Cowen claims aid to buyers will not inflate house prices

gurramok

20goto10 wrote: »

If you want to live off the dole rather than stand on your own 2 feet and buy a house then thats your business. God help our economy if the majority of the country share this attitude.

You won't be living off bread and water. And not only that but as you porgress through your career and life the payments get easier. If they don't, well then you've biten off more than you can chew and maybe you should consider this before you take the plunge. Like I say, you should be secure in your job and secure in the knowledge that you have a good career prospect before buying a home no matter what the price. If your mortgage is only 200K and you lose your job you're in as much sh!te as you would be with a 300K mortgage.

The simple fact is, if you don't like don't buy it. but don't tell me its "unaffordable" when it clearly is. Tough yes, but affordable.

No, your mistaken there. I made the comparison that your life is no better than a person on the dole as you have the exact same amount of money left over to yourself.
I don't know how you can save on 400 after expenses, never mind 800. that rainyday fund must be tiny in contrast to a prudent borrower.

Your badly mistaken if you think splashing out 66% of your net income on an overpriced house in affordable.

How did the bank forward you a mortgage 8 times your income, did you say you were renting a room or something?

SimpleSam06

20goto10 wrote: »

And quit moaning cause we're not all in dead end jobs.

I think people will quit moaning when you stop touting that "tighten your belt and suck it up" attitude. People aren't going to put up with that for the sake of helping Jimmy O'Banker make his quarterlies, or ensuring that builder Brendan, the Junior Cert dropout, gets his holiday in Lanzarote this year.

20goto10 wrote: »

I cannot believe the greediness which still exists out there.

Yes the banks and developers all fed at the trough. Happily they stand a fighting chance of going bust in the near future.

20goto10 wrote: »

Its not that its not affordable its that its not affordable enough for you to live the celtic tiger cocaine snorting lifestyle you've been so accustomed to over the past while.

Its mad the justifications that those who bought unwisely, and are now living near the poverty line, looking with envy on people queing for the dole, will come up with to make themselves feel better. Apparently anyone who didn't buy a house is now a drug addict. Thats some train of thought there.

Not to mention that the people who sat and waited will be paying less for better houses in the near future, and will be long finished paying off their mortgage when others are still labouring under theirs for years to come.

The last laugh is something you will not have.

20goto10

now hold on a minute here. Why would I want the last laugh and what exactly are you suggesting I would be laughing at?

I'm not living on the breadline and bought my house long before the peak.

There's a lot of twoddle being flung at me here. 1050 euro is plenty of cash to have after expenses and anyone who disagrees has either got a rock and roll lifestyle or is talking through their hat.

All the best with it.

bangersandmash

20goto10 wrote: »

I'm not living on the breadline and bought my house long before the peak.

You probably should have qualified your words before now.

Your advice essentially consists of: once you get a good job (which you won't lose), you'll have no problem moving to other, better jobs and/or getting wage increases. Your previously large mortgage will soon be effectively greatly reduced due to wage inflation. After a tough start, you'll soon have plenty of extra income for extravagances like savings and children.

This advice may have worked for some people during the boom, but we are now in an entirely different economic climate. There are plenty of newly qualified professionals in good jobs (solicitors, traders, architects, engineers, auctioneers,...) who would rightly not be as complacent about their future career.

You've accused anyone who is wary of taking out an excessive mortgage of living a "celtic tiger cocaine snorting lifestyle". To me, anybody who casually advocates paying 66% of their salary on a mortgage smacks of the excesses of the boom.

ixoy

20goto10 wrote: »

I'm not living on the breadline and bought my house long before the peak.

Okay, but the houses now for 300K are generally far from the city and you need to factor that in accordingly for transport costs, etc. Further to go means higher petrol costs and a corresponding lower cost in living as you've less time at home. Not all these places are on public transport routes either.

1050 euro is plenty of cash to have after expenses and anyone who disagrees has either got a rock and roll lifestyle or is talking through their hat.

Well you don't have 1050E after expenses because I'd like to think that stuff like food, electricity, house/contents insurance, transport, etc. are considered expenses.

Your plan only works if you live a very frugal life-style that never require unforeseen emergencies or any real indulgences (I'm assuming you're working on the basis that the house is furnished completely too).

Yes it could be done conceivably and indeed I'd not be too far off your own calculations (albeit as a renter) in terms of wages/savings but the risk is far too high for it recommended to anyone for something as important as a mortgage.

Victor

Can people not make personal remarks please?

Boggle

@20goto10: You appear to have decided that 800pm is enough to live on and then go on to say that the falling house prices that ftb's are hoping for would signal an end of our economy. Tell me though, with 66% of earnings going straight on your mortgage, what money is there to circulate into the economy?? Do you not agree that the economy would be better if we had 66% of take home pay staying in people's pockets so that they can spend it and, in turn, generate VAT and employment and reduce the upward pressure on wage demands?

Also you say that you are able to save for a rainy day at that - how much can you save? Even at 25%, leaving you with 600pm you will need 6 to 10 good months for every one bad. How do you pay for your car repairs - and what would you do if, like us, your car goes to the garage and costs a grand only to need to go back 2 weeks later to cost another grand?? (Don't ask - still reckon we were ripped off by the pr1ck!!)

Also you appear over reliant on pay raises to actually materialise. Fine (maybe) ine the public service but do not count on it in any private company as many, from pubs to wholesalers appear to be under pressure atm.

Next question, what about if you are sick for a while or hurt your back (as has happened my brother - hurt his back in work and is now only clearing a fraction of his take home with a mortgage and a child to support)? Can you still manage the recouperation time or will you be forced ack to work before you are ready with the implcations involved for your future health??

I'll put it to you a bit simpler, if you presented me with these figures for a business plan, you'd be advised tha you were significantly underfunded and would be a very poor bet for any investor. I'm not saying it can't be done, but by any definition you'd have to be considered sub-prime and look at where lending to the subprime market has landed us?? (Don't take this as a personal remark, just discussing teh numbers presented.)
You may survive a while, and many may survive, but an unacceptable number of these people WILL default at some stage.

jackal

You would be a long time furnishing and decorating your house if thats all you had left over. In addition to the all but unavoidable monthly expenses: mortgage protection, house insurance, health insurance, car insurance, car tax, petrol, heating, electricity, telephone, television, television license, food, clothing.

Throw an emergency visit to the dentist, doctor, optician, mechanic or some other unforseen expense and a person in this position is in serious trouble, and could go under in a matter of months.

Thats all without considering their quality of life! Live like a spartan for the privilege of owning your own four walls? I accept that buying a house does mean that your lifestyle must change to accommodate the large monthly payments, but it should not mean that you are living the same lifestyle as a person on the dole in a social housing unit.

Anyone else that thinks living like this is winning?

Mr. Presentable

jackal wrote: »

You would be a long time furnishing and decorating your house if thats all you had left over. In addition to the all but unavoidable monthly expenses: mortgage protection, house insurance, health insurance, car insurance, car tax, petrol, heating, electricity, telephone, television, television license, food, clothing.

Throw an emergency visit to the dentist, doctor, optician, mechanic or some other unforseen expense and a person in this position is in serious trouble, and could go under in a matter of months.

Thats all without considering their quality of life! Live like a spartan for the privilege of owning your own four walls? I accept that buying a house does mean that your lifestyle must change to accommodate the large monthly payments, but it should not mean that you are living the same lifestyle as a person on the dole in a social housing unit.

Anyone else that thinks living like this is winning?

This is what was always the norm when buying a house. Ask your parents/grandparents. The first few years are necessarily a struggle, but as time passes and your income increases (usually) the burden shrinks.

Mr. Presentable

flatpack, I, for one, salute you! You had a problem, identified a solution and are on the road to resolving it. Compare with others who advocate running away from it.

Boggle

flatpack, I, for one, salute you! You had a problem, identified a solution and are on the road to resolving it. Compare with others who advocate running away from it.

He bought a house he couldn't afford. Well done. There is no running away from it, you just try to manage until it falls down around your ears or you cach a break. Not sound advice for anyone.

This is what was always the norm when buying a house. Ask your parents/grandparents. The first few years are necessarily a struggle, but as time passes and your income increases (usually) the burden shrinks.

Only one of my parents worked and they could afford a mortgage and kids. Now, generlly both parents need to work and they can no longer afford kids.
You're kidding no-one, things have gotten worse. Sound FF.

jmayo

To paraphrase a line from "the Usual Suspects", the greatest trick the vested interests pulled (during the bubble) was convincing the people that you must get on the property ladder no matter what.
It has become the be all and end all. No matter what it costs it must be done.
Sure you will own your own place, no matter if it isn't suitable long term and it costs too many multiples of your average yearly salary and saddles you with a mortgage for 40 years.
The mentality of Irish people is that they want to own their own property. But it doens't excuse pure fiscal suicide and saddling yourself with huge debt for your entire working life.

From reading 20goto10 posts on here and in a few other threads, I would guess he is one of those who believes that no matter what, you have to buy your own house.
I do believe that 20goto10 beleives it can be done on 37k, but there is absolutely no margin of error, you cannot get sick, have kids, you have shag all rainy day funds. You must get salary increases and large ones, becuase otherwise you are living in continual studentville.

Nipplenuts ? stated that this was the method that our forebearers used to get on property ladder, they saved (something most young people have not been acustomed to recently), they scrimped, they lived with little or no furniture for a start and eventually they bought bits and pieces.
The big difference when comparing those times with today is they were repaying maybe a 25 year mortgage and it was only 4 or 5 times their annual salary (not 10 times), and that was often the salary of one member of a couple and not dependent on both partners working.

Mr. Presentable

Boggle wrote: »

He bought a house he couldn't afford. Well done. There is no running away from it, you just try to manage until it falls down around your ears or you cach a break. Not sound advice for anyone.

.

I have not offered him any advice
I am applauding the fact that he is dealing with a situation - regardless of how he got into it. Some posters have suggested he give his keys to the bank and emigrate!

Mr. Presentable

jmayo wrote: »

Nipplenuts ? stated that this was the method that our forebearers used to get on property ladder, they saved (something most young people have not been acustomed to recently), they scrimped, they lived with little or no furniture for a start and eventually they bought bits and pieces.The big difference when comparing those times with today is they were repaying maybe a 25 year mortgage and it was only 4 or 5 times their annual salary (not 10 times), and that was often the salary of one member of a couple and not dependent on both partners working.

Yes, and another big difference - they didn't have cars, foreign holidays, three nights a week socialising (much)!

Look, I'm not saying things aren't hugely more difficult now, just that our forebears had to make sacrifices many of us do not seem prepared to make.

punchestown

nipplenuts wrote: »

Some posters have suggested he give his keys to the bank and emigrate!

hi guys,
i have quick question, i have house purchased last year now i want to sell it but i dont think so i can get as much as i spend now what if i just leave house and call to bank that i can not afford it.
what is worts case scenario here?

That is the original post from flapjack or whatever his name is. He is the one advocating giving the keys to the bank and leaving and seeking advice on same.

Boggle

Yes, and another big difference - they didn't have cars, foreign holidays, three nights a week socialising (much)!

Neither do alot of Irish anymore. Notice that pubs are closing down at a scary rate which may show that we have a less social lifesyle than our parents.

Look, I'm not saying things aren't hugely more difficult now, just that our forebears had to make sacrifices many of us do not seem prepared to make.

I am not willing to sacrifice my health or any chance of ever having a family just to ake some developer rich.
Other than that see my previous post on this matter.

I have not offered him any advice

I meant that he was basically cheerleading for the construction industry and advising people (insanely) that someone on 37kpa cuold afford a 300k mortgage. Especially when the true value of that property is closer to half that level. (I never implied you were giving advice)
And yes, I agree, fair play for sticking with it and working his way through his problems - but that was not where I take issue with him, rather its when he's encouraging others to mess their lives up just cos he did.

Mr. Presentable

punchestown wrote: »

hi guys,
i have quick question, i have house purchased last year now i want to sell it but i dont think so i can get as much as i spend now what if i just leave house and call to bank that i can not afford it.
what is worts case scenario here?

That is the original post from flapjack or whatever his name is. He is the one advocating giving the keys to the bank and leaving and seeking advice on same.

Not on this thread, it's not.

And if you read his posts you'll find he is fighting tooth and nail to keep his home and looks to be succeeding.

Should I go through your entire post history (don't worry, I won't) looking for inconsistencies or change of circumstance?

20goto10

Boggle wrote: »

@20goto10...

I've been drawn into a debate on something else here and I'd like to step away from it if thats ok. If you read my posts you'll see I'm not arguing whether or not it is a wise decision. I'm saying its affordable.

If it were me I would have €1050 a month in my pocket after expenses. What I would choose to do with it is up to me. Personally I'd save most of it and have enough for a few beers now and then. Its more than enough to cover car maintenance thats for sure. When I started off I had a lot less than that.

My original point, actually my only point on here, is that it is affordable. As much affordable as a mortgage of 200K in that in reality you can afford neither because you need a loan from the bank. But after that monthly payment is paid off and all your living expenses are paid off you have enough money for other things.

Having extra cash in your pocket if your mortgage was only 200K is not going to help you when you find yourself out of work through illness or otherwise. It would have to be a very very small mortgage for you to be able to save the cost of your mortgage month on month and still have cash left over. Thats a misleading argument. And anyway the majority of people would still choose the bigger house with the bigger mortgage....because they can afford it.

Boggle

I've been drawn into a debate on something else here and I'd like to step away from it if thats ok.

No worries mate.

If you read my posts you'll see I'm not arguing whether or not it is a wise decision. I'm saying its affordable.

I see where you're coming from in fairness in that technically it may be possible if youre luck holds.

Having extra cash in your pocket if your mortgage was only 200K is not going to help you when you find yourself out of work through illness or otherwise.

Depends on how prudent you are with your money I suppose - if you save regularly you may be able to afford much more breathing space with the lower amount. But then you have to choose between everyone saving all their money and, technically, reinvesting it in the economy and in jobs (even the breakfest roll in the morning generates jobs!!).

And anyway the majority of people would still choose the bigger house with the bigger mortgage....because they can afford it.

In an era of easy credit maybe you'll chance it and see nothing wrong with it. But in an era of prudent financial management you will spend what you know you can afford.

gurramok

Hold on, 20goto10. You've changed your story.

Now you say that 1050 to live on is AFTER expenses rather than BEFORE expenses, how did you make that one out with a 1531 mortgage(after relief) with around 2580 wages?

Whats your expenses and are you adding in another wage??

From post #49

20goto10 wrote:

1 person earning 37K -> take home pay of €2580 p.m
I live off €800 p.m for 2 people. So €400 p.m for 1 person on day to day expenditure.
A mortgage of 1700 - 169 TRS = mortage of €1531

€2580 - €1531 = €1049 spending money

20goto10

gurramok wrote: »

Hold on, 20goto10. You've changed your story.

Now you say that 1050 to live on is AFTER expenses rather than before, how did you make that one out with a 1531 mortgage(after relief) with around 2580 wages?

Whats your expenses and are you adding in another wage??

From post #49

you're right my apologies. €1049 pre expenses Its tighter than I was arguing. But still affordable And €400 p.m on expenses is being generous (for example there is €56 p.m for Sky TV including Sky Sports included in that). As I've pointed out I am by no means living on the breadline or being cheap. Its all down to personal situation. Most people prefer to have more room to breathe. Thats you're preogative, but blasting this down as unaffordable in general is misleading. And lets not forget there are people who earn more than 37K who are in the same situation - they can't get a 300K mortgage.

Besides, 37K is a hypothetical figure. It may be more or it may be less. does anyone know what you must earn to qualify?

It doesn't change the fact that the government is helping out people who can afford a mortgage but are being refused due to abnormal tightening of criteria due to the credit crunch.

wasim21k

i m not expert on anything here but just want to add some my own opinion
lots of negative thinking settled in irish communities.
dont want to see on bright side.:mad:

sorry if i made some one angry but its my opinion.

Boggle

It doesn't change the fact that the government is helping out people who can afford a mortgage but are being refused due to abnormal tightening of criteria due to the credit crunch.

Do you consider it unreasonable to refuse a mortgage of 300k to someone earning 37kpa?? I know I certainly wouldn't.

You may be a little too used to whats been happening here of late, ie the banks were giving out any crappy loans safe in the knowledge that with rising house prices their money was easily recoverable through forced sale. In a falling market, you no longer have this luxury so you have to make sure that customers can actually afford the repayments in the longterm. Also you have to allow for the fact that in a falling market you can only recover so much of the loan value (hence back to needing 20% deposit).

Climate Expert

dont want to see on bright side

Look where thinking on the bright side has gotten you?
Please excuse us for being more financially prudent and valuing our lives.

The_Conductor

Guys- no more personal comments.
If you disagree with what someone posts- refute the post, do not attack the poster. I've had to do a pretty major cleanup on this thread- with all the reported posts and PMs from offended posters.

Please be civil to each other.

DJDC

It doesn't change the fact that the government is helping out people who can afford a mortgage but are being refused due to abnormal tightening of criteria due to the credit crunch.

The credit bubble of the last decade has been abnormal rather the other way around. I doubt we are going to return to the spurious lending practices of that time ever due to the deleveraging and uncertainty that is currently taking places on bank balance sheets.300k mortgage to a 37k worker sounds like potential toxic waste to me.

i m not expert on anything here but just want to add some my own opinion
lots of negative thinking settled in irish communities.
dont want to see on bright side.

sorry if i made some one angry but its my opinion.

Just back from primary school?

Climate Expert

Just back from primary school?

English isn't his native language so cut the man some slack.
His approach to financial matters is at a primary school leve.

Firetrap

Judging by the way banks are tightening up on criteria for handing out loans, there won't be too many people on 37k getting mortgages for 7 or 8 times their salary anymore. The fundamentals have changed.

punchestown

Firetrap wrote: »

The fundamentals have changed.

But the fundamentals are sound

plasmaguy

If these moves by the government loosen the lending criteria any more, then this could have serious long term side effects. We could actually be looking at an Irish Subprime bubble in the making. If those people who avail of these assistance programs are unable to get credit from lending institutions it may be for the very good reason that they don't have the ability to repay.

If the government gives them easy credit which they cannot repay, then longer term we would be looking at subprime problems similar to the US, with foreclosures, builders owed money, financial institutions unable to recover their money. It could cause a crisis in our own banking system.

I think the government should look very carefully at the longer term impact of giving aid to the subprime market.