Central bank purposes new mortgage protection rules

Specialun

Is it just me but is this taking the pi55

With the rising costs of rent..increased taxes and increased charges couples/families will find it hard to save

Surely this is punishing the joe soap for banks crazy lending before. I cant see this being a runner

http://www.rte.ie/news/business/2014/1007/650641-central-bank-mortgages/

Generic Dreadhead

Boo Banks Boo!

shruikan2553

So banks lending everyone **** tons of money is bad and banks being limited on how much they can lend is also bad?

realweirdo

It's another case of the middle aged middle class crushing the youth of this country and making everyone suffer for the sins of a few.

Expecting individuals or couples to come up with 50 grand at least as a deposit for a house is just crazy. And whatever savings they did have will be blown away by this. It will push buying a house out of the reach of the vast majority of people which is probably what the central bank wants. If you are a millionaire great, buy a house, everyone else can p*ss off.

This will also destroy the slowly coming back construction industry and all those industries that feed off it such as shops which sell furniture and the like. I have a feeling this move could send us back into recession.

Specialun

shruikan2553 wrote: »

So banks lending everyone **** tons of money is bad and banks being limited on how much they can lend is also bad?

Ah can you point out where i send bank lending is bad..i said that the 80% mortgage is tough, espically considering the increased tax's or charges

Ive no issue with banks being highly regulated, but imo at least make it fair

Very few rent to buy schemes..big issue with social housing...

Sh1tbag OToole

If they started back on the 100% mortgages people would be complaining too

Specialun

Sh1tbag OToole wrote: »

If they started back on the 100% mortgages people would be complaining too

Do you not see the issue with the huge gap between 100 and 80

Lets say the average house is 200k...thats 40k in just the mortgage savings...

Sh1tbag OToole

Sh1tbag OToole wrote: »

If they started back on the 100% mortgages people would be complaining too

It's AH. If they sneezed there'd be a thread called "Central Bank sneezing on the pewr, de bastards....."

AnonoBoy

Ban mortgages.
























That's what we call the woman who gives out home loans in my local bank.

realweirdo

Sh1tbag OToole wrote: »

If they started back on the 100% mortgages people would be complaining too

They would and 100% mortgages should never ever have been allowed. It belonged to our Wild West days.

But 80% is at the other extreme. Houses are wildly overpriced at the moment and most people, particularly working class will never be able to afford a house with these measures, which of course will have knock on impacts down the line yet to be seen.

bmwguy

Knee jerk reaction to a mini bubble appearing. However the mini bubble is due to restricted supply. It will serve to decrease demand to let the market settle but why not stimulate the economy with increasing supply at the same time to let market find it's own equilibrium. Not a bad long term policy this 80% rule but in short term it will crush the hopes and dreams of someone that had 8% saved and now only is half way there. But can't please all the people all the time I suppose.

Sh1tbag OToole

Specialun wrote: »

Do you not see the issue with the huge gap between 100 and 80

Lets say the average house is 200k...thats 40k in just the mortgage savings...

Yea about 20%.. thing about it is yer average brick box that comes with a lifetime right to pay property tax on shouldn't be worth 200k anyway. If the limit was 30% or no mortgages at all and maybe a limit of 1 or 2 houses per person they would be a lot cheaper.

It is strange the attitude people have here towards houses, in some countries they are just something used for living in that you buy out of necessity or gets handed down through the generations without anyone giving a damn about how much it's worth but here it's like "collect as many as you can so you can drink 15 euro cocktails in the shelbourne and go shopping in new york every weekend"

ffactj

I just posted in another thread that we would never in a million years have got our mortgage if those rules were in place 10 years ago when we bought the house. Its very harsh on FTBs.

Kaizersoze81

Thread here


http://www.boards.ie/vbulletin/showthread.php?t=2057300400

suicide_circus

Cant afford rent.......cant get a mortgage.....hmmmm

Senna

Limit lending levels = Cheaper houses
Cheaper houses = Better for everyone

I cant believe people are straight already back to "poor youth of this country" cant burden themselves with huge mortgages because of them dam banks.
Credit levels dictate the market levels not the other way around. The market depends on FTB's and if they cant buy because of lending levels, then prices will drop. Cash buyers, investors, small time buy-to-lets etc might push prices up but that will be temporary, if these conditions are imposed on banks, it will stabilize the house market and keep prices within reach of FTB's.

Balmed Out

kind of think its going to lead a return to the property ladder

MRnotlob606

people complain inexorably for about anything

Specialun

Senna wrote: »

Limit lending levels = Cheaper houses
Cheaper houses = Better for everyone

I cant believe people are straight already back to "poor youth of this country" cant burden themselves with huge mortgages because of them dam banks.
Credit levels dictate the market levels not the other way around. The market depends on FTB's and if they cant buy because of lending levels, then prices will drop. Cash buyers, investors, small time buy-to-lets etc might push prices up but that will be temporary, if these conditions are imposed on banks, it will stabilize the house market and keep prices within reach of FTB's.

What about the incresing number of renters...lets not forget that the rental market has gone up as of late....do you think that the government have any interest in stabalizing the rental market? The more demand for quality houses then the greater the rises in rental costs..i understand that there needs to be protection on FTB's but this imo is too much

If the governent were able to stabalize the rental market..encourage rent to buy schemes...then this would all be fair but the market is still not mature enough

Menas

Remember, you need to save 20℅ plus stamp duty plus any moving and renovation and furniture costs. That is a big ask.

I reckoned it would be 10% and limited to four times joint salary....that would be reasonable IMO.

Sand

realweirdo wrote: »

But 80% is at the other extreme. Houses are wildly overpriced at the moment and most people, particularly working class will never be able to afford a house with these measures, which of course will have knock on impacts down the line yet to be seen.

Why should banks be allowed to lend sums of money that make it easy to buy wildly overpriced houses? We tried lending loads of money to combat poverty and inequality, it didn't end so well.

If sellers of houses cant find buyers for their wildly overpriced houses, they'll reduce the price. This control is a step in the right direction as history has demonstrated Irish banks are far too stupid to even carry out basic risk control or bread and butter mortgage lending.

This is a very, very, very good thing for the average Irish citizen who would otherwise be held to ransom when the banks got into trouble. Again.

Dr Turk Turkelton

Sh1tbag OToole wrote: »

Yea about 20%.. thing about it is yer average brick box that comes with a lifetime right to pay property tax on shouldn't be worth 200k anyway. If the limit was 30% or no mortgages at all and maybe a limit of 1 or 2 houses per person they would be a lot cheaper.

It is strange the attitude people have here towards houses, in some countries they are just something used for living in that you buy out of necessity or gets handed down through the generations without anyone giving a damn about how much it's worth but here it's like "collect as many as you can so you can drink 15 euro cocktails in the shelbourne and go shopping in new york every weekend"

Ah the good old days,I for one miss them.

professore

I predict a big wave of rent to buy schemes.

bigroad

It keeps the rich richer and the young renting at expensive rates.
This is geared towards the middle aged fat cat landlords renting their propertys while government build social housing.
If their was a good pool of social housing and young people could buy a house with a reasonable price/mortgage,then the landlord fat cat would be in trouble.

MonkeyTennis

There are PLENTY of people who wish the banks had these rules 7or 8 years ago.

realweirdo

Sand wrote: »

Why should banks be allowed to lend sums of money that make it easy to buy wildly overpriced houses? We tried lending loads of money to combat poverty and inequality, it didn't end so well.

If sellers of houses cant find buyers for their wildly overpriced houses, they'll reduce the price. This control is a step in the right direction as history has demonstrated Irish banks are far too stupid to even carry out basic risk control or bread and butter mortgage lending.

This is a very, very, very good thing for the average Irish citizen who would otherwise be held to ransom when the banks got into trouble. Again.

As I said on another thread, the most likely outcome will be:

1. A further restriction of supply. Are developers and bankers going to go ahead with new estates when they know that the demand will have collapsed? It would be a huge risk. You yourself admit this will massively drive down demand. Developers and banks have to cover their costs.

2. As I said elsewhere, most of the 25% in arrears, either one or both wage earners lost their job I would imagine. Arrears go up as unemployment goes up, this is a fact. It doesn't matter if you handed over a 20% deposit and the house cost only 3 times salary. If you lose your job, you are screwed. Likewise most if not all people who handed over 8% mortgage and got 4.5-5 salary ratio probably could pay their mortgage if employed.

Its a poor knee jerk attempt from the banking sector to tackle banking arrears in this country. Tackling unemployment would be better.

realweirdo

Senna wrote: »

Limit lending levels = Cheaper houses
Cheaper houses = Better for everyone

I cant believe people are straight already back to "poor youth of this country" cant burden themselves with huge mortgages because of them dam banks.
Credit levels dictate the market levels not the other way around. The market depends on FTB's and if they cant buy because of lending levels, then prices will drop. Cash buyers, investors, small time buy-to-lets etc might push prices up but that will be temporary, if these conditions are imposed on banks, it will stabilize the house market and keep prices within reach of FTB's.

WRONG!!!

It will attract into the market thousands of greedy buy to let landlords.

Precisely the group most at risk of mortgage arrears.

This policy is just a disaster waiting to happen. I am beginnging to ask do we really need an Irish Central Bank?

Fr. Ned

Specialun wrote: »

Is it just me but is this taking the pi55

With the rising costs of rent..increased taxes and increased charges couples/families will find it hard to save

Surely this is punishing the joe soap for banks crazy lending before. I cant see this being a runner

http://www.rte.ie/news/business/2014/1007/650641-central-bank-mortgages/

Are banks even lending?
Why would they bother when all they have to do is cry loud enough and the government will hand them billions.
Some of those billions are then used to shore up the pension funds of their employees. (AIB being case and point).

dotsman

Senna wrote: »

Limit lending levels = Less home owners/more renters
More renters = Better for those who can afford to purchase investment properties/Worse for those stuck in the renting trap

Fixed your post. Your understanding of the housing market is as crazy as this policy.

realweirdo

MonkeyTennis wrote: »

There are PLENTY of people who wish the banks had these rules 7or 8 years ago.

Not really. Our banks were crazy 7 or 8 years ago. 100/110/120% mortgages...6, 7, 8 or even 9 times salary. Forged job references...banks not bothering to check. Solicitiors as property developers, farmers as property developers, teachers as property developers, etc etc...can't afford a mortgage? no problem, have one anyways.

No-one wants a return to that craziness.

We are at a happy medium now and the rules have been tightened up. There shouldn't be less than 8% deposit required.

But the new rules are draconian to say the least.

We bailed out the banks and this is how they pay us back??

dotsman

realweirdo wrote: »

We bailed out the banks and this is how they pay us back??

I don't think you understand. We bailed them out and now WE are forcing them to implement these new rules (the Central Bank represents us). The banks themselves don't want these rules (they lose out just as much as the people).

Balmed Out

realweirdo wrote: »

We bailed out the banks and this is how they pay us back??

This is nothing to do with the banks its the central bank trying to protect the taxpayer against risky behavior by the banks.

Would you prefer another large and devastating bubble?

The consultation period will probably lead to the banks, developers, real estate agents getting it watered down somewhat.

_Kaiser_

suicide_circus wrote: »

Cant afford rent.......cant get a mortgage.....hmmmm

The idea is that you move back with Mammy and Daddy I suppose (if they'll have you) ... or emigrate - that's an option too right?

Ah FG.. ensuring the rich only get richer. They haven't gotten themselves into enough of a mess with the water charges, they had to start this too - and I don't buy for a second that the CBI is as "independent" as claimed.. we saw the proof of that last time round!

What this will do is push the younger end of the market into even more overpriced, effectively-unregulated private rentals, and encourage those who took early retirement a few years back and got plenty of cash for it to buy a nice investment, as well as the multinational investors that NAMA is busy selling stock too.

In theory this move today is actually the right move - but without significantly increased supply AND a reform of the private rental sector to support the notion of long-term affordable tenancies that people can make homes, all this will do is make an already bad situation much much worse for most people!

small investor

20% deposit is a fortune, average grad salary after 3 yrs maybe 30K ? with couple 60k by 3.5 = 210k where in dublin wud u find house for 210? and ud have to have deposit of 42k I think it should be 10% deposit and 5 times salary. So couple with 60k salary can buy house for 300k. Am I wrong, or will just really rich folks buy houses from now on?

Shiraz 4.99

It's not that draconian if you're buying as a couple. You save your 10%, they save their 10%, then you get 3.5x your combined. They'll probably have a tick box on match.com to confirm whether you have your readies.

realweirdo

Balmed Out wrote: »

This is nothing to do with the banks its the central bank trying to protect the taxpayer against risky behavior by the banks.

Would you prefer another large and devastating bubble?

The consultation period will probably lead to the banks, developers, real estate agents getting it watered down somewhat.

I explained how the bubble happened in an earlier post. The bad old days of 100% mortgages and up to 9 times salary. We are far removed from that now. Another factor in the bubble bursting was the collapse of the economy. We are faced now with an even worse bubble of people being forced to rent indefinitely, driving up rented accomodation.

The Irish Central Bank never get it right unfortunately.

Balmed Out

_Kaiser_ wrote: »

What this will do is push the younger end of the market into even more overpriced, effectively-unregulated private rentals, and encourage those who took early retirement a few years back and got plenty of cash for it to buy a nice investment, as well as the multinational investors that NAMA is busy selling stock too.

In theory this move today is actually the right move - but without significantly increased supply AND a reform of the private rental sector to support the notion of long-term affordable tenancies that people can make homes, all this will do is make an already bad situation much much worse for most people!

I think its more likely to lead to more people purchasing more affordable homes in order to continue saving and buying family homes later on. A property ladder.

Rental reforms need to be looked at now, hopefully the restrictions on BTL's of 30% will limit an increase of amateur landlords.

realweirdo

dotsman wrote: »

I don't think you understand. We bailed them out and now WE are forcing them to implement these new rules (the Central Bank represents us). The banks themselves don't want these rules (they lose out just as much as the people).

They didn't bother to enforce their own rules the last time out. Anyone could get a 100% mortgage with no real stress tests of your ability to pay..remember those days? They are long gone thankfully.

Since when did the Central Bank represent us? They were asleep when the bubble was growing the last time. Now they want to punish everyone trying to get on the property market. They go from on extreme to another.

Were any banks fined the last time for ignoring regulations?

Who was the sherrif in the wild west town that was the celtic tiger? That's right, the Central Bank.

Chips Lovell

Have to say, I'm kind of stunned people have a problem with this. It's like they've forgotten everything that went wrong over the past 10 years and want to make the same mistakes all over again.

_Kaiser_

Oscar Gateaux wrote: »

Have to say, I'm kind of stunned people have a problem with this. It's like they've forgotten everything that went wrong over the past 10 years and want to make the same mistakes all over again.

The problem is people have been paying for those mistakes for the last 6 years while those responsible have gotten off scot-free for the most part, or in the case of those who DID "go mad" are still sitting in property they can't afford/aren't paying for, while the first group are forced to pay ever increasing rents as a result.

Right decision but not enough in isolation

realweirdo

Oscar Gateaux wrote: »

Have to say, I'm kind of stunned people have a problem with this. It's like they've forgotten everything that went wrong over the past 10 years and want to make the same mistakes all over again.

We are not living in an era of 100%+ mortages and up to 9 times salary. The rules have been tightened up and rightly so. And arrears have little or nothing to do with affordability of people in employment and everything to do with the massive collapse in employment under Fianna Fail.

A person who hands over a 50% deposit and a loan to salary ratio of 2 times is not going to be able to afford to pay a mortgage if they lose their job.

Chips Lovell

Allowing people to borrow more money isn't going to make it easier for people to buy a house. It just makes houses more expensive.

twinytwo

realweirdo wrote: »

I explained how the bubble happened in an earlier post. The bad old days of 100% mortgages and up to 9 times salary. We are far removed from that now. Another factor in the bubble bursting was the collapse of the economy. We are faced now with an even worse bubble of people being forced to rent indefinitely, driving up rented accomodation.

The Irish Central Bank never get it right unfortunately.

I would say the bubble started when Bertie let developers in on the first time property market, ie the beginning of the end

Sand

If after many years of saving you and your OH cant afford 20% of the purchase price of your ideal home, then its too much for you. Interest rates are as low now as they will ever be and the banks are gouging people on variable mortgages. It will only get worse when the Eurozone (eventually) recovers. The 80% rule protects everyone from the risk involved.

Normally that risk would be entirely your problem. And it should be. But given the government happily robs the taxpayer blind to bail out their mates in the banks, every taxpayer should be delighted to see the 80% rule. The only people against this will be the banks-property-political complex in this country and people who cant afford to buy a house. And even that latter case ought to be grateful for rules that help keep themselves out of trouble.

realweirdo

twinytwo wrote: »

I would say the bubble started when Bertie let developers in on the first time property market, ie the beginning of the end

I'm not sure of the stats or if they are even available. Suffice to say the arrears issue affects everyone across the board from your ftb, to your buy to let landlord who were among the worst offenders, to the trader uppers who suddenly found they couldn't afford the big house they moved into, to people nearing retirement. Many supposed millionaires also found themselves in arrears. And there have been some famous victims of the arrears crisis.
Everyone was impacted, but ftbs are always the softest target.

keeponhurling

So if the idea in this country is that when banks lend recklessly, it is loaded onto the taxpayers , I'm keen on any measures to minimize defaults

KomradeBishop

Are people fúcking insane or something? People view limiting the size of mortgages as a bad thing?

This is good - a very good - thing, and it doesn't go far enough really, as there should be a lot of other protections in place, for the future.

dotsman

realweirdo wrote: »

They didn't bother to enforce their own rules the last time out. Anyone could get a 100% mortgage with no real stress tests of your ability to pay..remember those days? They are long gone thankfully.

But they did enforce "their own rules" their own rules said they could lend for those amounts!

realweirdo wrote: »

Since when did the Central Bank represent us? They were asleep when the bubble was growing the last time. Now they want to punish everyone trying to get on the property market. They go from on extreme to another.

Officially, they do represent us. They may not do a good job of it, but it is they who represent us. They are controlled by the government who we elect.

realweirdo wrote: »

Were any banks fined the last time for ignoring regulations?

Not sure what regulations you are referring to. Banks have been fined for breaches of regulations. Similar to the first comment, you are forgetting that there were no real regulations governing "caps" on how much a customer could borrow etc.

realweirdo wrote: »

Who was the sherrif in the wild west town that was the celtic tiger? That's right, the Central Bank.

Actually, it was IFRSA during the boom, then "The Financial Regulator" before responsibility was handed over the Central Bank (and The Financial Regulator disbanded)

Sand

The next step is to limit the banks lending to developers and the property industry. And to put an overall cap on the banks lending as a whole. Looking at the figures, by simple basic measures the banks were lending vastly, vastly more than they ever had ever before in modern Irish history. And vastly, vastly more than banks in other European and international states were.

Irish banks should be fitted with L plates and not left unattended with anything bright, sharp or sparkly or they'll probably eat it.

Specialun

KomradeBishop wrote: »

Are people fúcking insane or something? People view limiting the size of mortgages as a bad thing?

This is good - a very good - thing, and it doesn't go far enough really, as there should be a lot of other protections in place, for the future.

Rofl

anncoates

Happy to see tighter restrictions on qualifying income and mortgage length but a 10% deposit should suffice.