What government minister allowed 2 incomes to be used for a mortgage?

This is very specific, I know, but does anybody know what government minister, year and government allowed two incomes be used to get a mortgage?

It must have been an absolute windfall for builders and house sellers at the time, but it has had enormous consequences on the freedom of couples to stay at home and raise their children since. (that change is being mentioned on this thread)

It sounds like the change had great potential for political backhanders/corruption so was it Haughey as Minister for Finance (1966-1970)??

L1011

I think that would have been a bank decision as the central bank controls (which are also not Government defined) are a recent invention

FreudianSlippers

Deleted User wrote: »

This is very specific, I know, but does anybody know what government minister, year and government allowed two incomes be used to get a mortgage?

It must have been an absolute windfall for builders and house sellers at the time, but it has had enormous consequences on the freedom of couples to stay at home and raise their children since. (that change is being mentioned on this thread)

It sounds like the change had great potential for political backhanders/corruption so was it Haughey as Minister for Finance (1966-1970)??

What freedom for couples to stay at home? Why on Earth should a couple who stays at home be given a mortgage in the first place? It's wrong that people believe they should be able to do nothing, have a bunch of kids and get money and housing from the taxpayer.:mad:

amacca

Not putting words in another posters mouth but I presume poster meant for one of the parents to have an opportunity to stay home? not for both to be paid and given a house to do nothing except raise a child.

That might not be such a bad thing imo.....a lot of social issues etc could be attributed at least in part to long sabsence of both parents or single parent from the home particularly if commuting involved etc...some kids reared by creches, schools to all intents and purposes.. what I mean is perhaps if only one of the couples incomes could be taken into account that would mean less money available for mortgages and somewhat of a reduction in house prices maybe they would have been more affordable over time


I kind of agree though in a sense I think people shouldn't have kids until they have the resources to support them themselves......however wouldn't that lead to a worrying drop in birth rates and economic downturn if it happened (not to worry I know thats unlikely - in the short term at least) .....

I agree with the general sentiment however that both parents working long hours just to pay off a massive mortgage/childcare etc while their kids barely see them or vice versa is a moronic way of living and does ultimately cause societal problems - the status quo needs fixing.

FreudianSlippers

amacca wrote: »

Not putting words in another posters mouth but I presume poster meant for one of the parents to have an opportunity to stay home? not for both to be paid and given a house to do nothing except raise a child.

That might not be such a bad thing imo.....a lot of social issues etc could be attributed at least in part to long sabsence of both parents or single parent from the home particularly if commuting involved etc...some kids reared by creches, schools to all intents and purposes.. what I mean is perhaps if only one of the couples incomes could be taken into account that would mean less money available for mortgages and somewhat of a reduction in house prices maybe they would have been more affordable over time


I kind of agree though in a sense I think people shouldn't have kids until they have the resources to support them themselves......however wouldn't that lead to a worrying drop in birth rates and economic downturn if it happened (not to worry I know thats unlikely - in the short term at least) .....

I agree with the general sentiment however that both parents working long hours just to pay off a massive mortgage/childcare etc while their kids barely see them or vice versa is a moronic way of living and does ultimately cause societal problems - the status quo needs fixing.

Totally agree with everything you say here and in particular on the last point, I agree with you but I don't see the correlation between the last point and Central Bank policy.

In fact, I'd go so far as to say that it would perhaps be unconstitutional to not allow both incomes to be counted towards mortgage approval as it would imply that one parent should not work.

Draco

There's a presumption here - that a couple would always have children in the mix. My wife and I don't have children and won't be having children (an age thing) so why shouldn't both our incomes count towards a new mortgage?

amacca

Fair points tbh

But people being protected from overborrowing should happen imo...nanny state and all as it is

or else..borrow as much as you want but if you mess up no quarter given, house gone back on market etc???...

if both incomes need to be taken into account then would an even lower multiple of those incomes when giving out a mortgage have the desired effect? Much bigger deposit saved required?

FreudianSlippers

amacca wrote: »

Fair points tbh

But people being protected from overborrowing should happen imo...nanny state and all as it is

or else..borrow as much as you want but if you mess up no quarter given, house gone back on market etc???...

if both incomes need to be taken into account then would an even lower multiple of those incomes when giving out a mortgage have the desired effect? Much bigger deposit saved required?

People are protected from over-borrowing which is precisely why both incomes are counted and multiplied by 3.5. I suspect that OP is angling at is that there should be some expansion of the borrowing limit for families with only one income, which would lead to over-borrowing.

blanch152

FreudianSlippers wrote: »

People are protected from over-borrowing which is precisely why both incomes are counted and multiplied by 3.5. I suspect that OP is angling at is that there should be some expansion of the borrowing limit for families with only one income, which would lead to over-borrowing.

If I remember my own first mortgage correctly many years ago, it was 2.5 times the main income and once the second income.

I could be wrong, so long ago.

FreudianSlippers

blanch152 wrote: »

If I remember my own first mortgage correctly many years ago, it was 2.5 times the main income and once the second income.

I could be wrong, so long ago.

Could be... I just know at the moment the Central Bank rules are 3.5x the total income of the applicants with rumour that it might increase to 4x in October (I think that's probably unlikely though).

amacca

FreudianSlippers wrote: »

People are protected from over-borrowing which is precisely why both incomes are counted and multiplied by 3.5. I suspect that OP is angling at is that there should be some expansion of the borrowing limit for families with only one income, which would lead to over-borrowing.

Ah....you must have previous experience to read that into it. I was on a completely different tack if that was what OP was angling at.

Id still argue both incomes multiplied by 3.5 is too much given how costly it is to live and how over confident some people are about their capacity to pay back borrowings + pay for everything else thats almost a necessity to live nowadays.

Lets say both partners earn 40k, and i know individual circumstances vary hugely and there are other factors in the calculation but that would perhaps entitle that couple to borrow 280,000 which I think is too much given the cost of living including childcare etc etc not to mention risks of job loss, interest rate rises etc etc

Id be coming from the angle that too much borrowed money sloshing around raises prices and makes life more difficult for everyone and even the 3.5 times income is probably too much as a significant proportion of people inevitably bite off more than they can chew and inflate prices on those who act prudently....as with anything I suppose a balance needs to be struck so I could be wrong, too much prudence could depress things too much also

FreudianSlippers

amacca wrote: »

Ah....you must have previous experience to read that into it. I was on a completely different tack if that was what OP was angling at.

I don't know what you mean by that. I don't have previous experience other than I own a house. The OP is confusing and vague.

Id still argue both incomes multiplied by 3.5 is too much given how costly it is to live and how over confident some people are about their capacity to pay back borrowings + pay for everything else thats almost a necessity to live nowadays.

Lets say both partners earn 40k, and i know individual circumstances vary hugely and there are other factors in the calculation but that would perhaps entitle that couple to borrow 280,000 which I think is too much given the cost of living including childcare etc etc not to mention risks of job loss, interest rate rises etc etc

Except that's not the way it actually works. 3.5x is the max amount, then they calculate your ability to repay after expenses and this is calculated in; in other words 3.5x is the maximum borrowing limit and not the given limit that the bank will grant. The bank is only going to give you what they believe you can repay based on your savings history.

amacca

FreudianSlippers wrote: »

I don't know what you mean by that. I don't have previous experience other than I own a house. The OP is confusing and vague.

perhaps thats why both of us have interpreted it differently

FreudianSlippers wrote: »

Except that's not the way it actually works. 3.5x is the max amount, then they calculate your ability to repay after expenses and this is calculated in; in other words 3.5x is the maximum borrowing limit and not the given limit that the bank will grant. The bank is only going to give you what they believe you can repay based on your savings history.

Id still think that as an upper limit/maximum its too high.

By allowing two incomes to be used to purchase a house, where one income had previously sufficed to buy the exact same house, house prices rocketed and this meant that two people had to then go out and work to put the same roof over their heads that one income could previously do. No choice there for most people in Dublin anyway. This decision has taken away freedom from subsequent generations, but enriched house builders and sellers from that time. We now *must* go out and both work to pay for the exact same house one income previously could purchase. How can anybody here think that two people working for what one person could previously get/ that policy change is an improvement for our quality of life? You'll need much more than 500 rubbish channels on Sky to compensate for that decline in standard of living.

And that's before the consequent culture of this neoliberal policy change: farming our children out to be raised by for-profit private companies while we work to pay that ridiculously inflated mortgage. Yeah, what could possibly go wrong with that?

FreudianSlippers

FreudianSlippers wrote: »

I suspect that OP is angling at is that there should be some expansion of the borrowing limit for families with only one income, which would lead to over-borrowing.

Actually, I'd love if they lifted all the borrowimg restrictions as my house would probably go up by a few hundred thousand (as long as they put them back when I want to buy, of course). More seriously, I was thinking about how my own Dad had a family multiple times my own in size and he managed to get his mortgage for a very nice area on a single income and my Mam had the freedom to do what she wanted, in her case stay at home and raise us. Meanwhile, despite both of us having very good jobs we don't have the freedom to do this, something which hit home again watching that RTÉ Investigates programme last night. We are far from alone in reaping the consequences of that change 40-50 years ago.

Samuel T. Cogley

Deleted User wrote: »

This is very specific, I know, but does anybody know what government minister, year and government allowed two incomes be used to get a mortgage?

It must have been an absolute windfall for builders and house sellers at the time, but it has had enormous consequences on the freedom of couples to stay at home and raise their children since. (that change is being mentioned on this thread)

It sounds like the change had great potential for political backhanders/corruption so was it Haughey as Minister for Finance (1966-1970)??

If only one income was allowed today, there would be no building as it would be impossible to make a profit given modern building standards and taxes.


Maybe you could hang your hat on Article 41.2.1 & 2

2 1° In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.

2° The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.

It's aspirational in it's language though.

blackwhite

TBH - I doubt there was a single conscious decision ever made.

It was more a societal change through the 70s/80s in Ireland that saw more and more women opt to stay working instead of becoming housewives once they got married or had children. At the same time, there was no corresponding change in the working habits of men - so society shifted from being predominantly one-income households to 2-income households.

The more families have 2 incomes, then the more families are capable of paying a premium for nicer areas.
As 2 income families became the norm - the prices adjusted upwards based on higher purchasing power - as people were willing to pay for what they perceived to be a better area (with what constituted “better” varying massively depending on the family’s circumstances). For some, “better” meant living in Swords instead of Santry, for others it was Dalkey instead of Blackrock, but it ultimately had the effect of slowly bringing prices up across the board to the point that, for most families, two incomes were needed to be able to afford to live where they wanted when in previous generations it only needed one.

Ultimately - it was social changes that drove prices, not the other way around.
The problem being - society shifted so far to 2-income families being the norm that it means that a 1-income family now needs the earner in the family to be taking home double the average wage (less childcare and other similar costs) in order to have the same lifestyle as the average 2-income family

FreudianSlippers

Deleted User wrote: »

By allowing two incomes to be used to purchase a house, where one income had previously sufficed to buy the exact same house, house prices rocketed and this meant that two people had to then go out and work to put the same roof over their heads that one income could previously do. No choice there for most people in Dublin anyway. This decision has taken away freedom from subsequent generations, but enriched house builders and sellers from that time. We now *must* go out and both work to pay for the exact same house one income previously could purchase. How can anybody here think that two people working for what one person could previously get/ that policy change is an improvement for our quality of life? You'll need much more than 500 rubbish channels on Sky to compensate for that decline in standard of living.

And that's before the consequent culture of this neoliberal policy change: farming our children out to be raised by for-profit private companies while we work to pay that ridiculously inflated mortgage. Yeah, what could possibly go wrong with that?

I don't think there's a scrap of evidence to support any claim you've made in that post.

blindside88

Just my 2 cents. People need to consider the difference in the standard of living between when one parent worked in the 70s and 80s compared to today. Most households with mortgages now have 2 cars, Sky tv, internet, multiple mobile phone bills, foreign holidays, 2 or 3 televisions, eat out or have take seats once a week.

When one income payed for everything there was one phone in the house, one car in the house and the basic channels. The above additional “necessities” can cost many families in excess of €1000 a month from take home pay. If you’re willing to live a similar standard of living to that of the 70’s you may be able to have one parent stay at home but if you want to have all of the additional trappings, in most cases it’s not possible

tea and coffee

OP, Are you thinking of Charlie McCreevy and tax individualistion? Happened around the start if the century and helped feed the boom by making it more financially advantageous for both partners to work, which, some argue, had the net effect of creating a situation where both partners "have" to work to afford living expenses including a mortgage, which in turn pushed property prices up (one of a myriad of reasons )

The choice to be a single income house is still there to almost everyone.

Except, to avail of the choice requires a move away from cities. People though choose not to make the move and tend to stay in the cities leaving the kids at the creche. That's the lifestyle choice.

That's why rural towns are declining and large employers in rural towns, including the regional hospitals, sometimes struggle to recruit and retain staff. That's why programs like lookwest exist.