Central Bank to limit amount banks lend for home purchase

Bob24

"Mortgage approvals up 57.5% for three months to end of January": http://www.irishtimes.com/business/economy/mortgage-approvals-up-57-5-for-three-months-to-end-of-january-1.2128812

The old rule rush is in. It will be interesting to see where that figure is going in the coming months.

Rowley Birkin QC

Bob24 wrote: »

"Mortgage approvals up 57.5% for three months to end of January": http://www.irishtimes.com/business/economy/mortgage-approvals-up-57-5-for-three-months-to-end-of-january-1.2128812

The old rule rush is in. It will be interesting to see where that figure is going in the coming months.

I'm one of those who went for it at the last minute. We're in no particular rush or need to buy but wanted to have the facility to do so if all the boxes were ticked.

Have looked at a few places. Invariably, the advertised price goes up by 10-20% in the first week of play. Annoying for us but I'd imagine it's deeply frustrating for those who actually need to move out of their current situation and buy a home.

boogaloop

Galway seems to be the same as Cork so, supply is very slow - only around 7 or 8 properties max coming on per week at the moment

Went to view a house last night, on the market just over a week & it's already got an offer in of 10k over asking price. Time to take a step back I think, and be patient.

I'll be keeping an eye on the auction later today, if anyone can whip up an auction frenzy it's that agent :P

BoatMad

The key is patience , the current bubble needs to play out

Bob24

Rowley Birkin QC wrote: »

I'm one of those who went for it at the last minute. We're in no particular rush or need to buy but wanted to have the facility to do so if all the boxes were ticked.

Have looked at a few places. Invariably, the advertised price goes up by 10-20% in the first week of play. Annoying for us but I'd imagine it's deeply frustrating for those who actually need to move out of their current situation and buy a home.

We happened to get our AIP just before the deadline as well, but would be approved with the new rules anyway (we just happened to get serious abut buying as this was happening).

It is a bit of an frustrating situation now - we want to make a move as after having a look for some time we decided to get serious - but the head says to wait for some buyers to disappear.

Eldarion

Bob24 wrote: »

We happened to get our AIP just before the deadline as well, but would be approved with the new rules anyway (we just happened to get serious abut buying as this was happening).

It is a bit of an frustrating situation now - we want to make a move as after having a look for some time we decided to get serious - but the head says to wait for some buyers to disappear.

There will always be a situation. There will always be uncertainty. Even back in late 2012 - early 2013, where we now judge to be one of the best times to have bought, people were very uncertain about buying a "constantly depreciating asset".

At the end of the day you have to make up your own mind, own the decision and take the leap. That being said, I think right now would be a truly awful time to buy Irish property. But that's just one opinion.

Bob24

Bob24 wrote: »

"Mortgage approvals up 57.5% for three months to end of January": http://www.irishtimes.com/business/economy/mortgage-approvals-up-57-5-for-three-months-to-end-of-january-1.2128812

The old rule rush is in. It will be interesting to see where that figure is going in the coming months.

Not surprised. We had our bank on to us in late Jan to make sure our AIP was up to date. 'Just getting everyone up to date with approval before new rules,' said the mortgage advisor, flouting the spirit (if not also the letter) of the rules set out in the CB's proposal.

It's annoying. We will be unaffected by the rules but the banks have made sure that we are looking at a delay of six months before they come into effect in reality.

Bob24

By they way - long term mortgage accounts in arrears are up.

http://www.irishtimes.com/business/economy/number-of-long-term-mortgage-accounts-in-arrears-increases-1.2128896

With the previous default crisis still unsolved, I find it crazy how many politicians are criticising the CBI's move to make loans more secure.

BoatMad

Bob24 wrote: »

By they way - long term mortgages accounts in arrears are up.

http://www.irishtimes.com/business/economy/number-of-long-term-mortgage-accounts-in-arrears-increases-1.2128896

With the previous default crisis still unsolved, I find it crazy how many politicians are criticising the CBI's move to make loans more secure.

The CBI acted to attempt to suppress unrestrained credit growth, in the past it would have done that by raising interest rates.

It did not act to make loans more secure, it merely used what few regulations it had available inplace of interest rates

TheDriver

Deleted User wrote: »

flouting the spirit (if not also the letter) of the rules set out in the CB's proposal.
.

And we're back to square 1 if we allow banks control everything..........

BoatMad

TheDriver wrote: »

And we're back to square 1 if we allow banks control everything..........

yes, banks have a difficult business situation, they are operating in a very low interest rate environment, hence they have to substitute volume of business against profit from business as a driving factor, hence the current or recent activity in the market with new mortgages

in reality however the CBI has few tools in its chest to control banks, that falls to the monetary policy of the ECB and currently they are frantically trying to expand credit, when in reality for us we should be restricting it.

In reality we should be in a currency union with the Uk not the Euro. ( or even in a dollar union)

boogaloop

Originally Posted by Rowley Birkin QC
I'm one of those who went for it at the last minute. We're in no particular rush or need to buy but wanted to have the facility to do so if all the boxes were ticked.

Have looked at a few places. Invariably, the advertised price goes up by 10-20% in the first week of play. Annoying for us but I'd imagine it's deeply frustrating for those who actually need to move out of their current situation and buy a home.

Same as you, not in a particular rush and should also be approved under the new rules. Two things frustrating are 1. the lack of supply and 2. the wait until those who may have over extended themselves in a rush to get in under the old rules go out of the market.

Balmed Out

Do the central bank have rules governing any conflict of interest if a bank is the vendor of a repossessed house and the mortgage provider of the potential buyer?
Ive bid on a repossessed house but the estate agent wont say what bank is selling it. As over the years my wife and I have had mortgage approval from all of the local banks they would each be in a position to easily check that we can afford to pay far more then what we are offering.....

the world wonders

Balmed Out wrote: »

Do the central bank have rules governing any conflict of interest if a bank is the vendor of a repossessed house and the mortgage provider of the potential buyer?

http://www.centralbank.ie/consumer/cpc/requirements/Pages/ConflictsofInterest.aspx


Where conflicts of interest arise and cannot be reasonably avoided, a regulated entity must:

disclose the general nature and/or source of the conflicts of interest to the consumer. A regulated entity may only undertake business with or on behalf of a consumer where there is directly or indirectly a conflicting interest, where that consumer has acknowledged, on paper or on another durable medium, that he or she is aware of the conflict of interest and still wants to proceed; and
ensure that the conflict does not result in damage to the interests of the consumer.
...

A regulated entity must ensure that there are effective Chinese walls in place between the different business areas of the regulated entity, and between the regulated entity and its connected parties, in relation to information which could potentially give rise to a conflict of interest or be open to abuse.

So the rules are there, but it would be quite difficult to prove any wrongdoing...

farrerg

Balmed Out wrote: »

Do the central bank have rules governing any conflict of interest if a bank is the vendor of a repossessed house and the mortgage provider of the potential buyer?
Ive bid on a repossessed house but the estate agent wont say what bank is selling it. As over the years my wife and I have had mortgage approval from all of the local banks they would each be in a position to easily check that we can afford to pay far more then what we are offering.....

I'm not sure that the estate agent would pass on your details until contracts are being exchanged, someone else here might know?

I know we may not love the banks but i think this would be extreme.
Even if they did know who's bidding, it would be a very time consuming and unethical practise to try and check each bidder to see a) if they have given them approval b) that it still valid and your situation hasn't changed c) to chance coming back, refusing your offer and trying to get you to increase it (just because you can, doesn't mean you will bid more).
Different departments won't have access to that kind of info in my experience I.e. someone involved in the sale of repossessed properties isn't going to be linked in to the retail mortgage system and while trying to get the best price they can, isn't going to go to such lengths to get a few more grand

I'd be more concerned about the fact that my local estate agent is also a mortgage broker. I went to a viewing and they gave me their 'first-time buyers pack' promoting their mortgage operation and then followed up a phone call trying to get me to come in for a meeting.

Obviously if one guy in the office knows I have X amount of money/credit and the guy literally at the next desk is trying to sell me a house the scope for conflicts of interest is great.

The_Conductor

Deleted User wrote: »

I'd be more concerned about the fact that my local estate agent is also a mortgage broker. I went to a viewing and they gave me their 'first-time buyers pack' promoting their mortgage operation and then followed up a phone call trying to get me to come in for a meeting.

Obviously if one guy in the office knows I have X amount of money/credit and the guy literally at the next desk is trying to sell me a house the scope for conflicts of interest is great.

I'd be reporting them to the Property Services Regulatory Authority. This 'upselling' was supposed to have been ringfenced with 'Chinese Walls' in companies where both functions were present.

I was considering that but they are so open about it and are part of one of the big estate agent chains so I presume they are skirting the rules but somehow not breaking them.

Irish house prices rose at 15 times the EU average last year.

Somehow, the Indo article implies early on that the Central Bank rules are fueling the increases.

Figures from Eurostat show the continued upward march on prices as new mortgage lending rules and a lack of property coming onto the market fuels increases

They do eventually say the exact opposite.

And despite some slowdown in recent months as new lending rules from the Central Bank take hold, prices continued to rise in the last three months of 2014 compared with the period between June and September.

spockety

Deleted User wrote: »

Irish house prices rose at 15 times the EU average last year.

Somehow, the Indo article implies early on that the Central Bank rules are fueling the increases.



They do eventually say the exact opposite.

I would imagine they are saying that the price increases near the end of 2014 was a last minute frenzy by people trying to avoid the new rules before they kicked in...

gaius c

spockety wrote: »

I would imagine they are saying that the price increases near the end of 2014 was a last minute frenzy by people trying to avoid the new rules before they kicked in...

There were none actually. Prices, actual selling prices, have been on the decline since last summer but they are mix-matching actual sales prices and asking prices to sustain their narrative of always increasing prices.

impr0v

gaius c wrote: »

There were none actually. Prices, actual selling prices, have been on the decline since last summer but they are mix-matching actual sales prices and asking prices to sustain their narrative of always increasing prices.

Yes. This is my favourite part:

Indo wrote:

Recent data from property website Daft.ie shows that spiralling prices have continued into 2015...

No, it doesn't.

stevedublin

gaius c wrote: »

There were none actually. Prices, actual selling prices, have been on the decline since last summer .

cso residential price index:

Jul 2014 +2.0
Aug 2014 +2.3
Sep 2014 +1.8
Oct 2014 +2.9%
Nov 2014 +0.5%
Dec 2014 +0.4%

The_Conductor

stevedublin wrote: »

cso residential price index:

Jul 2014 +2.0
Aug 2014 +2.3
Sep 2014 +1.8
Oct 2014 +2.9%
Nov 2014 +0.5%
Dec 2014 +0.4%

That is the CSO residential price index- which is based solely on mortgages drawn down- it does not factor cash sales, corporate sales- or any of the large scale disposals such as to the multinational funds- who volume wise made up almost 70% of the market. The only accurate figures are the Property Price Register figures- however, they too, are far from perfect (not least because there is no cognisance of multiple sales, different types of dwellings (other than a blanket apartment/house designation etc etc).

The CSO figures- are interesting- but mean precisely nothing.

stevedublin

The_Conductor wrote: »

The CSO figures- are interesting- but mean precisely nothing.

They are a reflection of the direction of the overall market.
People with mortgages would not be paying more for property every month if the market was falling.
What facts do those who claim that the market has been falling since last summer have to back up their claim?

The_Conductor

People with mortgages- statistically- account for a particular subsector of the mortgage market- i.e. they are statistically more likely to be in the sub 220k category than any other category- and this category- is increasingly the domain of those living outside of Dublin- which automatically means an increased weighting is given to sales featuring mortgages, outside the greater Dublin area- and an decreased reporting of sales in the Pale.

It is recognised that since March-April last year- achieved prices nationally have raced ahead of Dublin and Galway (Cork is holding its own for the time being- though that is a matter of time too).

The CSO figures- are tracking an incrementally larger number of these sales- and an incrementally smaller number of other sales- totally independently of overall volume sales (which have increased).

Accordingly- they are skewed- and their increases are more a reflection of increases of rural (non-Dublin/Galway/Cork) prices- than increases in the centres in which greatest volumes of sales are occuring.

We have already discussed this ad infinitum.........?

Greyian

stevedublin wrote: »

They are a reflection of the direction of the overall market.
People with mortgages would not be paying more for property every month if the market was falling.
What facts do those who claim that the market has been falling since last summer have to back up their claim?

Except that they aren't. The CSO is reflective of properties purchased with mortgages exclusively, while the PPR accounts for all properties. The PPR is far more relevant to the overall market, as it actually tracks the whole market.

There are reasons why people with mortgages would be paying more. Lets say the average selling price is €200,000, and a completely average property goes up for sale at €200k. The vendor might be willing to accept €195,000 from a cash buyer (because of the far lower chances of the sale collapsing), but look for €210,000 from a buyer with a mortgage. Lets say the mortgage holder offers the €210,000 and secures the property, and this happens on 100 properties. This would have the CSO giving an average price of €210,000.
Meanwhile, 300 cash buyers have also bought €200,000 houses, but gotten them at €195,000/piece.

The total spend in the market would have been €79,500,000, giving an average property price of €198,750. So the CSO would give an increase of 5%, while the market actually fell 0.625%

Bob24

Greyian wrote: »

Except that they aren't. The CSO is reflective of properties purchased with mortgages exclusively, while the PPR accounts for all properties. The PPR is far more relevant to the overall market, as it actually tracks the whole market.

On the other hand the PPR is full of mistakes and does not give information at a vert granular level (you could have a whole block of apartments listed as a single transaction, drastically increasing the average selling price).

Neither the CSO figures not the PPR are perfect, but they do give an idea of prices trends and are the best two sources of information we have.

Greyian

Bob24 wrote: »

On the other hand the PPR is full of mistakes and does not give information at a vert granular level (you could have a whole block of apartments listed as a single transaction, drastically increasing the average selling price).

Neither the CSO figures not the PPR are perfect, but they do give an idea of prices trends and are the best two sources of information we have.

The PPR figures are still far better than the CSO. Issues like multiple properties showing up as a single entry in the PPR figures can be rectified (instead of 50 apartment block sold for €10,000,000, count it was 50 individual sales at €200,000 each). There is no way though of adding non-mortgage sales to the CSO figures, which only capture a portion of the total market.

The Spider

Dunno, every report is pointing to rising prices, daft, myhome etc. Yeah based on asking prices but what else can they base them on?

Not one report or analysis has said prices are falling, the closest anyone has said is prices in dublin were rising at a lower rate, that's still rising.

As far as I can see all the talk about prices falling is just wishful thinking, not on reputable source has come out and said it, apart from Internet posters who missed the boat in 2012, and are trying to use their mind powers to turn the market.

(I do however know that changes can be picked up here or on the likes of the property pin way before the media admits it)

However there seems to be a touch of desperation from people shouting for drops, nothing that I can see points to it, supply is down and the economy is going from strength to strength, in those circumstances barring external shocks I really don't see how prices can fall.

UK pulling out of the euro however may grant that wish.