How does the bank lending rules help the working class?

2Mad2BeMad

Hi everyone,

Just wanted to start a discussion thread on the 3.5 rule the banks have and how its affecting you in getting a house. (hoping this thread is ok)

Myself and my partner currently earn 55k a year (gross).

According to AIB using there calculator we can get a loan of €192.500
along with paying 10percent, we can buy a house worth €213,889.
Obviously the calculator is only a guide and I'd expect the approved loan to be even less then that.

We live in Dublin and have lived here all our lives, our family are here,friends and we both work here as well (start of careers)

Now its all well and good in saying " tough **** you can't afford to live here move outside Dublin" But that reply is snobbery, its not a good answer to the problem thousands of people are having.

You can't buy a house in Dublin for 213k, or at least one that does not need a considerable amount of investment to make it livable.

So there is 2 options, increase the rules from 3.5 to 4.5/5
or House prices need to fall dramatically( which in turn creates a whole host of other problems)


We looked at houses near the commuter belt and all seem reasonable we are still priced out of them though, some are just about within the price range but if a bid starts happened we will get priced out very quickly.
So we have to move abit futher out again.

Now here is were the main issue is.
If we moved out far for example say Athy, yes it ain't far in terms of going once, but to do it 5 times a week plus traffic in and out would be soul destroying.

I found a house there for 159k for what ever reason its that price, but its obviously well within our lending criteria so we could afford it.
BUT for us to move down there, we would end up having to buy

2 cars (i already own 1 car but would need a new one as current one wouldnt last very long doing the mileage)
insurance x2
tax x2
nct x2
petrol x2
tolls x2
More car maintenance.
The reason for 2 cars is we both work in opposite ends of Dublin.

And thats just the cost of the getting back into Dublin

That cost far outweighs the price of increasing the 3.5 to 4.5/5.

Now I'm not a complete idiot, I also understand why the rules are at the moment set at 3.5 because of the last crisis people borrowed more then they could and the banks were only to willing to let them borrow it.

I'm just looking for a general discussion, if you can afford in Dublin, thats good for you but this problem of people who can't apparently afford to live in Dublin should just pack up and move away is not the answer. There is alot more people who can't buy in Dublin then there is who can buy.

Myself and my partner, currently pay 2k rent a month, and have done for the past 2 years and likely to continue paying it for the next 2 years.
We could easily afford a mortage of 300k, which would give us at least some options in Dublin. Not to mention the price of the mortage a month would mean we would be saving money every month because it wont be a 2k mortage, it would most likely be less then 1500 a month.

I think the rules need to be changed, and its not only to suit me but to suit alot of people.

It can't just be a 3.5 and thats it, there has to more to look into then that.

This is only for discussion and to rant (slight rant) over the rules.

I'm sure there is some very valid points as to why it can't be increased but I can only see it from my perspective as well as the perspective of other low income workers.

I mean Guarda,nurses all essential workers that keep people in this country safe can't afford a mortage. (not comparing my work to theres they are far more important but being able to compare my wage to a guarda is quite bad on there end)

I don't wish to leave Dublin, It would end up costing me more to live outside Dublin then to live in.

Graham

According to the Rebuilding Ireland Loan calculator you should qualify for a mortgage of around €262k. With your deposit that would give you a budget of €290k +


Why wouldn't you go for that?

TallGlass2

Moving the 3.5 in my eyes will just move the houses price up with them.

El Gato De Negocios

TallGlass2 wrote: »

Moving the 3.5 in my eyes will just move the houses price up with them.

Yep, it's a control to stop people getting mortgages they simply cannot pay.

Lu Tze

Ok, so say the rule are changed to 4.5 time salary as you suggest. That will apply to everybody. What happens? The prices go up as supply is still constrainedYou will still get outbid by the same people in the commuter belt who outbid you before, as they will also have have additional borrowing capacity.

It's not a case of tough **** though. We had timing on our side when we bought, and a while abroad on good money saving up a deposit prior to that so we weren't taking out the maximum mortgage. Focus on the things in your control, can you get a deposit for greater than 10% together? Can you increase your earnings?

Creamy Goodness

desirable areas will always be that desirable. Until we get the supply of houses with proper planning of amenities and public transport and road infrastructure we'll just keep pushing people further and further out.

I'll be the first to admit I would have loved a house in Booterstown/Blackrock, Dalkey/Killiney/Greystones but I'm unfortunately priced out and needed a roof over our heads so looked elsewhere.

thomasdylan

If you're just at the start of your careers like you say, youll have to work towards promotion.

2Mad2BeMad

Graham wrote: »

According to the Rebuilding Ireland Loan calculator you should qualify for a mortgage of around €262k. With your deposit that would give you a budget of €290k +


Why wouldn't you go for that?

Yes we are looking into that

My question is a general one that most low income workers are facing this problem.
And the councils just looking into the thread itself are so far behind that by the time you are approved in principle the houses you might of been able to afford have gone and that's if you even get the amount. I take all these calculators with a pinch of salt.

Samuel T. Cogley

290K purchases a 3 bed house in some okayish parts of Dublin. Things are likely to get easier over the next wee while too assuming your jobs are safe.

the_syco

2Mad2BeMad wrote: »

Now its all well and good in saying " tough **** you can't afford to live here move outside Dublin" But that reply is snobbery, its not a good answer to the problem thousands of people are having.

It's not snobbery, it's being realistic. It's only snobbery if you don't want to live in a particular area in Dublin which you can afford because you view said area to be a drug infested sh|thole with gang related murders happening on a weekly basis nearby.

It could also be said that only wanting to live in Dublin is snobbery.

If you do the maths on your current income, would you be able to afford a life if you got 4.5? Add in a kid, and do the sums.

2Mad2BeMad

thomasdylan wrote: »

If you're just at the start of your careers like you say, youll have to work towards promotion.

I due a promotion in November ( someone retiring I was to take there position) but I can't see myself getting a decent pay rise now due to the coronavirus. Partner also due payrise in September which might not happen.

The question I'm really asking is why would anyone move away from Dublin when it will cost them a lot more in the long run to move away. Strictly speaking as someone who's whole live is in Dublin. It doesn't make financial sense.
A low income worker forced to move away from dublin because they can't get a mortage for a house there for only to pay a lot more down the years to commute to the place.

Donald Trump

The rules help against predatory lending.

In other words, it stops someone from giving you a loan they know you won't be able to service.

It also keeps a little dampner on the prices of houses. The impact might be small, but it is there.

The house that you want for 300k (assume we are still pre-corona) would probably be more than 300k were the limits not in place

2Mad2BeMad

the_syco wrote: »

It's not snobbery, it's being realistic. It's only snobbery if you don't want to live in a particular area in Dublin which you can afford because you view said area to be a drug infested sh|thole with gang related murders happening on a weekly basis nearby.

It could also be said that only wanting to live in Dublin is snobbery.

If you do the maths on your current income, would you be able to afford a life if you got 4.5? Add in a kid, and do the sums.

I certainly could
We have a child and pay 2k a month rent.
We have 20k saved for a deposit. It took a little longer to save but on a mortage of 300k roughly paying back 1300month. We would be 700e better off every month plus own an asset by the end.

But again these are my circumstances and I'm well aware people on the same income and much worse off.
But I think the process needs to based on what you can afford this 3.5 rule is a general rule and places everyone on it.
I could be better off financially then someone on 100k a year because my spending is much less but because they get 100k a year they can get 350k mortage but be up to there neck in debt because they didn't reduce there lifestyle when they took out the mortage.

Samuel T. Cogley

Donald Trump wrote: »

The rules help against predatory lending.

In other words, it stops someone from giving you a loan they know you won't be able to service.

My personal opinion is it's a little bit about that, but a lot more about a stable banking system and not being in a situation where the majority of loans are in negative equity.

Samuel T. Cogley

2Mad2BeMad wrote: »

I certainly could
We have a child and pay 2k a month rent.
We have 20k saved for a deposit. It took a little longer to save but on a mortage of 300k roughly paying back 1300month. We would be 700e better off every month plus own an asset by the end.

But again these are my circumstances and I'm well aware people on the same income and much worse off.
But I think the process needs to based on what you can afford this 3.5 rule is a general rule and places everyone on it.
I could be better off financially then someone on 100k a year because my spending is much less but because they get 100k a year they can get 350k mortage but be up to there neck in debt because they didn't reduce there lifestyle when they took out the mortage.

Surely you realise any relaxation of the rule would just increase house prices and instead of being priced out at 300K you'd be priced out at 360K or whatever.

Affordability is stress tested in any mortgage application.

Donald Trump

Samuel T. Cogley wrote: »

My personal opinion is it's a little bit about that, but a lot more about a stable banking system and not being in a situation where the majority of loans are in negative equity.

The link to negative equity is secondary. You would be making the point that relaxing the rules could inflate a bubble in the housing market which would inevitably pop sooner or later.

You can still have negative equity with the rules in place.

The direct link is just on ability to afford repayments.

Idbatterim

So there is 2 options, increase the rules from 3.5 to 4.5/5
or House prices need to fall dramatically( which in turn creates a whole host of other problems)


We looked at houses near the commuter belt and all seem reasonable we are still priced out of them though, some are just about within the price range but if a bid starts happened we will get priced out very quickly.
So we have to move abit futher out again.

Now here is were the main issue is.
If we moved out far for example say Athy, yes it ain't far in terms of going once, but to do it 5 times a week plus traffic in and out would be soul destroying.

I found a house there for 159k for what ever reason its that price, but its obviously well within our lending criteria so we could afford it.
BUT for us to move down there, we would end up having to buy

2 cars (i already own 1 car but would need a new one as current one wouldnt last very long doing the mileage)
insurance x2
tax x2
nct x2
petrol x2
tolls x2
More car maintenance.
The reason for 2 cars is we both work in opposite ends of Dublin.


this is the idiocy of what many people do, bank has prudent enough rules, but then you waste a fortune on cars you might not need, to spend hours in traffic, living in a relatively **** location. Would somewhere around luas line help you ditch one or both care if you were on the green line around cabra or walking distance to that line?

lomb

You can get a good house in Clondalkin for 220k With Corona my advice is get approved now and you won't have too many obstacles to getting a good house in budget. If need be buy a house that needs some cosmetic work or bathroom kitchen flooring paint and diy it over a few years.

Donald Trump

Idbatterim wrote: »

this is the idiocy of what many people do, bank has prudent enough rules, but then you waste a fortune on cars you might not need, to spend hours in traffic, living in a relatively **** location. Would somewhere around luas line help you ditch one or both care if you were on the green line around cabra or walking distance to that line?

It wasn't clear whether they currently have two cars or currently have one.

Either way, an annual tax-saver bus ticket and no cars would help save a chunk towards a nicer deposit.

Rock77

Donald Trump wrote: »

It wasn't clear whether they currently have two cars or currently have one.

Either way, an annual tax-saver bus ticket and no cars would help save a chunk towards a nicer deposit.

Some people need a car.. maybe OP can’t get to work without it, or needs to get the child to crèche or school.

I agree with the OP and think it should be at least 4 times your income. I always ask myself how ‘normal people’ afford a 3 bed semi in Celbridge.. (not even Dublin)

Like a barman married to a hairdresser or a beautician married to a factory operative. They earn €70,000 between them. So they can borrow €245,000 with their €25,000 deposit is €270,000.. cheapest 3 bed semi in Celbridge at the minute is €280,000..

All well and good saying save a bigger deposit but some people need to pay €2,000 a month rent, childcare.. if your household income is €70,000 a year there’s not much left for saving...

Wesser

You could retrain in something that pays better.

riffmongous

Just get rich parents and buy with cash stupid*

*Irish times advice a few months ago

Round Cable

There are major issues basing lending rules on pre tax salary. Worker A on €60k can borrow 100% more money than Worker B on €30k. But they actually only take home 60% more pay.

This greatly disadvantages lower earners, and a more fair way would be to introduce a multiplier based on after tax income.

Graham

2Mad2BeMad wrote: »

Yes we are looking into that

My question is a general one that most low income workers are facing this problem.
And the councils just looking into the thread itself are so far behind that by the time you are approved in principle the houses you might of been able to afford have gone and that's if you even get the amount. I take all these calculators with a pinch of salt.

Plenty of people are now sitting in their new homes as a result of the RBI scheme.

As has already been explained, lifting the multiples would not help you. It would make things worse.

Rock77

Wesser wrote: »

You could retrain in something that pays better.

But if all the bar men and all the hairdressers did this who would cut the wives hair and pull the husbands pints?

Salary Negotiator

Rock77 wrote: »

Some people need a car.. maybe OP can’t get to work without it, or needs to get the child to crèche or school.

I agree with the OP and think it should be at least 4 times your income. I always ask myself how ‘normal people’ afford a 3 bed semi in Celbridge.. (not even Dublin)

Like a barman married to a hairdresser or a beautician married to a factory operative. They earn €70,000 between them. So they can borrow €245,000 with their €25,000 deposit is €270,000.. cheapest 3 bed semi in Celbridge at the minute is €280,000..

All well and good saying save a bigger deposit but some people need to pay €2,000 a month rent, childcare.. if your household income is €70,000 a year there’s not much left for saving...

You do realise that that couple don’t live in a vacuum and increase the limit to 4 just means that every other person can borrow more too?

More people trying to buy the same house just pushes the price up and out of their reach anyway.

Fol20

2Mad2BeMad wrote: »

I certainly could
We have a child and pay 2k a month rent.
We have 20k saved for a deposit. It took a little longer to save but on a mortage of 300k roughly paying back 1300month. We would be 700e better off every month plus own an asset by the end.

But again these are my circumstances and I'm well aware people on the same income and much worse off.
But I think the process needs to based on what you can afford this 3.5 rule is a general rule and places everyone on it.
I could be better off financially then someone on 100k a year because my spending is much less but because they get 100k a year they can get 350k mortage but be up to there neck in debt because they didn't reduce there lifestyle when they took out the mortage.

There is a big difference between owning and renting. You need to factor theses costs in as well. You also need to bear in mind that people in Ireland pay more in mortgages as it is so difficult to evict. If this was better. Potentially it would be more appealing to banks. The 3.5rule should be general. The more specific it is. The more likely it will be abused. The only way to fix this is to build apartments and have high density building but people don’t want that wither

Rock77

Salary Negotiator wrote: »

You do realise that that couple don’t live in a vacuum and increase the limit to 4 just means that every other person can borrow more too?

More people trying to buy the same house just pushes the price up and out of their reach anyway.

Yes I do realise this, however this rule guarantees that the average worker can not afford a 3 bed semi.

Salary Negotiator

Rock77 wrote: »

Yes I do realise this, however this rule guarantees that the average worker can not afford a 3 bed semi.

You obviously don’t realise it if you think the CB lending limits are the reason for that.

Rock77

Salary Negotiator wrote: »

You obviously don’t realise it if you think the CB lending limits are the reason for that.

I didn’t say the limits are the reason for it.

I said the CB limits guarantee that the average worker can not afford a 3 bed semi.

Salary Negotiator

Rock77 wrote: »

I didn’t say the limits are the reason for it.

I said the CB limits guarantee that the average worker can not afford a 3 bed semi.

Can you expand on that? How do measures which help keep prices in check guarantee that the average worker can’t afford a 3 bed semi?

aaakev

Just did a quick search on daft, there are 34 houses with at least 3 bedrooms for sale under €200k at the moment in Dublin. Your choices are Clondalkin, Finglas, Balbriggan, Santry, Ballyfermot and Mulhuddart

Donald Trump

Round Cable wrote: »

There are major issues basing lending rules on pre tax salary. Worker A on €60k can borrow 100% more money than Worker B on €30k. But they actually only take home 60% more pay.

This greatly disadvantages lower earners, and a more fair way would be to introduce a multiplier based on after tax income.

Not really.

Basic living and fixed costs are (or can be) similar for a person regardless of their income. The person on 60k a year likely has a lot more than twice the discretionary disposable income than the person on 3k a year.

For example, if you compare the "fixed" bills for the house in Killiney vs the one in Killinarden. There might not be a whole lot of difference for the heating bills for example. Granted the house in Killiney might be bigger and more exposed to the sea breeezes but it is probably insulated better. And the house in Killinarden, although perhaps not as well insulated can keep down it's heating costs by taking advantage of the heat coming off the stolen cars crashed and burning in the front garden.


Anyway, point being that the marginal utility (in terms of being able to pay his mortgage with it) of the 60k mans gross one Euro is probably more than double that of the 30k fella (or lady of course).

Donald Trump

riffmongous wrote: »

Just get rich parents and buy with cash stupid*

*Irish times advice a few months ago

While a plausible suggestion, a possible alternative might be to upgrade partner instead :pac:

Heres Johnny

Round Cable wrote: »

There are major issues basing lending rules on pre tax salary. Worker A on €60k can borrow 100% more money than Worker B on €30k. But they actually only take home 60% more pay.

This greatly disadvantages lower earners, and a more fair way would be to introduce a multiplier based on after tax income.

Worker A on 60k pays about 13k in tax so comes out with 47k or around 900 a week

Person B on 30k pays around 3k in tax and comes out with 27k or around 520 a week

So yes, double gross does not equal double take home, you are correct

Now, the guy on 520 has to spend 200 euro a week to get in and out of work, insure and tax the car and feed himself and pursue a hobby, just money he spends on himself, a few pints at weekend, ticket for football match. Now he has 320 a week and will have to have some sort of emergency fund if the car breaks or the fridge breaks etc.. 50 euro a week so down to 270 now
A few clothes here and there, maybe a phone bill, Internet sub, Netflix he's down close to 200 a week here now after spending 320

The guy on 900 has same hobbies same commute same food bill. So he has 700 left after looking after a few essentials. He must also save 50 a week for rainy day fund, but now has 650 left. Subscriptions etc bring this to about 580 like the guy above, 70 a week for other little things. After a few essentials and not being flamboyant, the guy on double the gross has more than double the discretionary spending power of the guy on lower salary.

He has nearly 3 times as much to pay a mortgage with. OK the numbers are made up but probably not a million miles away. You're going to be to the pin of your collar trying to pay rent or a mortage on 30k unless you have literally no expenses otherwise

Dental visits, doctor visits will put a massive dent in it too

Rock77

Salary Negotiator wrote: »

Can you expand on that? How do measures which help keep prices in check guarantee that the average worker can’t afford a 3 bed semi?

I’m not sure how much further I can expand to be honest..

The rule is 3.5 times your combined income, if this total plus €25,000ish (which takes a long time to save if your paying high rent) is less than the cheapest house in my area then this rule at the moment guarantees that I can not afford that cheapest house.

I don’t have all the answers but I do know that this CB rule guarantees the average worker can’t afford a 3 bed semi in Celbridge.

Mrs OBumble

The rule is a sound one: it stops people from buying houses that they cannot afford to maintain. It's horrible meeting an old person whose house is breaking, but they simply cannot afford to fix it, so they have to live with a leaking roof, dodgy electrics, drafty windows, no shower, etc.

OP, to be blunt, you are earning an average of 27.5k each. Maybe one of you is a little higher, one a little lower, Whatever. It's still a very low wage. Its not enough to buy and maintain a house. And - critically -the wage from one of you would not be enough to live on if a female-bodied person on the house got pregnant and was off work for six months.

Yes, it sucks that you cannot afford to buy where you grew up. And it sucks that you're stuck between really poor (would qualify for a council house eventually) and wealthy enough to buy where you want. But this kind of trap is a feature of pretty much all welfare systems. Rage about it all you want, but it will do you no good.

What you can do about it is to focus on study and getting a better paying job. Realistically, that is the only way out if you don't want to move locations.

JoChervil

Some people suggest that increasing mortgage regulations from 3,5 to 4,5 will increase price of houses.

But keeping it at 3,5 causes renting costing more. I would prefer if, people could take mortgage and pay for their own house than pay landlords lucky enough to buy houses in different times.

Salary Negotiator

Rock77 wrote: »

I’m not sure how much further I can expand to be honest..

The rule is 3.5 times your combined income, if this total plus €25,000ish (which takes a long time to save if your paying high rent) is less than the cheapest house in my area then this rule at the moment guarantees that I can not afford that cheapest house.

I don’t have all the answers but I do know that this CB rule guarantees the average worker can’t afford a 3 bed semi in Celbridge.

But that assumes prices are static and not responsive to the market.

In your example you can’t afford the cheapest house regardless of the CB limits, they’re an irrelevance to you. Your problem is that while demand is high there will always be someone earning more than you who can outbid you for that house.

In essence you’re in competition with other couples for that house and if they earn more then more often that not they will outbid you on the house whether you both borrow 3.5 or 5 times your salary.

gary550

2Mad2BeMad wrote: »

You can't buy a house in Dublin for 213k, or at least one that does not need a considerable amount of investment to make it livable.

Depends on where you look in all honesty.

Two houses within 2 mins walking distance of me recently sold for 180k & 210k respectively, both north Dublin (bordering on meath). Both decent enough & relatively mature area/estate, both in move in condition, both 3 bed & both have private front driveway and decent back gardens. Both 15mins from train station & 10 minutes from a bus to the city centre. The 180k one was cheaper cause it is terraced.

Heres Johnny

There is a finite supply of housing available near any city, especially a capital city where all the industry is. The financial muscle of people looking to buy these dictates the price. This includes savings and mortgage capability.
A couple on 55k are up against couples on 70/80/90/100k and there aren't enough houses to cater for everyone
I see 3 bedrooms in celbridge being mentioned here as some sort of a compromise to living in Dublin. Trust me, couples on far more than 100k are living in 3 bed semis in celbridge and are very happy to do so, the 55k couple are up against them too.
It's going to be difficult to buy anything nice under 200k without moving away from Dublin or buying something needing a lot of work, both of which bring their own additional expenses.

Rock77

Salary Negotiator wrote: »

But that assumes prices are static and not responsive to the market.

In your example you can’t afford the cheapest house regardless of the CB limits, they’re an irrelevance to you. Your problem is that while demand is high there will always be someone earning more than you who can outbid you for that house.

In essence you’re in competition with other couples for that house and if they earn more then more often that not they will outbid you on the house whether you both borrow 3.5 or 5 times your salary.

I kind of follow you but not sure I agree with you. You say ‘in your example you can’t afford the cheapest house regardless of the CB limits’ that part I don’t follow. I’m 10 grand short, surely if I can borrow more I now have enough..?

The couple that earn more can now borrow more aswell so they will be looking at nicer houses ( I’m looking at the cheapest)

I realise that more people can now afford the house I’m looking at and the price may go up but it may still be in budget for me.

At the moment I definitely can not afford that house because of the CB rule

Do you get my point or am I looking at this arseways??

Basically I have a chance of getting that house if the rule changes.

At the moment I have no chance.

Graham

In a supply constrained market there's a finite supply of 'nicer houses' for the couple you're competing with. It's just as likely they will just pay more for the house you are looking at.

If lending multiples are relaxed, thousands of new buyers are introduced to the market.

Rock77

Graham wrote: »

In a supply constrained market there's a finite supply of 'nicer houses' for the couple you're competing with. It's just as likely they will just pay more for the house you are looking at.

If lending multiples are relaxed, thousands of new buyers are introduced to the market.

I hear you but it’s a slight chance of being able to afford it against no chance.

Salary Negotiator

Rock77 wrote: »

I kind of follow you but not sure I agree with you. You say ‘in your example you can’t afford the cheapest house regardless of the CB limits’ that part I don’t follow. I’m 10 grand short, surely if I can borrow more I now have enough..?

The couple that earn more can now borrow more aswell so they will be looking at nicer houses ( I’m looking at the cheapest)

I realise that more people can now afford the house I’m looking at and the price may go up but it may still be in budget for me.

At the moment I definitely can not afford that house because of the CB rule

Do you get my point or am I looking at this arseways??

Basically I have a chance of getting that house if the rule changes.

At the moment I have no chance.

I get your thinking now. So for that other couple who can borrow more, there another couple earning more who can also borrow more so the 3rd couple buy the nicer house while the couple have to make do with the cheapest house.

There are more couples than houses so you as the lowest earners are always the last to be able to purchase.

Heres Johnny

Rock77 wrote: »

I kind of follow you but not sure I agree with you. You say ‘in your example you can’t afford the cheapest house regardless of the CB limits’ that part I don’t follow. I’m 10 grand short, surely if I can borrow more I now have enough..?

The couple that earn more can now borrow more aswell so they will be looking at nicer houses ( I’m looking at the cheapest)

I realise that more people can now afford the house I’m looking at and the price may go up but it may still be in budget for me.

At the moment I definitely can not afford that house because of the CB rule

Do you get my point or am I looking at this arseways??

Basically I have a chance of getting that house if the rule changes.

At the moment I have no chance.

There will be someone earning a little less than you that wants to buy too. If they stretched the rules a little bit for you they need only stretch the rules a little more for the guy earning just below you.. And a little more again for someone behind that... And so on

I wish you best of luck as 12 years ago I was in my 20s and dearly wanted to buy a house and couldn't afford, well I could have gotten a celtic tiger no checks done mortgage but it would have wiped me out with payments. Then the bust came, I saw my chance and with the lending rules tightened house prices came down and I got one. So that's my story, and I hope you get one too you seem to have your head screwed on and just bide your time. It's never too late to upskill either, it's often overlooked as a way to buy a house. Qualify in a higher paid occupation if you can

Graham

Rock77 wrote: »

I hear you but it’s a slight chance of being able to afford it against no chance.

Unfortunately there's no logical basis for your theory. If lending limits go up, people earning more than you will still be able to outbid you, driving property prices higher.

Your solution is to improve YOUR chances, not everyones chances. That may be through something like an RBI mortgage, pay-rise, change of career etc.

Sheep Shagger

Mrs OBumble wrote: »

OP, to be blunt, you are earning an average of 27.5k each. Maybe one of you is a little higher, one a little lower, Whatever. It's still a very low wage. Its not enough to buy and maintain a house. And - critically -the wage from one of you would not be enough to live on if a female-bodied person on the house got pregnant and was off work for six months.

Yes, it sucks that you cannot afford to buy where you grew up. And it sucks that you're stuck between really poor (would qualify for a council house eventually) and wealthy enough to buy where you want. But this kind of trap is a feature of pretty much all welfare systems. Rage about it all you want, but it will do you no good.

What you can do about it is to focus on study and getting a better paying job. Realistically, that is the only way out if you don't want to move locations.

This is the crux of it.

Unfortunately not everybody is going to be able to afford to buy a house in their lifetime, the rental market (if it worked properly which at the moment it doesn't) would cover those who can't afford to own.

If you are at the start of your careers then as has been suggested, keep saving and when your salaries go up you'll be able to buy within the CBI rules. Or look at changing careers to something with more salary growth potential.

You can't blame the rules for not letting you buy, they are there for a bigger reason - you need to earn more money.

alias no.9

JoChervil wrote: »

Some people suggest that increasing mortgage regulations from 3,5 to 4,5 will increase price of houses.

But keeping it at 3,5 causes renting costing more. I would prefer if, people could take mortgage and pay for their own house than pay landlords lucky enough to buy houses in different times.

In the budget for 2005, the threshold below which FTB's were exempt from Stamp Duty was set at €317,500. Within weeks if not days, the bottom end of the market was marked up to €317,500.

Everything that is done to increase the purchase power of the broad population of prospective house buyers will be sucked up by increases in house prices. Anyone who could outbid you before an increase in income multiplier can outbid you afterwards, the only difference is anyone who makes it across the line to buy, ends up paying more.

wench

Rock77 wrote: »

I kind of follow you but not sure I agree with you. You say ‘in your example you can’t afford the cheapest house regardless of the CB limits’ that part I don’t follow. I’m 10 grand short, surely if I can borrow more I now have enough..?

The couple that earn more can now borrow more aswell so they will be looking at nicer houses ( I’m looking at the cheapest)

I realise that more people can now afford the house I’m looking at and the price may go up but it may still be in budget for me.

At the moment I definitely can not afford that house because of the CB rule

Do you get my point or am I looking at this arseways??

Basically I have a chance of getting that house if the rule changes.

At the moment I have no chance.

You're looking at it arseways, unfortunately.


If there are 5 houses available, and 10 couples looking to buy, the 5 highest earning couples will get to buy, regardless of the multiple you use.
Going from 3.5 to 4 or 5 times won't change the outcome, just how much of those peoples income goes to servicing the mortgage.

Donald Trump

alias no.9 wrote: »

In the budget for 2005, the threshold below which FTB's were exempt from Stamp Duty was set at €317,500. Within weeks if not days, the bottom end of the market was marked up to €317,500.

Everything that is done to increase the purchase power of the broad population of prospective house buyers will be sucked up by increases in house prices. Anyone who could outbid you before an increase in income multiplier can outbid you afterwards, the only difference is anyone who makes it across the line to buy, ends up paying more.

I knew a fella back in the day who was bidding for a property. I think there used to be a threshold for tamp duty but this property would have been below that (It could have been some other tax or levy). Whatever it was, this fella would have been exempt because he was a FTB.

All I remember is he wanted it and increased his bid to just over the threshold. His logic was that that other bidders were not FTBs and would not bid that high because it would bring the extra tax liability for them.

But he upped his bid by something like 25% from the advertised price to do that.

The point is that, like you say, giving that relief at a certain level, just floors the market at that level.