95% mortgages for FTBers - state backed!

Zamboni

http://www.newstalk.ie/Government-to-assist-first-time-buyers-seeking-mortgages-

First time buyers could be given access to mortgages through a new government-backed scheme.

The government is planning to introduce the scheme, under which a portion of some mortgages for first-time buyers of new houses will be guaranteed by the State, in order to enable banks give out more loans.

Mortgages worth up to 95% of the value of the home will be available to first time buyers, allowing them to buy houses with smaller deposits.

Similar schemes are already in place in Canada, Australia and Britain.

It is hoped the scheme will provide a much-needed boost to the construction sector, since there is a belief that a further increase in demand will drive supply.

Group Political Editor with the Irish Independent, Fionnán Sheahan, told Newstalk's Breakfast it's an attractive option for the banks because they can share the risk:

Can't get a mortgage?
Can't save a deposit on your own steam?
Uncreditworthy?
Don't worry, the morons in the Irish Government are here to sort you out!

I had to check the date and make sure it wasn't April 1st.

If any body was under any illusion that Fine Gael are not Fianna Fail with a different name then surely this will put the nail in the coffin.
Get ready for super propertybubble.V2

Santa Cruz

Zamboni wrote: »

http://www.newstalk.ie/Government-to-assist-first-time-buyers-seeking-mortgages-



Can't get a mortgage?
Can't save a deposit on your own steam?
Uncreditworthy?
Don't worry, the morons in the Irish Government are here to sort you out!

I had to check the date and make sure it wasn't April 1st.

If any body was under any illusion that Fine Gael are not Fianna Fail with a different name then surely this will put the nail in the coffin.
Get ready for super propertybubble.V2

Will this be done before or after FG refund those who lost money buying Eircom shares and buying taxi plates?

seamus

Choo-Choo!

All aboard the Celtic Bubble Mk II!

there is a belief that a further increase in demand will drive supply

Except supply is constricted and property markets are inelastic. So they introduce this, demand goes crazy and it takes 3-4 years for any building projects to get started. In the rush to sell to buyers at inflated prices, small and poorly-constructed units are thrown up wherever anyone can find a scrap of land. 2 years after that, we're pumping out 60,000 units a year, with prices being maintained by an influx of foreign investment money. Suddenly everyone realises that supply is way over demand as rents start to drop, investors flee the market and the construction sector is left finishing 100,000 houses that nobody wants.

If only something like this had happened before so we could predict what might happen...

We need to incentivise supply rather than demand; NAMA needs to release land, now, and offer a partnership scheme for building projects where NAMA invests in the project. This means that banks are less exposed to cowboy developers, and NAMA gets a return on both the sale of the land and the sale of the properties built on it.

Demand is already high, and growing. Pushing it further will lead to exactly the same mistakes that got us into this mess. Incentivising supply is the only way to develop a stable and sustainable property market rather than one that troughs and peaks.

johnnyskeleton

They tried a similar thing with the home choice loan fiasco. Basically FF wanted to bring it in as an incentive scheme for builders. Then the good folks on thepropertypin and politics.ie complained to Europe and, while it was found to breach state aid regulations, was deemed acceptable provided it extended to second hand loans as well (or some similar fudging of the issue). In the end, they have spent millions administering a scheme that has only given out a handful of mortgages.

gaius c

So ftb's can't afford houses and need welfare assistance to buy?

I've a better idea. Let house prices drop to a level ftb's can afford.

snubbleste

But but but..
It is not the intention of this scheme — or of any other Government intervention in the housing sector — to incentivise or entice people into the market. Minister Jan O'Sullivan, June 2012

Mr.McLovin

sweet jesus what have we elected...

The_Conductor

Look at what the scheme is........

10% of the original purchase price of the property is guaranteed by a state backed scheme, which is funded by lender contributions. The maximum level of the guarantee is set at a fixed amount (tentatively 25k- but its not been defined)- which would infer a maximum purchase price of 250k in today's terms (which is probably on the higher side of normal).

The purpose is to lower the deposit needed by the FTBs to a level where they can actually save a deposit- however they still have to comply with all lending terms and criteria- including showing the propensity to save, lending multiples, other debt, history etc etc etc

Its a very basic scheme- and only guaranteeing a very small amount of the portion of a prospective mortgage- so any lender would have to do proper due diligence of prospective borrowers.

Yes- its the government meddling again- however, it really seems to be more smoke and mirrors- than anything else.

_Kaiser_

Yay! Let the good times roll.. I've already know of one person personally who got a call lately from his bank asking if there was anything they could do for him, and our own place here circulated an email from AIB last week where they're advertising 8am slots for mortgage discussions

Well I can tell ya one thing folks! Even if no-one else learned from the last 6 years, I have. This time I will be taking every cent I can get as NOT "going mad" last time round has left me screwed over at every turn anyway to pay for those who did. :rolleyes:

Hmm.. wonder should I change the car while I'm at it?

superman28

This government is committed to re-infalting the property bubble,, as FF did before it..

- FG introduced tax incentives for cash investors to buy property (no CGT if property is bought before December 2014)
- Actively restricts supply through the red tape convoluted planning process that has not been reformed since bubble
- Labour costs for building are still far too high
- Government controlled banks will not lend to property developers
- Land/property hording is widespread (empty property everywhere)
- Appointed minister for housing Jan O'Sullivan is a qualified pre-school teacher with no economic qualifications
- Introducing tax payer funded money for deposits for FTBs (even though demand is through the roof and not the problem)


It is telling that our minister for finance says "claims of a property bubble in Dublin are exaggerated"...

As we roar full steam ahead into another property bubble,, and the housing crisis continues,, why don't you email Jan,, and let her know what you think about it... jan.osullivan@oireachtas.ie

Frank Lee Midere

Utter madness. House prices are being kept up by government intervention, the government guarantees FTB's and the whole bloody shebang starts again. We actually need to make people accountable, that is politicians who inflate booms should be personally responsible for the problems they cause.

AlwaysAnyTime

Kaiser2000 wrote: »

Hmm.. wonder should I change the car while I'm at it?

Don't tell me you're still driving a 2013 reg car? :rolleyes:

ruthlessbich

This policy is misguided. Whilst it is true that some increase in prices is needed to mobilize the construction sector and increase supply, this policy will only serve to further increase demand - without doing anything for supply.

It is also not fair. Why should I as a taxpayer subsidize somebody else to buy a house? I personally saved my money over many years for deposit and to fund some of house purchase. The value of that money is now diluted by this scheme.

I have no doubt that we will all be paying for Enda's cheap election ploy

Shedite27

The_Conductor wrote: »

Yes- its the government meddling again- however, it really seems to be more smoke and mirrors- than anything else

Yeah I agree. Pre-election talk.

superman28 wrote: »

This government is committed to re-infalting the property bubble.

Or helping those voters in negative equity, depending on which side of the fense you're in.

A nothing story this really.

ted1

gaius c wrote: »

So ftb's can't afford houses and need welfare assistance to buy?

I've a better idea. Let house prices drop to a level ftb's can afford.

Or FTB are paying money out each month in rent and can't afford to save a deposit. so buying getting a help out with the deposit they can afford to buy and could actually have more money left.

marco_polo

AlwaysAnyTime wrote: »

Don't tell me you're still driving a 2013 reg car? :rolleyes:

Year doesn't matter if you're only driving a car you're already doing it wrong.

Idbatterim

read a few articles about it in the independent. There are pros and cons to it from what I gather, the thing is, it is very difficult to save if you are renting and the prices increases are currently eroding the savings you are making, you are sprinting to jog or run. This money that everyone is scrimping away, is money that could be spent in the local economy and generating confidence. I agree with the supply side of things and I believe on this front, they are going to tax undeveloped land.

Shedite27

The problem is that there isn't enough houses.

This initiative will increase the amount of people who can buy.

Net result: More people looking for the same number of houses = price rises.

But... this is a large part of what caused the problem in the first place

PLL

bluewolf wrote: »

But... this is a large part of what caused the problem in the first place

Yes and with the current high rent prices this will be attractive to so many. Oh dear

TimeToShine

It is hoped the scheme will provide a much-needed boost to the construction sector, since there is a belief that a further increase in demand will drive supply.

So by forcing the supply to become more accessible (in an arguably infeasible manner) the demand increases...and the subsequently forced increase in demand will increase supply?

How does this not look like a bubble waiting to pop?

youwhoglue

"Train tracks....bitta ching ching, ya know?"

Ritchi

This whole situation is worse than the boom. House prices are going up, rents are going up, but people's incomes are not.

At least in the boom people were getting salary increases to in some way fund the increase in prices, now they're not, for the most part.

It will only end badly, and a lot quicker than the last time.

Whosthis

AlwaysAnyTime wrote: »

Don't tell me you're still driving a 2013 reg car? :rolleyes:

I think he means from 141 to 142.

Cuddlesworth

Ritchi wrote: »

At least in the boom people were getting salary increases to in some way fund the increase in prices, now they're not, for the most part.

Salaries didn't come close to the rising houses prices then and they won't know. At least this time round, I can get on the ladder and stop paying my mortgage like the rest.

handlemaster

The big problem is a five yr cycle in government short term planning is always a bad idea

who_ru

Borrow from AIB only, they have no future anyway. Plus you can default quickly and they cannot, will not, won't be allowed to repossess.

I mean that borrow from AIB only.

AlwaysAnyTime

Ritchi wrote: »

This whole situation is worse than the boom. House prices are going up, rents are going up, but people's incomes are not.

At least in the boom people were getting salary increases to in some way fund the increase in prices, now they're not, for the most part.

It will only end badly, and a lot quicker than the last time.

It won't end badly, we'll have another "soft landing".

OMD

Shedite27 wrote: »

The problem is that there isn't enough houses.

This initiative will increase the amount of people who can buy.

Net result: More people looking for the same number of houses = price rises.

On what basis are you (and others) saying we haven't enough houses. We had enough 3 years ago. The population has not increased significantly in the last few years, especially as large portions of the property buying age group have emigrated. What has happened that you now believe we don't have enough houses?

The_Conductor

OMD wrote: »

What has happened that you now believe we don't have enough houses?

The big change- as noted in the census, was a massive decrease in the average house size (by this I mean number of occupants- not the size of the property itself- which is also pathetic).

A much larger number of smaller households, need extra properties.

Many people in the 20s and even 30s- are living at home with Mommy and Daddy- because they can't find anywhere else to live- this glut has not been tackled either.

Also- the vast number of people want to live a few limited areas- Dublin and its conurbation, Cork, Galway- and then to a lesser extent the regional towns. These are, by and large, not where we have been constructing dwelling units.

Shedite27

OMD wrote: »

On what basis are you (and others) saying we haven't enough houses. We had enough 3 years ago. The population has not increased significantly in the last few years, especially as large portions of the property buying age group have emigrated. What has happened that you now believe we don't have enough houses?

In the population centers there's a shortage of 3/4 bed houses. Head along to any open house this weekend and you'll see 20/30 couples out looking for that first home. Can't remember the figures off hand, but under noraml circumstances 4% of the houses in an area should be for sale at any one time, whereas at the moment we're below 1%. People holding onto houses through negative equity or dreaming of a blanket default.

There hasn't been that much emmigration to damage housing stats.

the groutch

let the good times roll

https://www.youtube.com/watch?v=T_URy6gEijg

Eldarion

Shedite27 wrote: »

People holding onto houses through negative equity or dreaming of a blanket default.

There hasn't been that much emmigration to damage housing stats.

Looks like they're the smart ones as this scheme will definitely increase house prices. The resulting increase could pull quite a lot of people out of negativity equity and back into a position where they'd be willing to trade up or sell.

Personally I think it's an absolute disgrace. We slammed, tarnished and almost lynch mobbed the bankers for doing the exact thing the government is planning on doing now. And their defense is? All the other western governments are doing the same! It's 2007 all over again, it's madness.

That being said I'll probably make out like a bandit if the trend continues but I still think it's an awful idea for the country as a whole.

crackcrack30

Its simple really.... there are about 100,00 homes in negative equity (and mortage arrears) in the capital region ....these people are on paper bankrupt and of no economic benefit to the irish economy (more like a perceived weight around its neck.....)


To change this their property price ,not worth , must rise rise......... hence inflate the market, balance the banks ect ect.

yop

Heard this on the radio this morning, the general jist is that there is a shortage of houses, so we need to build, in order to help the construction industry. So you hand out money to those who can't afford a "real" mortgage. Have we gone back in time or something because we know AGAIN how this story ends dont we?
We inflate the prices, we make builders and auctioneers rich AGAIN, after the bankrupt the place.
We have banks hand out money AGAIN to those who can't afford it, and guess how it will end.
But of course, we increase house prices.... so this then means that they government can then get more money from the LPT.

I can't say I am surprised, we really have elected another bunch of muppets.

seamus

Eldarion wrote: »

Looks like they're the smart ones as this scheme will definitely increase house prices. The resulting increase could pull quite a lot of people out of negativity equity and back into a position where they'd be willing to trade up or sell.

...and make the whole thing even worse. As people get pulled out of negative equity, moving home or trading up becomes a reality and even more pressure is put on demand.

Like you, I rub my hands with glee at the very real prospect of being able to sell my property at a profit possibly before the end of this year (that's without government intervention), but it still leaves me needing a home and jumping back into a property market where rents and asking prices are potentially way above their true value.

The only difference this time as is Cuddlesworth points out - the last time, salaries came nowhere near meeting asking prices. Prices rose because lenders relaxed their policies and made ridiculous decisions. I know of a couple of people who borrowed their deposit (and legal fees, etc) from the same bank as they got their mortgage. One person practically did it all in the same transaction.
As reckless as banks tend to be, I can't see the same thing happening this time. Possibly this time an influx of foreign money will start locking normal people out of the market in Dublin, which will result in the same proliferation of housing in the backarse of nowhere "Just an hour from Dublin".

GavMan

Money would be better spent incentivising people to develop land banks for housing. Penalise them via taxation for not building and give them a tax break for developing.

There is already sufficient demand there.

The key is in planners controlling the number of units built, doing so through restrictions in planning permissions granted.

gaius c

GavMan wrote: »

Money would be better spent incentivising people to develop land banks for housing. Penalise them via taxation for not building and give them a tax break for developing.

There is already sufficient demand there.

The key is in planners controlling the number of units built, doing so through restrictions in planning permissions granted.

We had a golden opportunity to do that via the LPT by making it a site valuation tax dependent on the value of the land the house was built on (thus giving us a chance to penalise land bankers) but no, they caved in to vested interests and made it a plain house valuation tax instead.

Idbatterim

if its houses only and "only" up to 250k, where the hell would that buy you in Dublin county? Certainly nowhere I would want to live... There is effectively no land where the real demand is, if you look at my area Dublin 14, there are 2 massive golf clubs, Churchtown and Rathfarnham, the lands could provide thousands of units, should land in critical areas, not be taxed so that the use of it is efficient? I.e price golf courses etc outside of the m50 circle...

riclad

IT should be limited to house,s under 170k.

IN a normal market there should be 20 thousand houses for sale in dublin,
theres way less than that on the market.

Plenty of houses for sale in clonsilla,under 150k.
i,d regard that as a good place to live.
quote ;

if its houses only and "only" up to 250k, where the hell would that buy you in Dublin county? Certainly nowhere I would want to live... There is effectively no land where the real demand is, if you look at my area Dublin 14, there are 2 massive golf clubs, Churchtown and Rathfarnham, the lands could provide thousands of units, should land in critical areas, not be taxed so that the use of it is efficient? I.e price golf courses etc outside of the m50 circle...

end quote .

Most of the big building companys are bankrupt,

its hard for a builder to get finance to build a large estate .

I Think its a bit snobbish to say,
the only good place to live is dublin south.

IF you drive around dublin ,theres acres of empty land to build on .

Alot of people want a house, will not bother looking at apartments for sale.

MisterAnarchy

There were enough houses built during the bubble to last until 2020 ,its a myth that there is a shortage of houses.

Anyone who cant save at least 15% of the value of a house has absolutely no business buying a house ,full stop.

Idbatterim

Most of the big building companys are bankrupt,

its hard for a builder to get finance to build a large estate .

I Think its a bit snobbish to say,
the only good place to live is dublin south.

IF you drive around dublin ,theres acres of empty land to build on .

Alot of people want a house, will not bother looking at apartments for sale.

so is it that the banks wont extend credit to the builders or as some builders claim, the figures still dont stack up to recommence building? Probablya combination of the two. Because if its that the banks wont lend, they should either be forced to or the government should set aside a fund let them draw it down from that...

riclad

Yes there s plenty of houses, but many are in the wrong place.
The days of people who work in dublin buying a house in cavan is gone.
EG long distance commuting is a waste of time.fuel is expensive.
eg ghost estates = houses built where theres no demand for them.
Banks look at your savings rate,salary , is your job safe, permanent .

Not just how much you have saved.
People in negative equity need to get permission to sell from the bank.
People on tracker mortgages maybe afraid to sell ,as they,ll lose their tracker low rate loan.

maybe builders are waiting for prices to rise,
Then their potential profits will rise.

RedPandaDan

Prices are getting too high because of a supply shortage, solution is to boost demand, genius!

Shedite27

MisterAnarchy wrote: »

There were enough houses built during the bubble to last until 2020 ,its a myth that there is a shortage of houses

If there are then they are in the wrong place! Huge shortage in the Cities where the jobs are unfortunately

MisterAnarchy wrote: »

Anyone who cant save at least 15% of the value of a house has absolutely no business buying a house, full stop.

Agreed

riclad

IN the short term, this may increase house prices in citys ,
Will it increase the no of houses being built?
OR the no of houses for sale?

Cuddlesworth

RedPandaDan wrote: »

Prices are getting too high because of a supply shortage, solution is to boost demand, genius!

Every single step the government has taken in the last 12 years has been to increase house prices. Why does this surprise you?

seamus

Idbatterim wrote: »

if its houses only and "only" up to 250k, where the hell would that buy you in Dublin county? Certainly nowhere I would want to live... There is effectively no land where the real demand is, if you look at my area Dublin 14, there are 2 massive golf clubs, Churchtown and Rathfarnham, the lands could provide thousands of units, should land in critical areas, not be taxed so that the use of it is efficient? I.e price golf courses etc outside of the m50 circle...

Recreational facilities are efficient use of land

Besides, we're not short of land in Dublin that we need to start CPO-ing private land. There are acres and acres and unused land within the M50 belt, and of course the elephant in the room: high-rise. Dublin has to grow up. Literally. We have massive infrastructural costs because we refuse to go skywards. The most efficient use of land is big blocks. We should be building 10+ storey blocks in the docklands.

riclad

prices have Gone down by 40-50 per cent since 2008 in most areas.
Stopping mortgage tax credits, property house tax,does not put up house prices.

Idbatterim

Recreational facilities are efficient use of land

Seamus that why I said golf courses, not parks or greens etc. What percent of the population of the population in these areas use these? and would it hurt for their members, who must have more than enough time on their hands, to drive a few kilometers further?

seamus

Idbatterim wrote: »

Seamus that why I said golf courses, not parks or greens etc. What percent of the population of the population in these areas use these? and would it hurt for their members, who must have more than enough time on their hands, to drive a few kilometers further?

You could ask the same questions of football pitches, or tennis courts or skateparks.

The fact is that there is no shortage of land to build and housing density in Dublin is very low by urban standards means that there's no need to take over golf courses just to build houses.