Central bank mortgage lending rate changes

handlemaster

http://www.irishtimes.com/business/economy/central-bank-decision-due-on-easing-of-mortgage-rules-1.2874167


We should see changes next week from the Central Bank. It more than likely push the prices further up ,but if they dont do anything they will also be blamed.

JP 1800

The rules should be left alone, the problem is not how much you can borrow but how little supply there is. As someone whom plans to buy in the new year I feel that the rules are just fine and I do not need more credit, I need more buying options through supply. I have a whole sense of Deja Vu with the property market at the moment as prices are unsustainable as they are and we are blindly walking into another disaster. We need to remember that interest rates are the lowest they have ever been and a 3 to 4 percentage hike could be disastrous for mortgage holders.

Rew

Jesus that would be disastrous if true...

handlemaster

JP 1800 wrote: »

The rules should be left alone, the problem is not how much you can borrow but how little supply there is. As someone whom plans to buy in the new year I feel that the rules are just fine and I do not need more credit, I need more buying options through supply. I have a whole sense of Deja Vu with the property market at the moment as prices are unsustainable as they are and we are blindly walking into another disaster. We need to remember that interest rates are the lowest they have ever been and a 3 to 4 percentage hike could be disastrous for mortgage holders.

Dont think the prices are that bad. You can still get three bed semi s below 200k in dublin. Try that in any other europen capital city.

Michael D Not Higgins

handlemaster wrote: »

Dont think the prices are that bad. You can still get three bed semi s below 200k in dublin. Try that in any other europen capital city.

Lisbon, Madrid, Warsaw are all much cheaper than Dublin. Paris and London are more expensive. There's not much point looking at it like that though as it's not a good metric to compare.

handlemaster

Michael D Not Higgins wrote: »

handlemaster wrote: »

Dont think the prices are that bad. You can still get three bed semi s below 200k in dublin. Try that in any other europen capital city.

Lisbon, Madrid, Warsaw are all much cheaper than Dublin. Paris and London are more expensive. There's not much point looking at it like that though as it's not a good metric to compare.

not salary wise they are not:

Michael D Not Higgins

handlemaster wrote: »

not salary wise they are not:

You didn't mention anything about salary. Nonetheless your simplified view belies many factors.

handlemaster

Michael D Not Higgins wrote: »

You didn't mention anything about salary. Nonetheless your simplified view belies many factors.

Here you go... undervalued by 15 % latest report

http://m.independent.ie/business/personal-finance/house-prices-to-rise-further-with-easing-of-lending-limits-35234804.html

Michael D Not Higgins

handlemaster wrote: »

Here you go... undervalued by 15 % latest report

http://m.independent.ie/business/personal-finance/house-prices-to-rise-further-with-easing-of-lending-limits-35234804.html

And how undervalued are they in similar cities which experienced a housing collapse like Madrid or Lisbon? In fact in the same study referenced in the Independent, there's plenty of countries not doing as well as Ireland. We also have the third highest rate of housing price inflation in the EU (after Hungary and Sweden), even if the prices are a little undervalued it won't be long before we catch up.

My point was not to get into a back and forth argument but to point out there are plenty of places with similarly depressed prices around Europe, contrary to your assertion. The common comparators of UK and Germany against our housing market are unfair on the whole. They have bounced back much quicker than Ireland due to their size and economic might. To compare on the basis of recovery, we're doing better than our European cousins in Spain, Portugal, etc.

The prices might not be too bad now as you mentioned, but with high inflation and relaxing of lending rules, you can guarantee they're going to start getting worse.

Lumen

handlemaster wrote: »

Here you go... undervalued by 15 % latest report

http://m.independent.ie/business/personal-finance/house-prices-to-rise-further-with-easing-of-lending-limits-35234804.html

Michael D Not Higgins wrote: »

And how undervalued are they in similar cities which experienced a housing collapse like Madrid or Lisbon?

To be clear, the report suggests that Irish prices are undervalued by 15%, not Dublin prices.

HamsterFace

handlemaster wrote:

Dont think the prices are that bad. You can still get three bed semi s below 200k in dublin. Try that in any other europen capital city.

I hear this all the time but I never see these houses. Certainly none that don't require a hell of a lot of investment to be any way efficient

Fian

JP 1800 wrote: »

The rules should be left alone, the problem is not how much you can borrow but how little supply there is. As someone whom plans to buy in the new year I feel that the rules are just fine and I do not need more credit, I need more buying options through supply. I have a whole sense of Deja Vu with the property market at the moment as prices are unsustainable as they are and we are blindly walking into another disaster. We need to remember that interest rates are the lowest they have ever been and a 3 to 4 percentage hike could be disastrous for mortgage holders.

The rules are impacting on rental costs though. It is harder to finance BTL investments => less supply => higher rents.

What does the review of the macro prudential rules restricting mortgages have to do with increasing interest rates? If anything more new mortgages increase the number of people who are available to subsidise tracker mortgage holders, sharing the burden with a greater number and so reducing the interest rates required.

thierry14

Market will explode if 10% deposit is increased to 350k

A lot more people have 35k in savings vs 70k

Great news for the builders

All of the 300k new builds in Dublin,Cork, Galway etc only need 30k deposit now

Berserker

JP 1800 wrote: »

The rules should be left alone, the problem is not how much you can borrow but how little supply there is. As someone whom plans to buy in the new year I feel that the rules are just fine and I do not need more credit, I need more buying options through supply.

It is going to take years to address the issue of supply.

handlemaster wrote: »

Dont think the prices are that bad. You can still get three bed semi s below 200k in dublin. Try that in any other europen capital city.

I was discussing this claim with an estate agent that I know who operates in North Kildare and Dublin and he told me that such properties tend to be in a serious state of disrepair or there are issues with other families in the area. He knows of three houses on the market for < €220K in West Dublin but all three houses have families with connections to known criminals neighboring them.

Alkers

Article can't even get the deposit facts right I.e. 10% of the first 220k and 20% of everything thereafter. Either way, were sale agreed so fingers crossed the new measures are in place before we draw down!

purple hands

handlemaster wrote: »

Here you go... undervalued by 15 % latest report

http://m.independent.ie/business/personal-finance/house-prices-to-rise-further-with-easing-of-lending-limits-35234804.html

That EC report mentioned in the article seems to use data as at end 2015 (with prices continuing to rise in the interim) and also compares prices then with peak prices. Are peak prices really an appropriate benchmark?

Gumbo

FTB 220k cap lifted seemly

Sierra Oscar

They have removed the 20% deposit rule entirely. You now only need 10% on all purchases.

chubbs2011

is this for all buyer or just FTB

Sierra Oscar

chubbs2011 wrote: »

is this for all buyer or just FTB

Just for first time buyers.

Central Bank to remove €220,000 cap for first-time buyers with 10% deposit

Michael D Not Higgins

Sierra Oscar wrote: »

Just for first time buyers.

Central Bank to remove €220,000 cap for first-time buyers with 10% deposit

This is still speculation. The CBI have not yet published the exact details.

If it is intended to be altered as such, it has a big impact on the help to buy scheme. Those 300k houses will be able to be bought with only 15k deposit.

RedPandaDan

What a disaster, this is only going to make the property crisis worse.

Michael D Not Higgins

RedPandaDan wrote: »

What a disaster, this is only going to make the property crisis worse.

It's exactly what the government want, more demand for new build houses for FTBs. It gives an extra level of demand to builders to start building more.

For FTBs of old properties, they still need to qualify for the LTI for a loan. For a 400k house before, they needed 58k deposit plus combined income of 98k. Now they need 40k deposit and 103k income. I doubt that's going to make that much difference.

Michael D Not Higgins

Michael D Not Higgins wrote: »

This is still speculation. The CBI have not yet published the exact details.

If it is intended to be altered as such, it has a big impact on the help to buy scheme. Those 300k houses will be able to be bought with only 15k deposit.

5% effective deposit to be saved by buyer, I think the boom is getting boomer.

uberwolf

Michael D Not Higgins wrote: »

This is still speculation. The CBI have not yet published the exact details.

If it is intended to be altered as such, it has a big impact on the help to buy scheme. Those 300k houses will be able to be bought with only 15k deposit.

confirmed as such now

Sierra Oscar

Michael D Not Higgins wrote: »

This is still speculation. The CBI have not yet published the exact details.

If it is intended to be altered as such, it has a big impact on the help to buy scheme. Those 300k houses will be able to be bought with only 15k deposit.

It's a done deal, media are being briefed on it by officials for the past hour. Formal announcement expected at 2pm.

Michael D Not Higgins

http://www.centralbank.ie/press-area/press-releases/Pages/OutcomeofReviewofMortgageMeasuresannounced.aspx

Details here.

ADO

Will the whole 3.5 times salary still apply to the above news?

ADO

Just saw the above link.

chubbs2011

ok, I'm not the smartest when it comes to these things but as a homeowner (mortgage) I would like to move house but finding it hard to come up with the 20% deposit. Is this 20% not stopping a lot of people like me (who have a house but wish to move) from moving house so not allowing these houses on the market?

Michael D Not Higgins

chubbs2011 wrote: »

ok, I'm not the smartest when it comes to these things but as a homeowner (mortgage) I would like to move house but finding it hard to come up with the 20% deposit. Is this 20% not stopping a lot of people like me (who have a house but wish to move) from moving house so not allowing these houses on the market?

Your equity counts towards the deposit.

chubbs2011

chubbs2011 wrote: »

ok, I'm not the smartest when it comes to these things but as a homeowner (mortgage) I would like to move house but finding it hard to come up with the 20% deposit. Is this 20% not stopping a lot of people like me (who have a house but wish to move) from moving house so not allowing these houses on the market?

It is stopping you from borrowing, not from moving.

awec

This is huge news for me and my wife. It knocks about a year off our saving requirements.

mahoganygas

chubbs2011 wrote:

ok, I'm not the smartest when it comes to these things but as a homeowner (mortgage) I would like to move house but finding it hard to come up with the 20% deposit. Is this 20% not stopping a lot of people like me (who have a house but wish to move) from moving house so not allowing these houses on the market?

This applies to First Time Buyers only.
Some would argue that FTB are stuck in rental accommodation / parent's home whereas people who already own a property do not need assistance.

A potential FTB is paying rent to fund somebody else's mortgage whereas an existing homeowner is paying for their own asset, which in theory will free up equity enabling them to sell and buy a new home.

There are many caveats to this explanation, such as the large number of homeowners in negative equity.

chubbs2011

oh I wish, we are just about out of negative equity so any profit we make will be just enough to cover solicitor fees and estate agent fees. Anyway will keep saving for a few more years and keep buying the lotto tickets

Cuddlesworth

chubbs2011 wrote: »

oh I wish, we are just about out of negative equity so any profit we make will be just enough to cover solicitor fees and estate agent fees. Anyway will keep saving for a few more years and keep buying the lotto tickets

Odds are the deposit reduction will increase prices in the 250k to 350k house price range by increasing the number of people with the funds required but not directly effecting the supply. So if you intend to move to a bugger house, might work out in your favour.

uberwolf

mahoganygas wrote: »

There are many caveats to this explanation, such as the large number of homeowners in negative equity.

who are exempt from the Regs anyway.

whiskeyman

awec wrote: »

This is huge news for me and my wife. It knocks about a year off our saving requirements.

For you and probably lots more like you.
However, supply isn't changing.

Therefore, what's to stop prices rising as further demand (mortgage approvals) come on stream and are competing for the same thing?
Perhaps you'll ultimately still have to save to keep up with rising prices, depending on the price bracket you were hoping for.

mahoganygas

ADO wrote:

Will the whole 3.5 times salary still apply to the above news?

I believe this still applies.

Daith

mahoganygas wrote: »

I believe this still applies.

Yes 3.5x still applies.

mahoganygas

whiskeyman wrote:

Therefore, what's to stop prices rising as further demand (mortgage approvals) come on stream and are competing for the same thing? Perhaps you'll ultimately still have to save to keep up with rising prices, depending on the price bracket you were hoping for.

From a macro point of view, builders may now take on some extra risk and build more houses as there is certainty that demand is there.

Commercial Banks will also feel more comfortable financing these developers.

Yes , prices will rise, but maybe supply will increase also.

jaja321

awec wrote: »

This is huge news for me and my wife. It knocks about a year off our saving requirements.

Us too.. its huge.

lau1247

awec wrote: »

This is huge news for me and my wife. It knocks about a year off our saving requirements.

It might knock of the period you need to save but with 3.5 times still applied. it doesn't make much of a difference unless you fit within a certain narrow band from what I can see.

E.g. Lets say you have 38K saved today, if you and your wife earn 70K combined and you plan to buy a 300K house.

Up to now: Deposit is 22K+16K = 38K. You can borrow 3.5 times of 70K = 245K. You effectively need to save another 17K to buy that house.

New rule: Deposit is 30K. You can borrow 3.5 times of 70K = 245K. Now you have extra 8K in cash to put towards your home but you effectively still need to save another 17K to buy that house.


Unless I'm missing something (Feel free to tell me), it only fits into a very narrow band of people that would benefit where their earnings is sufficiently high but low deposit.

Paul_Mc1988

So if I have this right as a first time buyer for a 400k house I only now need a 40k deposit as opposed to 58k on the precious rules?

whiskeyman

mahoganygas wrote: »

Yes , prices will rise, but maybe supply will increase also.

Which is likely to happen first?

I really feel many of those who think this is great for them over the coming year or so will be sorely disappointed.
It may even work against them.

Yes, it makes sense in the long run but only when the supply issue is tackled.

JaimeLannister

If the 3.5 x Salary cap still applies then this will make no difference for a person (or couple) with an income of <75k

mel123

I certainly dont want another boom, but i would have liked to see some kind of lee way for the non first time buyers, maybe also 10% deposit

MrMorooka

Meh, useless to me with no LTI changes, still means it's very difficult for an average person to afford Dublin as a single applicant. I highly doubt that the mortgage repayments + management fee etc. would be more than the €1000 a month in rent I currently pay(that will probably go up next year), but oh well.

Will just stick to my ongoing plan, keeping saving until I have something like a 40/50% "deposit" since that's the only way I can buy what I want with the mortgage I am likely to get. Would be different if I could make a joint application of course, but that's unlikely to happen.

bazery

I'm confused, if a house costs say 270 what deposit is required, is it 90% to 220 and 80% on everything after.
so 22k and 10k is that correct or has the ltv ceiling changed??

catrionanic

RE: exemptions being reduced from 15% to 5% - is this universal to everyone or just to first time buyers?

My husband and I are hoping to move on from our existing very small 2-bed in the next year or two (pregnant with first child now and it'll be a tight squeeze, then next to impossible when baby number 2 comes along). We were hoping to get an exemption. I assume that we are now a lot less likely to get one?

MrMorooka

JaimeLannister wrote: »

If the 3.5 x Salary cap still applies then this will make no difference for a person (or couple) with an income of <75k

Exactly, exactly. The LTI cap is the real problem in Dublin.