Where do first time buyers on Primetime get 400k? What jobs have they? Is it staged?

anynews14

I am watching Desperate House Buys on RTE now. There are first time buyers paying 400k for 3 bed semi detached houses. Where do they get the money from? What banks are giving them this money? Or do these first time buyers just have it in savings in their twenties and thirties?

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

surpy

Id guess they have a mix of good salary and 10% savings

Moonbeam

I am not watching it but it depends on their age,earnings and savings.
A loan of 400k for a couple in their 30's earning 60k each with no kids would not be crazy.

lima

anynews14 wrote: »

I am watching Desperate House Buys on RTE now. There are first time buyers paying 400k for 3 bed semi detached houses. Where do they get the money from? What banks are giving them this money? Or do these first time buyers just have it in savings in their twenties and thirties?

I'm early 30's I've 100k in savings and am not looking to have my other half on the mortgage so I can buy up to say e350k. So if a couple had this amount (or if they had it each) they would easily be able to afford 500-600k

It's crazy money and I wouldn't commit my savings to investing in Ireland in that way but clearly some people are buying to live in Ireland foreve and to die in

anynews14

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

surpy

Plenty of jobs out there paying that and more.
secure is permanent.

They'll lend slightly more to civil servants buy they do lend to permanent private sector too.

if you're on 60+ its not unreasonable to think you have transferable skills

Atlantic Dawn

anynews14 wrote: »

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

The current market has house prices rising, given the buyer is adding 10% of a deposit the bank is in a relatively strong position that they will not lose anything should the buyer fail to repay they can sell it on for a profit. Security of job won't matter if the current salary figures add up.

Zamboni

anynews14 wrote: »

I am watching Desperate House Buys on RTE now. There are first time buyers paying 400k for 3 bed semi detached houses. Where do they get the money from? What banks are giving them this money? Or do these first time buyers just have it in savings in their twenties and thirties?

The Bank of Mammy and Daddy.
Remember the generation that pulled the ladder up after themselves?...still plenty of wealth in the country.

Cuddlesworth

anynews14 wrote: »

I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

I work with Indians every day. I don't think outsourcing will really move past the low end jobs for a long time yet, derived from my personal experience. They have a very unusual culture that's not very suited to the business world. Outsourcing has also not reaped the benefits envisioned. Plenty of multinationals now have in-source policy's and rank hiring locations in the US and Europe above Asia and other outsource specific country's.

maryishere

Zamboni wrote: »

The Bank of Mammy and Daddy.
Remember the generation that pulled the ladder up after themselves?...still plenty of wealth in the country.

I have a Uncle who got a lump sum of €120,000 when he retired from the public sector, and all his mates got the same ( 18 months salary tax free ). He helped his 2 kids, my cousins, get on the property ladder now. That's how they done it.

ted1

anynews14 wrote: »

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

Engineers, accountants, solicters, bankers, etc

Cuddlesworth

Zamboni wrote: »

The Bank of Mammy and Daddy.
Remember the generation that pulled the ladder up after themselves?...still plenty of wealth in the country.

Yeah when I think of it both my parents and my girlfriends parents are sitting on nearly 1.5 million in property atm and would be overall owe maybe 100k to the banks. That's a pretty amazing amount of asset wealth.

killers1

surpy wrote: »

Plenty of jobs out there paying that and more.
secure is permanent.

They'll lend slightly more to civil servants buy they do lend to permanent private sector too.

if you're on 60+ its not unreasonable to think you have transferable skills

They actually lend slightly less to civil servants and any other occupation with a mandatory pension levy. A person in the private sector with the same €60k income as a civil servant will qualify for a higher loan amount.

surpy

killers1 wrote: »

They actually lend slightly less to civil servants and any other occupation with a mandatory pension levy. A person in the private sector with the same €60k income as a civil servant will qualify for a higher loan amount.

i didn't know that. i had automatically assumed the job security was worth a bit more to them.

The_Conductor

surpy wrote: »

They'll lend slightly more to civil servants buy they do lend to permanent private sector too.

BOI and some other lenders have reduced their lending multiples for civil servants and some other public sector employees (including members of An Garda Síochána) because of the virtual abolition of many of the allowances and the severe curtailment of overtime that used be considered a buffer by lending institutions.

At present- it will stand to you working in a permanent public sector job- however, the multiple they are willing to lend to you may be lower than for private sector jobs, which are viewed as having vastly better prospects for wage increases.

I know it sounds counter intuitive- its just the way they've changed their calculations.

drumswan

Plenty of people have been saving since the bubble burst, seems obvious enough.

NIMAN

Don't read too much into that programme, it was full of crazy folk transported in from 2006.

Shedite27

anynews14 wrote: »

Where do they get the money from? What banks are giving them this money?

Banks are lending to the people they want to lend to. If a bank doesn't lend it doesn't make money. I was mortgage approved from TSB and BOI (AIB refused me).

anynews14 wrote: »

Or do these first time buyers just have it in savings in their twenties and thirties?

Myself and OH are 8 years out of college, avoided buying until we were ready, saved what I could, we have a deposit of approx 50k saved now (incl 10k inheritance from a deceased granny).

anynews14 wrote: »

What jobs pay 60k a year that are secure that the banks would give mortgages for? I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

IT and Finance in our situation. This idea of a "secure" job for life is long gone, and the banks are beginning to realise that. India can't do everything. I'd be more worried about Robots (computers) taking my job than India. And yes, there are tens of thousands of jobs in IT.

I'm just illustrating the type of person that the show profiled (I didn't see the show, just going off your post). There are a lot of people in my position. I realise I've been lucky both with career choices and purchasing history, but I'm not alone.

seamus

You need to remember that the bursting of the bubble and the recession primarily affected those who were overextended on property and those working construction and related sectors.

Most other workers saw salary drops of 10% or less - many so no drop at all, simply a pay freeze - while the cost of living and rents dropped. As economists have been saying for a while, savings went through the roof during that time, meaning that you have plenty of people in their late 20s/early 30s, with €50k+ in savings, and permanent jobs. It wasn't a case that everyone became penniless and broke; the 86% of people still in employment by and large battened down the hatches and saved a load of money. Even those with mortgages did pretty well since tracker rates are so low. You'll find a large cohort of people in negative equity on their property while sitting on €50k of savings. Banks will give them new mortgages provided they rent out the existing property.

As mentioned above, let's not also forget the bank of Daddy & Mammy. Those in the 50+ age bracket likewise will have seen their costs drop massively with wages staying the same. Combined with any existing savings they made during the boom, they can now throw an extra 10 or 20k onto their childrens' deposits.

For two working people, a €400k mortgage isn't that big. That's two €45k salaries - a fairly typical salary for a young professional 5-10 years out of college - the exact people who didn't buy during the boom and are now champing at the bit to buy.

Santa Cruz

Despite what people think a lot of people made a lot of money over the last 20 years. Since the 1960s Ireland has become a big property owning country with smaller families. People die and now leave property to 2/3 kids whereas before the 1960s there wasn't a lot of property to be inherited and there were bigger families claiming a share of the estate.

Zamboni

seamus wrote: »

For two working people, a €400k mortgage isn't that big. That's two €45k salaries - a fairly typical salary for a young professional 5-10 years out of college - the exact people who didn't buy during the boom and are now champing at the bit to buy.

Net monthly combined about €5,800
10% deposit
Repayments on €360k 30Yr 5% roughly €2k

If they limit themselves to one child perhaps.
Childcare will destroy disposable income.

Zamboni

One thing is for sure in Dublin - The conventional relationship between property prices and the borrowing potential of an FTB is diminishing rapidly.

seamus

Zamboni wrote: »

Net monthly combined about €5,800
10% deposit
Repayments on €360k 30Yr 5% roughly €2k

If they limit themselves to one child perhaps.
Childcare will destroy disposable income.

You're making the mistake of assuming that people are that forward-thinking. It's just like 2006 - "How do we get a mortgage", is more important than, "How do we afford the mortgage".

Many people with a child will have the grandparents providing full-time childcare, or they are planning to, or that's what they tell the bank. They're not considering whether that will still be the case in 5 years time.

Zamboni

seamus wrote: »

You're making the mistake of assuming that people are that forward-thinking. It's just like 2006 - "How do we get a mortgage", is more important than, "How do we afford the mortgage".

Many people with a child will have the grandparents providing full-time childcare, or they are planning to, or that's what they tell the bank. They're not considering whether that will still be the case in 5 years time.

I hate this country when we have to "account" for idiocy.

I'm the idiot for forgetting the fact that people are financially imprudent

jon1981

Zamboni wrote: »

Net monthly combined about €5,800
10% deposit
Repayments on €360k 30Yr 5% roughly €2k

If they limit themselves to one child perhaps.
Childcare will destroy disposable income.

I think you're closer to a combined income of ~5000 after you take into account pension contributions.

Tombo2001

anynews14 wrote: »

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

There are tens of thousands of jobs in this.

And there are tens of thousands of jobs in Financial Services and in Pharma.

Ray Palmer

Cuddlesworth wrote: »

I work with Indians every day. I don't think outsourcing will really move past the low end jobs for a long time yet, derived from my personal experience. They have a very unusual culture that's not very suited to the business world. Outsourcing has also not reaped the benefits envisioned. Plenty of multinationals now have in-source policy's and rank hiring locations in the US and Europe above Asia and other outsource specific country's.

Many people who don't work in IT really don't understand this. I have seen more work come back from India than stay at around 80%. The whole RBS mess has also made it more likely jobs will never be outsourced.

Having worked with Indian outsourced teams The quality of work has been appalling. There is certainly a cultural issue where the idea of making sure something is working doesn't seem to be a consideration. The difference between an amateur and a professional, amateur does it till the get it right once where a professional does it till he doesn't get it wrong.

I'd be more worried about eastern block IT workers as they seem to be really good. There are huge security risks so that is a problem outsourcing to there.

You simply can't outsource a lot of work either as you need to be on site.

Shedite27

seamus wrote: »

You're making the mistake of assuming that people are that forward-thinking. It's just like 2006 - "How do we get a mortgage", is more important than, "How do we afford the mortgage".

Yeah I agree, and then the common follow on is to blame the bank - "Why won't the bank give me a mortgage?" rather than "Maybe the bank are right, maybe we can't afford that much long-term, perhaps we should evaluate what we should buy"

Zamboni

jon1981 wrote: »

I think you're closer to a combined income of ~5000 after you take into account pension contributions.

Your ninja edit had me confused there
Haha I can't win on this thread - I get done for not accounting for the fact that Irish people are financially imprudent and then I get done if I assume most young couples don't have pensions

Either way, if you include pension contributions into the equation it further questions the capacity for a couple on a combined income of €90k to service a €400k property / €360k mortgage.
And that is going on current interest rates.

Everything is pointing to accumulated wealth fueling this Dublin bubble Whether directly by investors or through inter-generational transfers.

This really is another major f*ck up in the making.

gaius c

seamus wrote: »

You need to remember that the bursting of the bubble and the recession primarily affected those who were overextended on property and those working construction and related sectors.

Most other workers saw salary drops of 10% or less - many so no drop at all, simply a pay freeze - while the cost of living and rents dropped. As economists have been saying for a while, savings went through the roof during that time, meaning that you have plenty of people in their late 20s/early 30s, with €50k+ in savings, and permanent jobs. It wasn't a case that everyone became penniless and broke; the 86% of people still in employment by and large battened down the hatches and saved a load of money. Even those with mortgages did pretty well since tracker rates are so low. You'll find a large cohort of people in negative equity on their property while sitting on €50k of savings. Banks will give them new mortgages provided they rent out the existing property.

As mentioned above, let's not also forget the bank of Daddy & Mammy. Those in the 50+ age bracket likewise will have seen their costs drop massively with wages staying the same. Combined with any existing savings they made during the boom, they can now throw an extra 10 or 20k onto their childrens' deposits.

For two working people, a €400k mortgage isn't that big. That's two €45k salaries - a fairly typical salary for a young professional 5-10 years out of college - the exact people who didn't buy during the boom and are now champing at the bit to buy.

You're ignoring the fact that rents are very high again and also the higher taxes that we have been paying for a number of years now. Utilities are more expensive than ever before.

Cost of living hasn't dropped at all. It's gone up.

mathie

Zamboni wrote: »

The Bank of Mammy and Daddy.
Remember the generation that pulled the ladder up after themselves?...still plenty of wealth in the country.

This.

Money doesn't disappear.
It simply changes hands.

gaius c

mathie wrote: »

This.

Money doesn't disappear.
It simply changes hands.

This money is disappearing though. It's going into that black hole labelled debt from where it will never return.

seamus

gaius c wrote: »

You're ignoring the fact that rents are very high again and also the higher taxes that we have been paying for a number of years now.

Rents dropped though for the last 7 years. That's the point. People had more scope to save during the recession.

Utilities are more expensive than ever before.

Nope. Actually the cost of utilities is still lower now than in 2007. I was quite surprised too:
http://www.cso.ie/quicktables/GetQuickTables.aspx?FileName=CPA01C1.asp&TableName=Annual+Figures+2007+to+2013&StatisticalProduct=DB_CP
Taxes haven't actually gone up that much in real terms. It's an extra couple of % for most people.

Cost of living hasn't dropped at all. It's gone up.

I'll give you that, though if you look at the link above, the cost of many essentials has dropped - utilities, clothing. We also saw a massive spike in costs in 2008 followed by a huge dip in costs. This is where people get their scope to save money. Overall cost of living now isn't exceptionally larger than it was in 2007 and in many categories there were 2-4 years where the cost living was down.

Maximus_1

Myself and the missus live in the west on modest salaries of 34 and 28k and bought last year. Both IT workers, private sector. UB approved us for over 200k and we were only looking for less than half of that. We had saved 30k which was also a big plus in getting approved.Hence and therefore I can see couples with 90 or 100k between them in the capital getting approved for those large figures once they have a decent chunk of savings.

The_Conductor

Maximus_1 wrote: »

Myself and the missus live in the west on modest salaries of 34 and 28k and bought last year. Both IT workers, private sector. UB approved us for over 200k and we were only looking for less than half of that. We had saved 30k which was also a big plus in getting approved.Hence and therefore I can see couples with 90 or 100k between them in the capital getting approved for those large figures once they have a decent chunk of savings.

If UB approved you for over 200k- totally aside from the fact that you had a 30k lumpsum saved- they ran roughshod over their own earning multiples calculation. UB have 3 separate criteria they apply to mortgage applications- income multiples, debt service ratio and net income criteria. You have to satisfy all 3 criteria categories.

The national average loan amount approved for First Time Buyers in 2014 (according to the Central Bank) is 204,000- which does not lend itself to supporting those bizarre Dublin valuations.

ionapaul

My wife and I have very recently been approved in principle for €400k, which is bang on 4x our joint income. The scenario looked at buying a €500k house with a €100k deposit and we provided lots of supporting documentation. I doubt we'd actually get very close to that amount if push came to shove at drawdown, in any case I'd never borrow 4x our income in any circumstance as that's financial lunacy. Actively wanted the large approval though, to give us some flexibility if we need to borrow over €300k.

mathie

gaius c wrote: »

This money is disappearing though. It's going into that black hole labelled debt from where it will never return.

Yes but one mans debt in another mans savings

o1s1n

ionapaul wrote: »

My wife and I have very recently been approved in principle for €400k, which is bang on 4x our joint income. The scenario looked at buying a €500k house with a €100k deposit and we provided lots of supporting documentation. I doubt we'd actually get very close to that amount if push came to shove at drawdown, in any case I'd never borrow 4x our income in any circumstance as that's financial lunacy. Actively wanted the large approval though, to give us some flexibility if we need to borrow over €300k.

Yeah, definitely do your best not to go down that road. It's a hell of a lot of money to have hanging over your head. Both of you are on a really decent salary, but do you intend to both be working for the whole course of the mortgage?

In the end we went with something we could both afford on each of our salaries if one of us had to stop working/wanted to stay home with kids etc.

The feeling of knowing you have that level of security is worth it to me. I'd only be worrying if I had a mortgage that big.

DubDani

There are enough people on that kind of money that were also not affected by the recession at all, and accordingly able to save for a decent deposit.

The company I work for did not cut any people, did not cut Salaries and even paid Bonuses and (modest) payrises during the recession.

On my team there are about 10 people, all in their 30's, all been working for the company for 8+ years and all on about 60K+. And it's nothing special in terms of Job, just safe and well paid.

jon1981

Zamboni wrote: »

Your ninja edit had me confused there
Haha I can't win on this thread - I get done for not accounting for the fact that Irish people are financially imprudent and then I get done if I assume most young couples don't have pensions

Either way, if you include pension contributions into the equation it further questions the capacity for a couple on a combined income of €90k to service a €400k property / €360k mortgage.
And that is going on current interest rates.

Everything is pointing to accumulated wealth fueling this Dublin bubble Whether directly by investors or through inter-generational transfers.

This really is another major f*ck up in the making.

I agree, without a significant cash deposit , no bank will approve a mortgage of that amount on 90k.

imitation

anynews14 wrote: »

What jobs pay 60k a year that are secure that the banks would give mortgages for?
I realise u will say public sector but they have not recruited for years now.
I realise u will say IT but I know there aren't tens of thousands of jobs in this, other countries can provide these services e.g India.

There are a lot more stable jobs out there with multinationals than you think. There are also plenty of people with rare skillsets and abilities that will mean they are a safe bet. There are also plenty who have the money built up, a good deal of people haved worked abroad on well paying jobs, sometimes tax free. And as others have said, many built up a solid deposit during the recession. Considering building has been at a standstill for 6 years the shortage of houses is no surprise. It was a way of artifically protecting house prices and the governments investment in nama. The consequence is this new bubble.

Maximus_1

o1s1n wrote: »

Yeah, definitely do your best not to go down that road. It's a hell of a lot of money to have hanging over your head. Both of you are on a really decent salary, but do you intend to both be working for the whole course of the mortgage?

In the end we went with something we could both afford on each of our salaries if one of us had to stop working/wanted to stay home with kids etc.

The feeling of knowing you have that level of security is worth it to me. I'd only be worrying if I had a mortgage that big.

Totally agree with this sentiment. You cannot put a price on peace of mind. We borrowed well within our means so that in the event one of us was unable to work for whatever reason, minding children, loosing job, ill health God forbid we would be able to at minimum tread water for a decent time without going under so to speak. The mindset of borrowing to the absolute maximum I can understand to get the place to really want etc but it wouldn't be for me, I've enough grey hair as it is!

dubrov

Zamboni wrote: »

Net monthly combined about €5,800
10% deposit
Repayments on €360k 30Yr 5% roughly €2k

If they limit themselves to one child perhaps.
Childcare will destroy disposable income.

Current variable rates are closer to 4.5% which would be about €1,700 on a 35 year mortgage.

€4,100 left after the mortgage is plenty even with a child in creche.
2 children would be tighter but this should only be for a couple of years.

Interest rates may go up but so will salaries.

Zamboni

dubrov wrote: »

Current variable rates are closer to 4.5% which would be about €1,700 on a 35 year mortgage.

€4,100 left after the mortgage is plenty even with a child in creche.
2 children would be tighter but this should only be for a couple of years.

Interest rates may go up but so will salaries.

You're niggling, which suggests to me that you are trying to justify something to yourself

dubrov

Well, you could call it niggling or actually try to make an argument against it.

I actually think prices will go south from here but thought I'd provide some balance to the previous comments.

Heisenberg1

lima wrote: »

I'm early 30's I've 100k in savings and am not looking to have my other half on the mortgage so I can buy up to say e350k. So if a couple had this amount (or if they had it each) they would easily be able to afford 500-600k

It's crazy money and I wouldn't commit my savings to investing in Ireland in that way but clearly some people are buying to live in Ireland foreve and to die in

Wow with those type of savings you could buy one of those houses in Roscommon with a small loan.

delthedriver

Cuddlesworth wrote: »

Yeah when I think of it both my parents and my girlfriends parents are sitting on nearly 1.5 million in property atm and would be overall owe maybe 100k to the banks. That's a pretty amazing amount of asset wealth.

Very true. As the years roll on the value of their property will increase and their outstanding mortgage will decrease! By doing nothing in the next few years their net wealth will increase. Still plenty of money in the country!

NIMAN

When you hear about the amount of houses selling to cash buyers now, there is definitely LOADS of money still in this economy.

HerrKuehn

I think a lot of people were able to save money during the recession. Rent decreased substantially for a few years. People who were working in industries not affected by the bubble (positively during it or negatively after it) may not have had wage decreases. We saved almost 200k before buying last year. The house cost 440k, mortgage of 270, rest used for fees & renovation etc. I doubt we are unique in that regard. To save that amount of money required determination over a number of years but we are enjoying the benefit of it now. I think 2 people on 45k each borrowing 400k is nuts to be honest. We could have borrowed more, but I wanted to make sure I can pay the mortgage off early.

nilsonmickey

60k is not a large salary. I think for a couple earning 50k each should be entitled to a mortgage of 400k.

seamus

HerrKuehn wrote: »

We saved almost 200k before buying last year. The house cost 440k, mortgage of 270, rest used for fees & renovation etc. I doubt we are unique in that regard.

€200k is pretty unique to be fair. Over six years that's €33k per year saved, after tax. That's how much a single person on €45k earns, which you've managed to bank. Now, maybe you've been saving for ten years and/or have had inheritance or gifts in on top of that, but the amount you had is definitely exceptional. You lucky bugger.

I'd say the typical amount of savings over the last 6/7 years is probably between 25 and 50k.