Does the CB realise how the new mortgage rules have effected people

Angel2016

I was just wondering does the CB and banks in general realise the negative effect the new rules are having on people trying to buy their first home together, do they realise how many people are going to be stuck in the renting sector for alot longer then they hoped?

Have they actually thought all of these rules through good enough, they said it was to stop the prices of houses rising which it seems to have done but also it has stopped alot of people from being able to buy a house, did they think about where there is a couple and one is a second time buyer and one is a first time buyer?
I'd like to know people's thoughts on this, do you think that Ireland will end up where more people just accept the fact they will stay renting for a good part of their lives and if so do we need clearer and precise rules for tenants and also for landlords.

pablo128

It's only part of the problem, the main one being lack of supply. The idea itself in a normal functioning market is a good idea.

silent_spark

The problem is not the CB rules, it's the lack of supply. Granted, it will take people a few years to readjust their expectations of when they can buy, as they may have to save a slightly higher deposit than they would have previously, but overall I think it was a really prudent move by the CB, and I really hope there won't be a reversal of the ruling or that it won't be eroded by overly generous first time buyer grants from the Government etc - and I say that as someone currently saving for a deposit.

I think what we need is more social housing / affordable housing built by the Government, pressure on developers to build on suitable land, and a reassessment of the cost of building.

omb0wyn5ehpij9

silent_spark wrote: »

The problem is not the CB rules, it's the lack of supply.

That right there is the issue. Simple as. I am 32 and would love to buy my own place, but the lack of supply means I can't. Lack of supply has pushed prices up again.

Saipanne

It's a good idea because it saves people from their own stupidity.

Michael D Not Higgins

Angel2016 wrote: »

they said it was to stop the prices of houses rising which it seems to have done

They have not stated this. They have in fact stated the opposite, in that it is not their intention to alter or control the cost of housing in any way. Their only intention is prudential lending and borrowing for mortgages to ensure a functioning market.

Halfbaker

We are currently struggling to save a deposit. Despite being directly affected by the new rules I believe they are a good thing. The ridiculously loose lending policies of the past can never be allowed to return.

Ursus Horribilis

I'm sure they do but then these are bankers and economists. They're not in the business of feeling sorry for the people who are now caught in the rental trap. In the future the regulations will be seen as a positive thing. Assuming rents drop back, supply increases and people have more time to accumulate their 20%. Unfortunately the short term, there are going to be a lot of people who are collateral damage. They're just numbers to these guys.

omb0wyn5ehpij9

Angel2016 wrote: »

In 2009 there was 106K mortgages granted but in 2015 there was 26K

I bet if you look at the number of houses built in 2008/2009 and compare it to the number of houses built in 2014/2015 those figures would make a lot more sense

intheclouds

I think there is going to be a long term impact felt on our society as a whole.

I know many people renting apartments who cant save a deposit at the same time as rent. Meanwhile the rents keep rising. They cant get somewhere cheaper because there is nowhere cheaper to rent.

The result? People are putting having children on hold because they havent got room for them, there is no stability (ie, long term rental contracts), and they cant afford them.

This impact on society is definitely going to be felt down the line I think.

witchgirl26

I'm not going to lie - I don't love the new rules because it does mean if I want to move with my partner, it's going to be a slog of saving to get the 20%. However from talking to my mam, when my parents bought their last house in the late 80's it was a 20% that was the standard. Yes house prices were lower but that came down to there being a bigger supply. I think the small deposits of the past 20ish years were the kinda of out there thing as opposed to the current set up which is going back to the way it was. 100% were never a good thing.

The supply of properties is this countries major issue now not the rules laid down by the CB. And with the exceptions that the banks can give, those who are struggling to get the 20% can get some help and relief.

MarkAnthony

OP if you think about this logically what do you want to happen? If you remove the CB rules you still can't buy because that €250K house is being sold for €750K. The issue is supply I'm afraid.

MarkAnthony

It's certainly not easy but then the CB probably think that people should be saving long term. I'm totally useless with money and would live month to month, thankfully the wife keeps me in check.

nhunter100

I think the CB rules are required . Sadly the Celtic tiger years proved that people need to be protected from themselves.

I have to leave my rented apartment and looked into buying, but am pretty much priced out of Dublin except for Balbriggan and the odd property in west Dublin. The maximum amount I can get with the 3.5x rule results in a mortgage that's still about 30% less than the rent I've been paying up to now. So I can afford to pay more, and have been for the last 8 years, but the rules won't let me borrow more. I'd rather not waste my first time buyer status on a property that's too far away.

As a result, I now have to look for alternative rental accommodation and pay even more than I already am now.

riclad

The celtic tiger showed that people will do crazy things ,
the rules reduce how much you can borrow.
Banks are totallly immoral ,they would lend 200 k to joe bloggs working in a chipper to buy a 2bed house in cavan in the boom.
Banks cannot be trusted to even act to protect their shareholders .
The problem is theres very little building going on .lack of supply.
relaxing the rules a bit would not have much effect on supply .
relaxing the rules would probably just increase the average price of a house.
How does that help the first time buyer ?
do people not remember the market in 2006,
house prices going up every month.

FrStone

witchgirl26 wrote: »

I'm not going to lie - I don't love the new rules because it does mean if I want to move with my partner, it's going to be a slog of saving to get the 20%. However from talking to my mam, when my parents bought their last house in the late 80's it was a 20% that was the standard. Yes house prices were lower but that came down to there being a bigger supply. I think the small deposits of the past 20ish years were the kinda of out there thing as opposed to the current set up which is going back to the way it was. 100% were never a good thing.

The supply of properties is this countries major issue now not the rules laid down by the CB. And with the exceptions that the banks can give, those who are struggling to get the 20% can get some help and relief.

Back in the eighties my parents were able to get a bridging loan - essentially a 98% mortgage. Never had a problem paying the thing back, it's worth way more now than what they'd have paid for it (including interest etc).

What annoys me the most is that we can't get mortgages from foreign banks. Free movement of goods and services only ever seem to work against us.

andekwarhola

If two people without kids don't have the joint income to pay rent (as in rent somewhere you can afford rather than love to live) and squirrel away a deposit on the side over a couple of years, then maybe they shouldn't risk buying a house.

Problem with a lot of Irish people is they refuse to accept that they can't afford to rent or buy where they want (usually because everybody else wants to live there) so complain about a 'functioning market' instead of downgrading exceptions.

beauf

I think what we'll see is that more people will rent long term.

Lots of areas will be come un-affordable. So people will move further out. It will be like London etc.

People might even just emigrate as its too expensive to live here.

Del2005

FrStone wrote: »

What annoys me the most is that we can't get mortgages from foreign banks. Free movement of goods and services only ever seem to work against us.

Just like the motor insurance market, if Ireland was risk free you'd have banks queuing up to give loans. The fact that you can stop paying a mortgage and not be evicted is a reason why foreign banks aren't lending here.

Pawwed Rig

During the boom people were willing to commute silly distances but now are more reluctant. Cheap housing available if willing to travel.

hmmm

If they relaxed the rules, all you would have is more people chasing the same amount of houses, forcing them to borrow more. The problem is supply, not the CB rules which are very sensible. We've been through a property price bubble that bankrupt the country, we don't want another one.

pablo128

Pawwed Rig wrote: »

During the boom people were willing to commute silly distances but now are more reluctant. Cheap housing available if willing to travel.

Catch 22 though. The money you would save, you would spend on petrol or diesel driving to Dublin where lets face it most of the jobs are. A chap in my job drives 200km a day to get to work from Laois.

RandomAccess

However bad it looks out there, it would be far worse without the CB rules. You would likely still be in the same position of being unable to compete but the asking prices would be far higher.

jimmycrackcorm

Halfbaker wrote:

We are currently struggling to save a deposit. Despite being directly affected by the new rules I believe they are a good thing. The ridiculously loose lending policies of the past can never be allowed to return.

The real question to be asked is why homes cannot be built at more affordable rates such as 150 - 200k....

yqtwqxqm

Karsini wrote: »

I have to leave my rented apartment and looked into buying, but am pretty much priced out of Dublin except for Balbriggan and the odd property in west Dublin. The maximum amount I can get with the 3.5x rule results in a mortgage that's still about 30% less than the rent I've been paying up to now. So I can afford to pay more, and have been for the last 8 years, but the rules won't let me borrow more. I'd rather not waste my first time buyer status on a property that's too far away.

As a result, I now have to look for alternative rental accommodation and pay even more than I already am now.

I wouldnt get too stuck into preserving your first time buyer status.
Seems like there is a good deal on it at the moment. In another year it could be gone again.
In the meantime how much is it costing you to preserve this FTB status - is it worth it?
A bird in the hand and all that.

yqtwqxqm

There are a lot of posts about people wishing they could get long term contracts on rentals.
The fact is you automatically have a long term contract on rentals now.
The only person who doesnt have a long term contract is the landlord. He has absolutely no comeback if the tenant decides they want out of the contract.

And if I could offer a 10 or 15 year rental contract that was equal for both sides I would gladly offer it.
The problem is that im the only one who is beholding to the contract.

riclad

Theres an article on the irishtimes about this,
it says irish builders grossly overpaid during the boom for land.
They are waiting for taxs to go down and house prices to rise .
or some inventive from the government .
I think it costs 100k to build a house minus the cost of the site .
A building charity built 10 houses in ballymun ,they are selling for around 150k.
maybe the builders are waiting for celtic tiger version 2.http://www.irishtimes.com/opinion/john-mcmanus-housing-plan-looks-like-a-bailout-for-builders-1.2731701

the government own the banks,
They have no wish for house prices to fall.
The banks still have 1000s, of loans on their books from the celtic tiger era.

Peist2007

yqtwqxqm wrote: »

There are a lot of posts about people wishing they could get long term contracts on rentals.
The fact is you automatically have a long term contract on rentals now.
The only person who doesnt have a long term contract is the landlord. He has absolutely no comeback if the tenant decides they want out of the contract.

And if I could offer a 10 or 15 year rental contract that was equal for both sides I would gladly offer it.
The problem is that im the only one who is beholding to the contract.

Fixed term leases give the Landlord security and override Part 4. You're welcome.

Pawwed Rig

pablo128 wrote: »

Catch 22 though. The money you would save, you would spend on petrol or diesel driving to Dublin where lets face it most of the jobs are. A chap in my job drives 200km a day to get to work from Laois.

Agreed. It isn't ideal but not 'dead money' as some people like to call it. The point being that the desperation to own at all costs does not seem to be there at the moment.

riclad wrote: »

the government own the banks,
They have no wish for house prices to fall.
The banks still have 1000s, of loans on their books from the celtic tiger era.

Don't forget NAMA which we also own

Idbatterim

my opinion is that the biggest "waste money" is going to the banks, in terms of the interest rates they are charging to developers and mortgage holders. Its all well and good saying dont interfere with anything, it will work itself out. Its housing, its too important to be just left to "the market" in my opinion...

yqtwqxqm

Peist2007 wrote: »

Fixed term leases give the Landlord security and override Part 4. You're welcome.

Tell me what happens then if I rent an apartment to you and say after month 2 you stop paying the rent and refuse to leave.
What can I do about it?

or

On the other hand, I decide I want you out after 2 months and you decide you like the place so much you would like to stay rent free for another year, so you do.
Who is this relationship stacked against.

You're welcome.

Divelment

Angel2016 wrote: »

I was just wondering does the CB and banks in general realise the negative effect the new rules are having on people trying to buy their first home together, do they realise how many people are going to be stuck in the renting sector for alot longer then they hoped?

Have they actually thought all of these rules through good enough, they said it was to stop the prices of houses rising which it seems to have done but also it has stopped alot of people from being able to buy a house, did they think about where there is a couple and one is a second time buyer and one is a first time buyer?
I'd like to know people's thoughts on this, do you think that Ireland will end up where more people just accept the fact they will stay renting for a good part of their lives and if so do we need clearer and precise rules for tenants and also for landlords.

The whole thing is a wholesale con job OP. If the Central Bank and the government really wanted to fix the property market and the housing crisis in this country, there is a very simple way to do it. Simply stop this outrageous situation where vulture funds and people with huge cash sums are allowed to buy residential property for investment purposes. That is all that needs to be done to restore some equilibrium to the Irish residential property market.

Today we learn that 60% of properties bought in 2014 were bought with cash. These are certainly not first time buyers, these are investors/speculators. These are the same people who drove up asset prices back in the boom when people who wanted to buy to live in a house they were queuing up for (usually off plans), had to stand in a queue with investors standing in front of them and behind them. We have learnt absolutely nothing in this country, as we see the property speculator class again, queuing up to push people who want to buy to live in, out of a market that is not even building houses.

If the government wanted to deal with any of this, it would have done so, however the government is happy to let a property market emerge where investors are treated equally to would be owners and residents of a property, in terms of the right to buy a property.

This is all very fixable but a total change on the political scene is needed to get rid of the failed FF/FG/Labour/SF policies that first of all caused a housing crisis and since then, are determined to sustain a crisis by allowing residential property assets to be used for speculative purposes. We need to go back to a place where (1) It is not unacceptable to want to own your own house for yourself and your family, and (2) That is what houses are for, not for enriching people who are too lazy or stupid to go start up a business if they want to make money by investing their money in their own idea.

fatherted1969

The rules are very unfairly biased towards double income couples with no children. I was refused a topup on my mortgage early this year, was actually approved it last summer then my wife became I'll so I shelved it till she became better then tried to restart it in new year. She had used up all her sick leave at this point. Bank informed us that original application had expired so I had to apply bases on my single income which was knocked back straight away. They were only too happy to offer me a home loan at 9.9% as opposed to 3.25% mortgage.

The real sickener is we only owe 10k on my mortgage and was only looking for 15k topup. No car loans and 1k in credit card debt so total debt of 26k if approved. Both full time pensionable positions. Felt under pressure for home loan so took it but fully intend to reapply when my wife returns to work later this year to wipe out the home loan to avail of the lesser interest rate.

Absolutely no common sense in AIB, had a mortgage of 80k in 08 and had worked my ass off to have it down to 10k in 7 years only to be treated like that

Idbatterim

his is all very fixable but a total change on the political scene is needed to get rid of the failed FF/FG/Labour/SF policies that first of all caused a housing crisis and since then, are determined to sustain a crisis by allowing residential property assets to be used for speculative purposes. We need to go back to a place where (1) It is not unacceptable to want to own your own house for yourself and your family, and (2) That is what houses are for, not for enriching people who are too lazy or stupid to go start up a business if they want to make money by investing their money in their own idea.

I totally agree with this, we hear this is the latest issue they will deal with, after the sham that is our infrastructure, HSE etc, we simply go around in circles! good luck waiting for these clowns to do anything...

Senecio

Yes, they know exactly how the rules have impacted people and they should be applauded for having the courage to have done it.

Divelment

andekwarhola wrote: »

If two people without kids don't have the joint income to pay rent (as in rent somewhere you can afford rather than love to live) and squirrel away a deposit on the side over a couple of years, then maybe they shouldn't risk buying a house.

Problem with a lot of Irish people is they refuse to accept that they can't afford to rent or buy where they want (usually because everybody else wants to live there) so complain about a 'functioning market' instead of downgrading exceptions.

40 years ago, my parents, who were in their early-mid 30's at the time, on one full-time middle class income/salary, could afford to buy a spacious 3 bed semi detached house in the suburbs of Dublin with a generously spaced front and back garden.

Fast forward 40 years and a similar couple with 2 incomes, with double the spending power, would struggle to be able to afford to buy a two bed shoebox apartment in the same area.

There is something seriously wrong with what has happened in the last 40 years in this country, where we have allowed ourselves to be steamrolled into a place, very slowly, where it is now the norm that two incomes are needed to support a family, where a couple with two incomes can't afford to buy a house, there are now expected to raise kids in an apartment now, and they are expected to rent from a landlord who is always going to take advantage of a constraint in the property market to extract every cent in rent that might be possible to obtain from a tenant by way of a rent increase.

Added to that problem, we have an open door policy to immigration in this country now where people who are not even from an EU country, appear to have an automatic right to settle here, and we are not allowed to even discuss this?!?

Idbatterim

thats the thing, by not simply going ok we will throw more money at the problem, they have forced the government to start looking into the cost of land / building. Instead of simply going the easy route for government, I.e. let us hang ourselves with more debt...

Graham

Divelment wrote: »

Added to that problem, we have an open door policy to immigration in this country now where people who are not even from an EU country, appear to have an automatic right to settle here, and we are not allowed to even discuss this?!?

Because it makes bugger all difference in the grand scheme of things.

Divelment

Idbatterim wrote: »

I totally agree with this, we hear this is the latest issue they will deal with, after the sham that is our infrastructure, HSE etc, we simply go around in circles! good luck waiting for these clowns to do anything...

Everywhere you look in this country in terms of public policy now, you see total chaos. The HSE as you mentioned, housing, education, justice, all close to or beyond collapse.

My view is that we need a new right wing political party in this country, where we stand up and say that property is for living in, so the day is over where you can own several residential properties, tax these people out of the market.

Crime, if you are a repeat offender, then you'll be electronically tagged, end of story. Health, if you can't manage a health department or team of people, then you'll be fired and replaced by someone who can, end of story. We have become the worst country on earth in my opinion for fannying around with politically correct type policies and committees and expert groups and steering committees that OBVIOUSLY, cannot provide simple solutions to simple problems. It's hard to think of a national problem that we have in this country that isn't caused by vested interests and idiots pricking around at the edges of an issue without just calling out the solution loud and clear and then tackling it.

Michael D Not Higgins

Mod: this line of discussion is well outside of the topic of not just the thread but the entire forum. Divelment, don't post again before reading the charter and abiding by it.

Idbatterim

but how can you have a discussion on it without getting political. The ridiculous height restrictions in Dublin, awful infrastructure and building regulations, all government decisions and people can decide for themselves on the repercussions!

yqtwqxqm

Idbatterim wrote: »

I totally agree with this, we hear this is the latest issue they will deal with, after the sham that is our infrastructure, HSE etc, we simply go around in circles! good luck waiting for these clowns to do anything...

They have dealt with it.
Banned bedsits. Driving private investors out of the market with taxes and rules that dilute the control the investor has in their own investment.
Make it so that it was illegal to refuse tenants on certain grounds.
And numerous other attempts to fix the property market. All of which made things worse and not one that made it better for anyone.

Idbatterim

while we are at it, why stop at bedsits! sure why not ban apartments too, arent they only for short term living or "poor people"! Dublin can simply take over all of Wicklow, call it New South Dublin and we can all live in 4/5 bed detached houses :rolleyes:

Divelment

yqtwqxqm wrote: »

They have dealt with it.
Banned bedsits. Driving private investors out of the market with taxes and rules that dilute the control the investor has in their own investment.
Make it so that it was illegal to refuse tenants on certain grounds.
And numerous other attempts to fix the property market. All of which made things worse and not one that made it better for anyone.

Residential property is for living in, not for investing in. When we start getting our heads around that very simple fact and start pursuing policies that respect that simple basic fact, then we will be able to sort out our housing and homelessness crisis, and until we do, we are stuck with this crisis.

MarkAnthony

Divelment wrote: »

Residential property is for living in, not for investing in. When we start getting our heads around that very simple fact and start pursuing policies that respect that simple basic fact, then we will be able to sort out our housing and homelessness crisis, and until we do, we are stuck with this crisis.

So it's actually some left wing policies we need then?

Where do the tens of thousands of people who want to live in Dublin short term, or indeed want to rent live?

noodler

Rules completely necessary.

A measure of affordability.

They do nothing to.affect supply.

We badly need our CB Governor to hold firm on this in a way his predecessors never did to the country's detriment.

MarkAnthony

Sorry I've actually just realised this isn't a different thread - it's about CB rules. Thankfully the CB does not dictate social policy in Ireland. They've done what is financially prudent. The rest is up to the government. Stop electing the same muppets to the dail.

_Kaiser_

Idbatterim wrote: »

but how can you have a discussion on it without getting political. The ridiculous height restrictions in Dublin, awful infrastructure and building regulations, all government decisions and people can decide for themselves on the repercussions!

100% agree.

Housing IS political in this country... We based (and crashed) an entire economy on buying and selling overpriced housing to each other FFS!

Everything property-related... from the formerly ridiculously lax regulation and encouragement to "get on the property ladder" no matter what, to the dragging of heels on real reform of the rental sector and addressing the current shortage (not least because a sizable portion of TD's are landlords themselves) is impacted by political interference to some degree.

This is why the current situation exists... as I said in another thread, if there was real political will to address the supply shortage (and in turn all these other effects we'e seeing) then you'd be knocking out 450 houses every 2/3 months, not 5/6 years from now.

RandomAccess

I was speaking to two non eu national couples who have decided to buy as soon as they get Stamp 4 (I don't really know what that is or how long it takes but they seem to be taking about next year) citing rent prices as the reason.

One of those certainly intends to return home within a few years, whether they can keep the property to rent or will sell I do not know.

I would have thought that mortgage interest would make such short term purchases poor value? I've never run the numbers on such a plan.

I don't think these are what the central bank had in mind as regards definition of first time buyers. It's more like an investment purchase. There used to be some government incentives for purchasers which had clawback clauses for those who flipped property. Not sure the name of the scheme. Simon Coveney may need a similar clawback.

Anyway, thought it was worth adding as it shows an alarmed (or considered) rush from rental.

Long term residents should perhaps be prioritised but of course that is my bias.

Graham

_Kaiser_ wrote: »

We based (and crashed) an entire economy on buying and selling overpriced housing to each other FFS!

We crashed an entire economy based on imprudent lending/borrowing, the property crash was a symptom of this.

_Kaiser_ wrote: »

to the dragging of heels on real reform of the rental sector and addressing the current shortage (not least because a sizable portion of TD's are landlords themselves)

I call bunkum on this. Ireland has one of the most landlord-unfriendly environments I know of. Any landlord TD's operate in that same unfriendly environment.