.
Multiply that scenario by a few hundred thousand advances and you can see why, in recent weeks, credit managers have gone off their golf stroke and wake in the middle of the night, gibbering "I didn't lend, I didn't lend . . . it wasn't me!"
As a result, first-time buyers feel like they are getting interrogations of the Guantanamo Bay variety, in spite of providing copious documentation and medical reports to support their application as well as fitting the lender's desired "profile" of having two jobs, preferably not in financial services.
Banks are now looking more favourably upon public servants, gardai, teachers and nurses. In effect we are back to the old reliables. Oh - and it helps to be under 40 years old and to have blue eyes.
All that, for a possible 80 per cent loan. Which leaves our first-time buyers twisting in the wind to find around €50,000 to €80,000 to secure the property, which they know is already a bargain, compared to prices of a year ago. So, where to find the dosh?
Unfortunately, dear first-time buyer and younger sibling, I do not have the answer.
All I suggest is, you grin and bear it, as your parents did. Long walks in the hills, prayer and abstinence and four Marbella breaks a year instead of five. It might help to keep two graphs, one of share prices (rising slowly) and the other of house prices (falling faster).
When the two lines cross, go back to the parents for the inheritance. In the meantime, keep doing the Lotto.

© 2008 The Irish Times

http://www.ireland.com/newspaper/property/2008/0313/1205104701937.html

ntlbell

I can't see why anyone should ever need to go to their parents or get credit union loans etc.

It's simple. If you're a couple find a cheapish place to rent stop buying the latest clothes stop drinking yourself into next week stop going out to restraunts stop p|ssing money down the toilet.

Save, I know it's a strange word and not many people understand it but it's a very simple concept you save untill you can afford the deposit and DISCO.

People in this country want things yesterday, getting a LOAN for a LOAN is there any other countries were people are so backwards?

jetski

i perfectly agree, you wouldnt believe the amount of people that critisize me for saveing....

specailly when you consider the interested you pay back on your morgague something like 1 for every 2 borrowed?????

not only that but the satisfaction i expect to get from actually owning a good portion of the house and not just having the attitude of throwing money at a bank clerk to keep out of trouble, its a fake kinda lifestyle...

you see these lads and girls to in mid twentys driving new minis and bmws, thats serious serious money every month to pay the loans alot of these people have taken to have the pleasure of driving a nice car, it only takes the absence of a few pay checks and there in the red big time.....

ntlbell

Ah but.

"You're a long time dead"
"sure you'll be in debt all your life"
"It's not my money, it's a credit card."

jetski

The best i head was "your growing up too quckly" im in mid twenties

qwertyphobia

I really hate the presumtion that it's all right to hit up your folks for money for your lifestyle. I am sorry but that kind of parasitic behaviour needs to be challenged.

Unless your parents are seriously wealthy they should not be propting up their kids lifestyle or the property market. They have their own lives to live and with costs increasing much faster then their likely pensions they need to piortise their own finiances.

meesa

Jetski your post perfectly describes the reasons for the whole property boom/crash scenario. Starts with easy money thrown at everyone with a pulse, then the slow realisation that the asset value was becoming more and more air filled...just like a bubble.

bugler

It’s a disgrace that the citizens of one of the world’s wealthiest countries™ should have to work(?!) and save(?!!!) to enjoy the better things in life.

If my kid comes looking for a deposit for anything they'll get laughed at.

tHE vAGGABOND

It’s a disgrace that the citizens of one of the world’s wealthiest countries™ should have to work(?!) and save(?!!!) to enjoy the better things in life.

lol - so true...

Too many Ross O'Carrol Kellys

ixoy

Are that many people hitting their parents for a deposit?

I'm looking at maybe getting a place next year and, as an absolute minimum, I'd expect to have saved up 10% deposit on my own. And that's while renting. If my parents want to help out with maybe furnishing the place, then that's great, but I should definitely be the one putting down the original money. It's my place, not theirs. Surely most people follow this logic?

ntlbell

ixoy wrote: »

Are that many people hitting their parents for a deposit?

I'm looking at maybe getting a place next year and, as an absolute minimum, I'd expect to have saved up 10% deposit on my own. And that's while renting. If my parents want to help out with maybe furnishing the place, then that's great, but I should definitely be the one putting down the original money. It's my place, not theirs. Surely most people follow this logic?

I don' have any evidence to back it up but I would of thought people hitting their parents are the majority and you are the minority.

bill_ashmount

ixoy wrote: »

Are that many people hitting their parents for a deposit?

Most people I know, myself included, saved our own deposits and didn't go to our parents for a deposit. Maybe I live in a different social circle but I just don't see any parents throwing money at their kids.

beeno67

To broaden this out. It is not just for house deposits that people depend on their parents. Parents are still socially expected to pay for weddings often when the children are earning loads. Now parents are expected to be a creche for the grandchildren as well. So many people in this country have worked hard to get where they are in life and instead of being allowed to enjoy their retirement their twentysomething or thirtysomething offspring are still hugely reliant on them. Basically if you are old enough to work you should be old enough to sort your own life out.

bill_ashmount

beeno67 wrote: »

To broaden this out. It is not just for house deposits that people depend on their parents. Parents are still socially expected to pay for weddings often when the children are earning loads. Now parents are expected to be a creche for the grandchildren as well. So many people in this country have worked hard to get where they are in life and instead of being allowed to enjoy their retirement their twentysomething or thirtysomething offspring are still hugely reliant on them. Basically if you are old enough to work you should be old enough to sort your own life out.

Again, I can only think of one couple whose parents paid for their wedding. Everyone else I know saved and paid themselves. This country isn't as bad/messed up as people think. There is just an incredible amount of moaning going on.

latenia

You could argue that the parents have become disproportionately wealthy off the back of the same market that has driven their offspring to these measures. In a very roundabout way the children aren't really borrowing/receiving gifts of money at all but are recirculating it through the market.

bugler

From watching "I'm an Adult...." to reading web fora, parents giving their children a hand out with buying property is by no means rare.

I don't think it was/is all down to sponging offspring. It is probably also due to a belief on some parents behalf that things had changed since their day, houses were much more expensive and this how things were. And once the offspring were on the ladder sure there was no stopping them. So I view it as a symptom of the bubble.

Basically, people will just have to learn to be fiscally responsible. But I'm sure we all know people who will find being sensible tough going.

jdivision

Why does the link go to a different article??

Glenbhoy

ntlbell wrote: »

I don' have any evidence to back it up but I would of thought people hitting their parents are the majority and you are the minority.

I don't have the numbers, but about 4/5 years ago I did a short stint in one of the mortgage providers, checking that procedures were being following and the 'believability' of the info supplied by applicants etc - from (admittedly a very hazy) memory, a significant majority were getting large gifts from their parents.

gurramok

A few i know had at least one of their parents go guarantor to help get a bigger mortgage and some had their father/brother/sis as joint buyers for income purposes but were not part of repayment schedule.

starky

Glenbhoy wrote: »

I don't have the numbers, but about 4/5 years ago I did a short stint in one of the mortgage providers, checking that procedures were being following and the 'believability' of the info supplied by applicants etc - from (admittedly a very hazy) memory, a significant majority were getting large gifts from their parents.

Remember though that typically to buy a house then some one needed 8% deposit. From the years 2002 on the housing market was in rocket mode, if some one even waited even a few months they would be priced out of the market.

This meant that they just did not have time to save for a deposit. It was a case of get in quick or be left behind. They would have to source the 8% in a hurry and then they would have to explain where it came from to the bank. This gave rise to the “oh the deposit was a gift from my parents” when in actual fact it was some sort of a loan in a non ICB monitored institution and not really a gift at all.
Of course this carry on while it happened, it probably shouldnt have and was most certainly one of the many contributing factors to the bubble, easy access to money, more irresponsible borrowing and lending.

I know of loads of my friends that were jumping on the property roundabout by getting a deposit in this way. On paper it may have looked like people were getting gifts, where as in actual fact it may have been a loan in the parents name, some one else’s name or as I said a non ICB monitored institution, many credit unions are still not ICB monitored.

I have to agree with this poster:

bill_ashmount wrote: »

There is just an incredible amount of moaning going on.

The majority of parents may be asset rich, i.e living in a house worth over a million, but that does not mean they have a spare 50 grand in the bank to give on to little jimmy to help him buy his own place!

monkey24

I agree with the sentiments of your post. But going to a restaurant is not a waste of money. People shouldn't live in a small hovel, never going out or buying themselves anything of value just so they can afford a house. The economy itself would suffer greatly if people just decided to do this. Secondly, is a house really worth living your life that way. People should definitely make sacrifices if they want to buy a house but I think you need to find a balance.

[QUOTE=ntlbell;55512331
It's simple. If you're a couple find a cheapish place to rent stop buying the latest clothes stop drinking yourself into next week stop going out to restraunts stop p|ssing money down the toilet.
[/QUOTE]

Stephen

50-80k deposit on a first time buyer property? wtf? Are they buying a ****ing mansion or something?

I have more than enough for a deposit but I can't get a mortgage worth f**k all from the banks (on my own) so I'll sit here and wait for prices to get worse in the mean time :pac: