Central Bank to limit amount banks lend for home purchase

molloyjh

Michael D Not Higgins wrote: »

I was living in Dublin but I'm living in the UK now. The bulk of my savings are from Dublin. I know I'm an outlier, but the fact is that to reach the top of the 3.5LTI 80%LTV you need to save 87.5% of your gross salary.

Which is why I was so annoyed by the 20% rule in the first place. I still think the same results of reducing and stabilising house prices can be achieved with a 10% deposit rule. The 20% is shafting people who are on the cusp on being able to afford by forcing them to save more and then it is also screwing the market because a lot of people will now not have the deposit required where-as they may have done in January. I'd worry that this will cause the market to stall somewhat over the next year or so while people try and build on their savings.

boogaloop

From what I am seeing in Galway, house prices seem to still be going up (and fast) rather than decreasing. Perhaps once June/Jul 2015 arrives and the approval for anyone who got it just before the rules came in has to be renewed, we might see a drop?

I've seen one house that sold for 170k in mid-December 2014 sold last week for 220k :eek:. So 50k increase in 2 months? Makes no sense to me, people must be panicking?

Also, and as a FTB myself about to enter the market at some point this year all going well - I've noticed that 220k seems to be the new magic number for a hell of a lot of the semi-d's around town that have come on the market over the last few weeks. Hardly a coincidence?

Starting to think that I need to sit tight & wait it out for another few months, let the dust settle on the new rules a bit and see what happens the market once the summer comes. I didn't get swept up in the panic 8 or 9 years ago, so really don't want to do it now! I just hope that by waiting a few months, we don't end up pricing ourselves out of the market

fret_wimp2

boogaloop wrote: »

I've seen one house that sold for 170k in mid-December 2014 sold last week for 220k :eek:. So 50k increase in 2 months? Makes no sense to me, people must be panicking?

A house changed hands twice within 3 months? Sounds odd, often a single sale can take months to be completed.

Also, what was different that justified the 50k increase? were any renovations performed?

johnp001

boogaloop wrote: »

From what I am seeing in Galway, house prices seem to still be going up (and fast) rather than decreasing. Perhaps once June/Jul 2015 arrives and the approval for anyone who got it just before the rules came in has to be renewed, we might see a drop?

I've seen one house that sold for 170k in mid-December 2014 sold last week for 220k :eek:. So 50k increase in 2 months? Makes no sense to me, people must be panicking?

Also, and as a FTB myself about to enter the market at some point this year all going well - I've noticed that 220k seems to be the new magic number for a hell of a lot of the semi-d's around town that have come on the market over the last few weeks. Hardly a coincidence?

Starting to think that I need to sit tight & wait it out for another few months, let the dust settle on the new rules a bit and see what happens the market once the summer comes. I didn't get swept up in the panic 8 or 9 years ago, so really don't want to do it now! I just hope that by waiting a few months, we don't end up pricing ourselves out of the market

Maybe even sooner than that. I think money typically has to be drawn down within the period of the AIP so leaving a delay for price negotiation, survey, solicitors, land registry etc... you would really want to be Sale Agreed this month to be 100% sure you would be able to draw down the loan under the new rules.
Definitely a time to sit tight as a buyer unless you find a realistic seller who knows that the pre-CB rules easy credit buyers are drying up very quickly and is willing to deal on that basis.
As a matter of interest, are you seeing these price increases in Galway City or County?

gaius c

boogaloop wrote: »

From what I am seeing in Galway, house prices seem to still be going up (and fast) rather than decreasing.

PPR seems to back that up.
Dublin is generally falling but Galway is up.

http://i.imgur.com/tEVKPI5.png

BoatMad

johnp001 wrote: »

Maybe even sooner than that. I think money typically has to be drawn down within the period of the AIP so leaving a delay for price negotiation, survey, solicitors, land registry etc... you would really want to be Sale Agreed this month to be 100% sure you would be able to draw down the loan under the new rules.
Definitely a time to sit tight as a buyer unless you find a realistic seller who knows that the pre-CB rules easy credit buyers are drying up very quickly and is willing to deal on that basis.
As a matter of interest, are you seeing these price increases in Galway City or County?

I would agree , this is not the time to buy anything in the Dublin area. Parts of the country still offer very good value. Dublin is coming out of a panic buying spree.

boogaloop

Looking at Galway city, prices definitely creeping up plus the popularity of selling by auction is not helping the buyer (essentially, you don't know the price of the house before an auction, so banks really discourage this way of buying). But auctions seem to be a large part of the market in Galway city which imo rules out more people than in but maybe there's more cash buyers out there than I'd like to think?

There doesn't appear to be anything different in the house that seems to have changed hands twice in 3 months. Although just to clarify, it hasn't actually sold/appeared on the PPR since last week, so I don't know the final selling price this time around, auctioneer was asking for 220k. House was sold and is on PPR for 170k in Dec, appeared back up for sale with asking price of 220k in mid-Feb and went sale agreed 10 days later. So maybe I'm jumping the gun a little, will keep an eye on the PPR in a few months, see what the story is!

Hopefully things will calm a little over next few months, we'll be in same boat as others wrt having to get re-approved, guess I'm just hoping that as we didn't look for too high a mortgage (it's not outside the new rules anyway) that we will get reapproved without too much trouble. Finger's crossed!

by the seaside

molloyjh wrote: »

Which is why I was so annoyed by the 20% rule in the first place. I still think the same results of reducing and stabilising house prices can be achieved with a 10% deposit rule. The 20% is shafting people who are on the cusp on being able to afford by forcing them to save more and then it is also screwing the market because a lot of people will now not have the deposit required where-as they may have done in January. I'd worry that this will cause the market to stall somewhat over the next year or so while people try and build on their savings.

I think your post may be missing part of the point of the Central Bank restrictions.

It may be that most people who are now being forced to put down a 20% deposit could easily and comfortably afford repayments with a 10% and 15% deposit.

But step away from the individuals and look at the overall picture. This restricts credit overall, and reduces the amount of money that people can bid for houses. Cheap credit has been (so the argument goes) pushing prices up as people can bid more and more, which creates the risk of a bubble.

So stalling the market now is an alternative to allowing a bubble that causes a catastrophic crash later.

Right or wrong, I think that is the rationale for the Central Bank action, and it is tough for people who were about to buy. But perhaps not as tough as the people who might buy at much higher prices in a year or two's time and end up in NE. These macro decisions are often tough on individuals.

BoatMad

by the seaside wrote: »

I think your post may be missing part of the point of the Central Bank restrictions.

It may be that most people who are now being forced to put down a 20% deposit could easily and comfortably afford repayments with a 10% and 15% deposit.

But step away from the individuals and look at the overall picture. This restricts credit overall, and reduces the amount of money that people can bid for houses. Cheap credit has been (so the argument goes) pushing prices up as people can bid more and more, which creates the risk of a bubble.

So stalling the market now is an alternative to allowing a bubble that causes a catastrophic crash later.

Right or wrong, I think that is the rationale for the Central Bank action, and it is tough for people who were about to buy. But perhaps not as tough as the people who might buy at much higher prices in a year or two's time and end up in NE. These macro decisions are often tough on individuals.

correct and it may not even be enough. AT least this time " somebody" is intervening, even if the usual chorus of " what not if its affects us" piped up around this as usual.

by the seaside

fret_wimp2 wrote: »

A house changed hands twice within 3 months? Sounds odd, often a single sale can take months to be completed.

Also, what was different that justified the 50k increase? were any renovations performed?

Hopefully it wasn't sold cheap to the EA's mate and then flipped on.

A few years ago (in England) I phoned up an hour after listing for a house that was listed cheap (probably following death of an elderly owner from the look of it). EA said that it was sold and blocked any idea of a viewing or higher offer.

Bob24

fret_wimp2 wrote: »

A house changed hands twice within 3 months? Sounds odd, often a single sale can take months to be completed.

Also, what was different that justified the 50k increase? were any renovations performed?

The OP can confirm, but I suspect he meant the house sold 50k above asking price, not that it got sold twice.

If correct, it wouldn't really be an indication of price increase though ... More high demand or an estate agent advertising a low price to attract more bidders.

El_Dangeroso

The Galway market is very weird at the moment.

On one hand you have houses that have G BERs in not great areas of the city where the bidding is up to 300K and then on the other hand a house in salthill sold at auction last week for 320K when a similar house (actually in worse condition) went for 395K last year at auction.

And then you have askings of 350K on bog standard two bed apartments in the same area.

Supply seems to have also gone bone dry since xmas but I think that's just the time of year. I think it will be May before there's any clarity in what the market is doing.

Edited to add: Oh I've also had estate agents chasing me (for a change) with price drops on properties I'd previously viewed, don't know if that means anything but it happened twice in the last week!

molloyjh

by the seaside wrote: »

I think your post may be missing part of the point of the Central Bank restrictions.

It may be that most people who are now being forced to put down a 20% deposit could easily and comfortably afford repayments with a 10% and 15% deposit.

But step away from the individuals and look at the overall picture. This restricts credit overall, and reduces the amount of money that people can bid for houses. Cheap credit has been (so the argument goes) pushing prices up as people can bid more and more, which creates the risk of a bubble.

So stalling the market now is an alternative to allowing a bubble that causes a catastrophic crash later.

Right or wrong, I think that is the rationale for the Central Bank action, and it is tough for people who were about to buy. But perhaps not as tough as the people who might buy at much higher prices in a year or two's time and end up in NE. These macro decisions are often tough on individuals.

If cheap credit is the issue then deal with that and make the LTI 3. Or stagger the LTV changes from 10% to 15% to 20% over time so as not to hit the market like this all at once. It just find it so incredibly frustrating that such harsh measures are coming at a time when so many people are starting to come out of negative equity after a recession. Meaning they will have very little equity and will struggle to come up with the deposit through savings alone.

If you bought during the boom you were screwed with house prices. Then during the recession you were screwed with negative equity. Then once you got out from under that you're prevented from moving because of excessive LTV rates. What's worse is that I decided not to go crazy when we bought (years before the peak) and we bought conservatively. Then when the recession seemed imminent I took a pay cut to move into a more stable job in the public sector to guarantee my income. Then I got hit with the Pension Levy during what was already a tough recession. And then once I was almost in a position to finally trade up this happens. Its like at every turn I'm getting shafted, and I haven't been wildly excessive over the years. I've actually tried to be sensible. But now that I'm in a place where I'm looking to start a family saving for a house just isn't feasible. It would be nice to actually catch a break for a change.

mr_seer

molloyjh wrote: »

If cheap credit is the issue then deal with that and make the LTI 3. Or stagger the LTV changes from 10% to 15% to 20% over time so as not to hit the market like this all at once. It just find it so incredibly frustrating that such harsh measures are coming at a time when so many people are starting to come out of negative equity after a recession. Meaning they will have very little equity and will struggle to come up with the deposit through savings alone.

If you bought during the boom you were screwed with house prices. Then during the recession you were screwed with negative equity. Then once you got out from under that you're prevented from moving because of excessive LTV rates. What's worse is that I decided not to go crazy when we bought (years before the peak) and we bought conservatively. Then when the recession seemed imminent I took a pay cut to move into a more stable job in the public sector to guarantee my income. Then I got hit with the Pension Levy during what was already a tough recession. And then once I was almost in a position to finally trade up this happens. Its like at every turn I'm getting shafted, and I haven't been wildly excessive over the years. I've actually tried to be sensible. But now that I'm in a place where I'm looking to start a family saving for a house just isn't feasible. It would be nice to actually catch a break for a change.

Sure you'll have to wait a bit longer than you initially planned but try to look at the positives. Supply is starting to come on and demand will fall as a result of these rules. The price of the house you will be trading up to will therefore be considerably cheaper than what it would have been. In the end you will probably be left with a nicer place that what you would have gotten without CB intervention and you may even have less debt. This should leave you with more money to spend on your new family and you will have more disposable income to be a good citizen and support the economy :cool:

Everyone is a winner in the medium term

gaius c

El_Dangeroso wrote: »

Supply seems to have also gone bone dry since xmas but I think that's just the time of year. I think it will be May before there's any clarity in what the market is doing.

Don't know if Galway is anything like Dublin but there's loads of supply coming onstream there but most of it is priced over €400k so if you had an alert set up for under €350k say, you'd miss most of that new supply.

The_Conductor

gaius c wrote: »

Don't know if Galway is anything like Dublin but there's loads of supply coming onstream there but most of it is priced over €400k so if you had an alert set up for under €350k say, you'd miss most of that new supply.

Unless the politicians meddle- there is a whole lot of cheaper repossessions (possibly as many as 25-30k houses) coming on stream before the end of the year. We've already had over 4000 repossession cases before the courts in the first 2 months of the year.........

Villa05

The_Conductor wrote:

Unless the politicians meddle- there is a whole lot of cheaper repossessions (possibly as many as 25-30k houses) coming on stream before the end of the year. We've already had over 4000 repossession cases before the courts in the first 2 months of the year.........

Not sure if they will see the ftb market. Banks are gone in to the business of bulk selling to investment funds.

El_Dangeroso

gaius c wrote: »

Don't know if Galway is anything like Dublin but there's loads of supply coming onstream there but most of it is priced over €400k so if you had an alert set up for under €350k say, you'd miss most of that new supply.

Nope, looking at everything unfortunately

It's a drip feed of 1-2 day, some days none, and mostly crappy apartments.

jay0109

The_Conductor wrote: »

Unless the politicians meddle- there is a whole lot of cheaper repossessions (possibly as many as 25-30k houses) coming on stream before the end of the year. We've already had over 4000 repossession cases before the courts in the first 2 months of the year.........

It's just not going to happen..especially with an election less than year away.
Did you hear the AIB CEO on the radio this morning discussing their results....345 repossessions last year (and they have 1 in 4 of all arrears cases!) and most of them were voluntary/abandonment.
He expects less this year as above all (even profit!!!), AIB want to keep people in their homes

gaius c

Looks like Noonan's last shot of getting around the 20% deposit rule is gone.
http://www.independent.ie/business/personal-finance/mortgage-insurance-scheme-allowing-home-owners-to-borrow-more-may-be-shelved-31040284.html

Barely Hedged

The_Conductor wrote: »

Unless the politicians meddle- there is a whole lot of cheaper repossessions (possibly as many as 25-30k houses) coming on stream before the end of the year. We've already had over 4000 repossession cases before the courts in the first 2 months of the year.........

And they'll all be bundled into one portfolio, or tranche as is the management speak for it, and sold to the highest bidder most likely a REIT.

Any buyer hoping for an increase in supply based on repossessions should not hold their breath. If they do, they'll be a long time blue in the face.

This myth needs to be extinguished. No bank, repossessing on this scale, is going to get involved in selling off units individually. The time and man hours required to do that does not make commercial sense.

gaius c

jay0109 wrote: »

It's just not going to happen..especially with an election less than year away.
Did you hear the AIB CEO on the radio this morning discussing their results....345 repossessions last year (and they have 1 in 4 of all arrears cases!) and most of them were voluntary/abandonment.
He expects less this year as above all (even profit!!!), AIB want to keep people in their homes

Yes but the fund they sell them onto wouldn't have a problem repossessing.

jay0109

gaius c wrote: »

Yes but the fund they sell them onto wouldn't have a problem repossessing.

Have we seen any rise in repossessions since Funds started buying mortgages in the past few years....

gaius c

"Vulture" funds have only started buying the loans in the last year so it's a bit early to say.

Barely Hedged

gaius c wrote: »

"Vulture" funds have only started buying the loans in the last year so it's a bit early to say.

Vulture funds moved to scouring Spain, Portugal and Greece in 2013. Theyve been gone a long time.

These properties will be hoovered up by a REIT. Theyre more likely to do a sale and lease back type setup than repossess. Their interest is in income streams rather than a quick buck

golfdiva

What is the general consensus at the moment regarding property prices in June / July. I am looking to buy an apartment in Cork City around the 110k mark. Would I be better waiting it out ?

gaius c

Barely Hedged wrote: »

Vulture funds moved to scouring Spain, Portugal and Greece in 2013. Theyve been gone a long time.

These properties will be hoovered up by a REIT. Theyre more likely to do a sale and lease back type setup than repossess. Their interest is in income streams rather than a quick buck

The previous lot of vulture funds bought up commercial property and yes, they are long gone now.

We're talking residential property however and it's not clear yet who will buy them. At least some non-REIT's have bought mortgage loans.
http://www.thejournal.ie/bank-of-ireland-sale-mortgages-dilosk-limited-1538929-Jun2014/

Even if a REIT does buy them, they will charge market rents. Renting to customers with proven bad credit ratings doesn't seem like good business practice to me.

handlemaster

golfdiva wrote: »

What is the general consensus at the moment regarding property prices in June / July. I am looking to buy an apartment in Cork City around the 110k mark. Would I be better waiting it out ?

wheres Cork

Balmed Out

golfdiva wrote: »

What is the general consensus at the moment regarding property prices in June / July. I am looking to buy an apartment in Cork City around the 110k mark. Would I be better waiting it out ?

There is no general consensus at all. Most belief the new rules will slow the rate of increase or cause prices to reduce but plenty will say that the lack of supply will continue to be the prevailing factor . Im not looking in Cork city but I do keep an eye on it and from casually looking I think supply is still extremely restricted in comparison to Dublin.
Research the pitfalls of buying an apartment in the event of price drops.
If not an investment realize it will cause you to lose your status as a FTB so if you do buy a home for life in future you will probably need 20% for a deposit.

golfdiva

That does seem to be the issue in Cork , supply is very limited.

Places seem to come up at a trickle. Not much choice out there