New mortgage rules will they change for 2016 and going forward??

Pac2015

I would like to hear people's opinions on this please:

Does anyone think the central bank will change their rules on mortgages in relation to the 10% and 20% bracket needed for deposits ? I ask because we are currently saving to buy a house and as I already own an apartment we fall into the 20% deposit needed unless I sell my apartment at negative equity then we can get the 10% deposit which is not looking likely as it is going up in value due to it being in a really good central spot near all amenities and also the whole complex is currently undergoing investment to be the central area in D24 for cafes, medical centers etc...

So our problem now is where as before with the old rules ie. 10% based on a house of 240K we would have needed 24K plus fees etc and now we need close to 50K if not more which seems nearly impossible as we also rent ourselves.

I think the market has slowed up considerably and I wonder is it because people just cant get the deposit together or is everyone being careful ?
Banks are lending but are gone so strict now plus people who did have the 10% deposit before and were ready to buy are now stuck due to now needing double that.

gaius c

then we can get the 10% deposit

No matter what happens, you will need 20% deposit because you are not a first time buyer. There's only a limited number of exceptions to this rule.

Pac2015

gaius c wrote: »

No matter what happens, you will need 20% deposit because you are not a first time buyer. There's only a limited number of exceptions to this rule.

There is actually an exception I have been to a mortgage broker and you can qualify for the 10% deposit if you sell your current property at a negative equity amount but you must buy and sell more or less at the same time and take a switch up mortgage.
That is only if your property sells at a negative equity but currently my apartment is not in neg equity.

Your answer also was not to what I asked please read the post again.

Michael D Not Higgins

No they are very unlikely to change the limits.

Pac2015

Michael D Not Higgins wrote: »

No they are very unlikely to change the limits.

It's a shame really so many people blocked from buying as they are stuck with the deposit thing.
I know one family who saved 34K and want to move as they house they are in is too small and they are not in negative equity or anything but wanted to purchase a house around the 300K mark they were so disappointed to learn that they will now need 60K to move as it had taken them a few year 4 I think to get the 34K.

I dont think the central bank really thought this through properly.

Michael D Not Higgins

Pac2015 wrote: »

It's a shame really so many people blocked from buying as they are stuck with the deposit thing.
I know one family who saved 34K and want to move as they house they are in is too small and they are not in negative equity or anything but wanted to purchase a house around the 300K mark they were so disappointed to learn that they will now need 60K to move as it had taken them a few year 4 I think to get the 34K.

I dont think the central bank really thought this through properly.

If they're in positive equity then they have additional funds coming from the sale of the house.

Pac2015

Michael D Not Higgins wrote: »

If they're in positive equity then they have additional funds coming from the sale of the house.

I'm not sure I think they will just break even they were told they needed around 50-60K

I Am The Law

Pac2015 wrote: »

It's a shame really so many people blocked from buying as they are stuck with the deposit thing.
I know one family who saved 34K and want to move as they house they are in is too small and they are not in negative equity or anything but wanted to purchase a house around the 300K mark they were so disappointed to learn that they will now need 60K to move as it had taken them a few year 4 I think to get the 34K.

I dont think the central bank really thought this through properly.

To answer your question,
New mortgage rules will they change for 2016 and going forward?
No. The purpose of the rules is to reduce the example of the asking price above to maybe 200K, this would make the deposit more possible for the family in your example.

Pac2015

I Am The Law wrote: »

To answer your question,
New mortgage rules will they change for 2016 and going forward?
No. The purpose of the rules is to reduce the example of the asking price above to maybe 200K, this would make the deposit more possible for the family in your example.

Its a larger house they require and can afford it so why not buy it.

gaius c

Pac2015 wrote: »

Its a larger house they require and can afford it so why not buy it.

If they can't save the deposit, they can't afford the house at present.

L1011

Pac2015 wrote: »

Its a larger house they require and can afford it so why not buy it.

If they can't get a mortgage, they can't afford it now can they?

The new rules basically protect people from themselves, to some extent.

mel123

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

alastair

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

They'll last as long as there's concern that the banks can't be trusted to manage their own lending affairs. The measures aren't driven by how popular they are with buyers/voters.

L1011

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

That still means they can't afford it if they can't save the deposit.

jester77

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

If a couple started saving when they entered employment in their early 20s, and only saved an average of 200 a month for 10 years, the typical age when people buy a house, they would have well over 50k when taking investment/interest returns into account. If they cannot manage that, then it is easy to understand why a bank will not just hand out a mortgage.

AprilMayJune

jester77 wrote: »

If a couple started saving when they entered employment in their early 20s, and only saved an average of 200 a month for 10 years, the typical age when people buy a house, they would have well over 50k when taking investment/interest returns into account. If they cannot manage that, then it is easy to understand why a bank will not just hand out a mortgage.

We would fit into this though saved 60k for our first house which was 20% deposit bought in 2007 house dropped by 140k we'd now get 4k more than our mortgage is for so we're not in negative equity but if we want to move it'll take us 5 years of saving 1k a month to get 60k together whereas the new mortgage would only be €300 a month. So for people like us it's really trapping us.

gaius c

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

They can afford the mortgage now perhaps but what about down the line? The "I can afford the mortgage repayments" attitude is exactly why there are over 100k mortgages in arrears and the CB are dead right to make this move to protect the banks.

gosplan

There will always be people caught in the middle that are screwed over by the new rules.

If they weren't in place though, we'd see 10% YOY growth a greater number of people would either be priced out, or forced to overextend. Then we'd have another crash.

I think that the rules are protecting everyone from themselves, or rather protecting the average homeowner and taxpayer. The CB seem to be the only party involved who think property market that rises in line with inflation would be a desirable outcome.

Jen44

I don't think the inability to save 20% deposit is an indication that you cannot afford the mortgage. We didn't have 20% deposit saved but are still clearly able to pay the mortgage and so were given the mortgage at 90% LTV based on other circumstances. Your friends already have a big chunk of savings, did they go into the banks and speak to people. Ive found that online applications etc are not in your best interest if you are looking for any sort of exemption its best to go in and show your whole circumstance to the bank and go from there. I am no expert perhaps it wont work for you but its worth a try. I know the new rules where brought in for good reason but there are always exceptions to rules and it is my understanding that banks loan books only have to show a certain percentage of compliance to the new rules so even that shows the the central bank are aware that there are exceptions to the new rules out there.

L1011

gosplan wrote: »

I think that the rules are protecting everyone from themselves, or rather protecting the average homeowner and taxpayer. The CB seem to be the only party involved who think property market that rises in line with inflation would be a desirable outcome.

Too many years of drilling "the property ladder" in to people has them obsessed with buying a shoebox in the hope it'll increase in value enough to sell and buy something bigger (note: it won't, if it increases in value that much the bigger place will too).

Compared to our parents generation many of whom bought once, when they could afford it. My next door neighbours would be in their late 60s and bought the house off the plans - in 1972...

Daith

Do the banks take existing rent/mortgage payments into account?

If I'm saving X amount but also spending X on rent is rent not factored into it?

Or is the Central Bank saying the savings are there to cover if the mortgage payments go up?

Jen44

The banks do take existing rent/ mortgage payments as evidence of ability to pay back your mortgage. They calculate a stressed mortgage payment then look at your current rent/mortgage payments plus savings to see can you make that stressed payment

Daith

Jen44 wrote: »

The banks do take existing rent/ mortgage payments as evidence of ability to pay back your mortgage. They calculate a stressed mortgage payment then look at your current rent/mortgage payments plus savings to see can you make that stressed payment

Sorry I was mixing up myself. They wouldn't take into account your rent with your inability to save the deposit would they?

Jen44

no only as evidence of ability to pay the mortgage re payment. You can get a gift from parents family etc to use towards the deposit but they may need to sign a declaration that they have no interest in getting the money back or the property if the gift is over a certain amount

alastair

L1011 wrote: »

Too many years of drilling "the property ladder" in to people has them obsessed with buying a shoebox in the hope it'll increase in value enough to sell and buy something bigger (note: it won't, if it increases in value that much the bigger place will too).

Compared to our parents generation many of whom bought once, when they could afford it. My next door neighbours would be in their late 60s and bought the house off the plans - in 1972...

That's all well and good, but it's not as if the 'property ladder' is a complete myth. Generally it's the case that your property will increase in value, and while your 'trading up' property will probably have increased in value too, you've the benefit of a big lump of capital that will help fund the purchase of that, more expensive, property. Now, you might well claim that saving/investing elsewhere over the same time would provide the same capital, but that's in a scenario where rental costs will probably have been more of a drain on your ability to save. If you're lucky enough (in your twenties!) to afford a place that serves your long-term needs from the get-go, then obviously that's even better, but it's less realistic now than it was in 1972.

We're selling/buying at the moment, and I know that we could never have afforded to consider the place we're looking at, without having a place to 'trade up' from. We simply wouldn't have got the loan needed.

Pac2015

gaius c wrote: »

If they can't save the deposit, they can't afford the house at present.

They had 34-38k saved already which was the 10% rules plus legal fees etc and this was saved ages ago then the new rules came in and changed it all for them so just as they were about to go and try get a new mortgage the 20% came in so they have to save the rest so in fact yes they did have the deposit needed when the old rules came in.
Did you read the previous postings they are put out because it will now take them a few more years to save the rest they can afford the house and thought they were already to go when the new rules started.
I think any family who have a few kids and pay a mortgage already and who can save up to 38K are a great example.

Pac2015

Jen44 wrote: »

I don't think the inability to save 20% deposit is an indication that you cannot afford the mortgage. We didn't have 20% deposit saved but are still clearly able to pay the mortgage and so were given the mortgage at 90% LTV based on other circumstances. Your friends already have a big chunk of savings, did they go into the banks and speak to people. Ive found that online applications etc are not in your best interest if you are looking for any sort of exemption its best to go in and show your whole circumstance to the bank and go from there. I am no expert perhaps it wont work for you but its worth a try. I know the new rules where brought in for good reason but there are always exceptions to rules and it is my understanding that banks loan books only have to show a certain percentage of compliance to the new rules so even that shows the the central bank are aware that there are exceptions to the new rules out there.

I think they are going to speak to a few banks in the coming weeks to see what options are available to them.

Pac2015

Jen44 wrote: »

no only as evidence of ability to pay the mortgage re payment. You can get a gift from parents family etc to use towards the deposit but they may need to sign a declaration that they have no interest in getting the money back or the property if the gift is over a certain amount

Apparently banks now do not look favorably on gifts from parents they want to see you saving the amount monthly as understandably your parents wont be there to pay the actual mortgage for you.
We were gifted 10K from parents and the broker said look go off and pay anything you owe start saving again and come back debt free at the time we were disappointed to hear that but we did as he said and started saving again which we are not doing plus we also are paying 1100 rent so we know that we can definitely afford a mortgage we just have to power ahead and save the deposit.

Jen44

they want to see at least six months of saving the stressed payment so once you can show you can do that you can add a gift also if you need to.

Pac2015

Jen44 wrote: »

they want to see at least six months of saving the stressed payment so once you can show you can do that you can add a gift also if you need to.

We cleared all debts using the gift so we are now debt free which we feel is a better place for us I still have the mortgage on the apartment but its only small and that will be sold when we buy a house so then for the future we don't have any debts just mortgage payments and bills etc.

L1011

Pac2015 wrote: »

They had 34-38k saved already which was the 10% rules plus legal fees etc and this was saved ages ago then the new rules came in and changed it all for them so just as they were about to go and try get a new mortgage the 20% came in so they have to save the rest so in fact yes they did have the deposit needed when the old rules came in.
Did you read the previous postings they are put out because it will now take them a few more years to save the rest they can afford the house and thought they were already to go when the new rules started.
I think any family who have a few kids and pay a mortgage already and who can save up to 38K are a great example.

If it was "saved ages ago", they're clearly not currently or even recently able to save and can't afford it.

This reads more and more like a case of the new rules saving someone from over-stretching themselves and being the people on the front pages of the tabloids in the next crash complaining that its the banks fault.

Pac2015

L1011 wrote: »

If it was "saved ages ago", they're clearly not currently or even recently able to save and can't afford it.

This reads more and more like a case of the new rules saving someone from over-stretching themselves and being the people on the front pages of the tabloids in the next crash complaining that its the banks fault.

" Saved ages ago " means they have been saving for a few years and had it all ready to go earlier in 2015 it does not mean they cant afford it or save it in fact they are just adding to it to fall in line with the new rules but they are bitterly disappointed that it will take them another 2 years to save the balance.
You find me a family with 3 kids that already have a mortgage and all the expenses that go along with kids that can save over 30K not alot of people can but my friends did they have good jobs are sensible people and saved gradually over 2-3 years.
They are just saving more now.

Michael D Not Higgins

I agree that the deposit doesn't demonstrate affordability. That's what the LTI is for. The LTV is to protect the bank from exposure. Arguing that someone can afford the repayments isn't the point, the Central Bank are trying to prevent another bubble and collapse.

Of course there will be people caught out, but let's say the old lending continued and prices increased faster than they have recently. Your friends may now be able to get that house they want, but what about the low end of the market? The first time buyers will continue over-extending just to get a one bed that's completely unsuitable and the cycle begins again.

The macroprudential lending rules protects the whole market, not just individual buyers. Complaining about how individual cases are affected ingores the protection these rules give to everyone.

Pac2015

I think the price of the houses are going up in my area in 2014 a house was going for 245K now they are up around the 290K and 310K its crazy also houses were my parents are and I grew up are at the low end 220K which seems okay but others ones with not even a garden as the people have extended are 250K which is crazy as most are 3 bed terraced in Millbrook Lawns.

gosplan

alastair wrote: »

That's all well and good, but it's not as if the 'property ladder' is a complete myth. Generally it's the case that your property will increase in value, and while your 'trading up' property will probably have increased in value too, you've the benefit of a big lump of capital that will help fund the purchase of that, more expensive, property. Now, you might well claim that saving/investing elsewhere over the same time would provide the same capital, but that's in a scenario where rental costs will probably have been more of a drain on your ability to save. If you're lucky enough (in your twenties!) to afford a place that serves your long-term needs from the get-go, then obviously that's even better, but it's less realistic now than it was in 1972.

We're selling/buying at the moment, and I know that we could never have afforded to consider the place we're looking at, without having a place to 'trade up' from. We simply wouldn't have got the loan needed.

I agree with you but having a whole population obsessed with buying their 'first property' as opposed to their home brings problems with it.

Some people will always look towards investments and that's fine, but pressurising people to buy properties they don't want long term is unhealthy.

mel123

I totally agree with the LTV rate, and all the stress testing that comes with it, however I don't agree that you cant afford a mortgage if you cant save the 20% deposit. Its all very well and good saying start saving in your 20's. In hindsight if we all did this we'd be sitting on a nice stash. Me personally I didn't get stung by the crash (thank god), I got out just in the nick of time, but many of my friends and family were stung. They are now living in places they don't want to live, houses they don't like etc. So I defiantly think its right that something is being done about not getting ourselves into that crazy situation again.
If your not living at home with mammy and daddy, ie your either already on the property market paying a mortgage, or your renting, unless you've a very above average salary, its very very hard to save a 20% deposit.

I Am The Law

mel123 wrote: »

I totally agree with the LTV rate, and all the stress testing that comes with it, however I don't agree that you cant afford a mortgage if you cant save the 20% deposit. Its all very well and good saying start saving in your 20's. In hindsight if we all did this we'd be sitting on a nice stash. Me personally I didn't get stung by the crash (thank god), I got out just in the nick of time, but many of my friends and family were stung. They are now living in places they don't want to live, houses they don't like etc. So I defiantly think its right that something is being done about not getting ourselves into that crazy situation again.
If your not living at home with mammy and daddy, ie your either already on the property market paying a mortgage, or your renting, unless you've a very above average salary, its very very hard to save a 20% deposit.

But not if house prices are at a realistic level.

mel123

I Am The Law wrote: »

But not if house prices are at a realistic level.

Yes this is true. Im on the market for a house, so im all for them going down!!!

gaius c

Michael D Not Higgins wrote: »

I agree that the deposit doesn't demonstrate affordability. That's what the LTI is for. The LTV is to protect the bank from exposure. Arguing that someone can afford the repayments isn't the point, the Central Bank are trying to prevent another bubble and collapse.

Of course there will be people caught out, but let's say the old lending continued and prices increased faster than they have recently. Your friends may now be able to get that house they want, but what about the low end of the market? The first time buyers will continue over-extending just to get a one bed that's completely unsuitable and the cycle begins again.

The macroprudential lending rules protects the whole market, not just individual buyers. Complaining about how individual cases are affected ingores the protection these rules give to everyone.

Slight clarification. The CB cannot prevent housing bubbles & busts. Nor are they trying to do that. What they are doing is protecting the banks in the event of a downturn. As long as it's only real money being lost, there won't be any damage to the banking system.

Sono

Anyone on here got a mortgage recently and an exception was applied? If so would you give me an idea of the exception in % compared to original approval amount? Thanks!

alibab

Like others I don't agree with the fact that if you can't save 20 percent etc that you can't afford the mortgage. A lot got caught out with the new rules as others have pointed out especially people in unsuitable family homes and apartments that were paying a existing mortgage plus saving for 10 percent to trade up .

In my case I was very lucky in that I literally bought just before the new rules . My mortgage is more than manageable and to rent same house would be 300 euro more a month and I am not in Dublin .

Under the new rules I would not have been able to buy . I was not a first time buyer as I had a house but it had to be sold as part of divorce and there was no equity at all . I saved hard working with 2 kids and managed to save to start again . When they introduced the new rules I was sale agreed and had my 10 percent plus legal fees etc . It's all well and good saying I could have kept saving another few years for the 20 percent but I was just turning 40 and time was not on my side .

I am well able to service the mortgage bank would not have given me a mortgage as a sole applicant with 2 kids if they were not sure . I do feel for people with the new rules that are now stuck

Unearthly

Sono wrote: »

Anyone on here got a mortgage recently and an exception was applied? If so would you give me an idea of the exception in % compared to original approval amount? Thanks!

I got an exception approved in the 3.5 salary rule. The basis was that I had such a large amount of savings the ltv would be 63% and that I demonstrated over a 6 month period I could save the mortgage amount repayments

I got 4.5 times my salary

The J Stands for Jay

mel123 wrote: »

But lets say their income means they could afford to pay back the monthly repayments, but it's the deposit that stops them.
I think this will happen to a lot of people.

For what it's worth I think these rules will stick around for a couple of years and that's it, I can't see them lasting

If they can't afford to save, how can they afford the mortgage repayments?

Santy2015

We're saving 1150k a month nearly half way to our target of 16k and going for approval in January February next year. Would you move outside of Cork City? Some great value to be had in North Cork? I think the rules should stay as they make you set a goal and stick to it. It'll be worth it in the end.

Sono

Unearthly wrote: »

I got an exception approved in the 3.5 salary rule. The basis was that I had such a large amount of savings the ltv would be 63% and that I demonstrated over a 6 month period I could save the mortgage amount repayments

I got 4.5 times my salary

Thanks for that, good to know this info, hopefully find out first if we are approved and then if they can apply an exception.

markpb

McGaggs wrote:

If they can't afford to save, how can they afford the mortgage repayments?

We're paying €1,300 a month in rent and trying to save another €1,000 a month towards a deposit. €2,300 a month means we could afford a stinking great mortage (far more than we need) but in terms of doubling our deposit (we had enough for a house last year, prices haven't fallen in Dublin so now we need the same amount again), it'll take us over several years. If rents keep rising or when baby number two comes along, our ability to save will fall but our ability to afford a mortgage would hardly be affected.

I totally agree with the intention behind the new rules and am not at all in favour of rolling back on them. What I'm not in favour of is posts like yours which fail to see how the rules could actually be tough on people.

Standard Toaster

Unearthly wrote: »

....

I got 4.5 times my salary

Which bank was that if you don't mind me asking?

lainey316

EBS told me they have no exceptions left, but will in January (on the LTI). BoI said they could make an exception on LTI, I know a friend who got an exception from KBC. The size of deposit does seem to be a factor in where they will consider being more flexible on LTI.

It seems a bank can apply LTI exceptions to up to 15% of transactions, and EBS for example used theirs up in q1 2015 (I was told - I was encouraged to come back in Jan if I don't find something) Santy2015 it would be worth kicking off your application early in 2016 if you are hoping to go that route.

Michael D Not Higgins

lainey316 wrote: »

EBS told me they have no exceptions left, but will in January (on the LTI). BoI said they could make an exception on LTI, I know a friend who got an exception from KBC. The size of deposit does seem to be a factor in where they will consider being more flexible on LTI.

It seems a bank can apply LTI exceptions to up to 15% of transactions, and EBS for example used theirs up in q1 2015 (I was told - I was encouraged to come back in Jan if I don't find something) Santy2015 it would be worth kicking off your application early in 2016 if you are hoping to go that route.

For clarity, it's 15% of the value of the mortgage book, not on number of transactions.

McGaggs

McGaggs wrote: »

If they can't afford to save, how can they afford the mortgage repayments?

Peoples circumstances can change, new job on better money giving them the ability to easily make a mortgage payment but up to now only having a small amount saved and dont want to spend ages saving up the required amount.

As other have also said people paying over a thousand per month in rent and then saving a bit on top when the mortgage repayment could be 700 or 800 per month so their outgoing would actually be much less with a mortgage than rent+saving.

Jen44

Sono wrote: »

Anyone on here got a mortgage recently and an exception was applied? If so would you give me an idea of the exception in % compared to original approval amount? Thanks!

We got an exemption we only had 10% deposit and we are second time buyers