Should 100% mortgages return?

Andy Magic · 24-07-2018 10:50PM

They are already a thing, I know couples who's parents have gotten loans from the credit union to give to them for a deposit.

no.8 · 24-07-2018 10:51PM

Not seen that way everywhere. Some cultures have established rental markets..Generations who rent at fair cost. Its not dead because you get something from it...a roof over your head and a place to call home

Dravokivich · 24-07-2018 10:52PM

I don't think the issue is that there were 100% mortgages. It's that people were sold 100% mortgages for properties in excess of 300,000 Euro when really that is too much. I'd love to get a 100% mortgage on a property circa 100,000 / 125,000. Should be possible on my salary.

Stop looking at the % and judge the problem by the monetary value it represents. It's absolutely insane.

Alf Veedersane · 24-07-2018 10:52PM

Wheeliebin30 wrote: »

How about no I phone, holiday, 4 take always, 2 cars, Orlando every year, kids decked out in the newest gear, laptops, I pads, Netflix, 3 TVs in each house etc etc

Then people wonder why that can’t afford the necessary things.

You forgot the smashed avocados on toast.

Andy Magic · 24-07-2018 10:53PM

Dravokivich wrote: »

I don't think the issue is that there were 100% mortgages. It's that people were sold 100% mortgages for properties in excess of 300,000 Euro when really that is too much. I'd love to get a 100% mortgage on a property circa 100,000 / 125,000. Should be possible on my salary.

Stop looking at the % and judge the problem by the monetary value it represents. It's absolutely insane.

Bingo, not sure the landlords on here will agree with you though

Dravokivich · 24-07-2018 10:54PM

Darius Rapid Southerner wrote: »

It seems to be forgotten that people had to save almost a year's gross earnings as a deposit back in the 70s & 80s. Many also had to pay rent while doing so. And the subsequent interest rate on the mortgage in excess of 13%. But house prices remained relatively stable with building matching demand.

The advent of cheap loans and 100% mortgages led to the debacle we plunged into in 2007/8

In the early 80's my parents where in a scheme that had a low deposit and annual repayments were 20% of the highest salary. Its a completely different world we are in now.

noodler · 24-07-2018 10:56PM

No they shouldn't.

Of course not.

Christ.

GreeBo · 24-07-2018 10:57PM

bluewolf wrote: »

you might as well say buying groceries is dead money if you dont end up owning the shop

Its dead money when your rent is more than your mortgage would be for the same property. Whats the point in renting if its costing you more than ownership would?

GreeBo · 24-07-2018 10:59PM

Dravokivich wrote: »

I don't think the issue is that there were 100% mortgages. It's that people were sold 100% mortgages for properties in excess of 300,000 Euro when really that is too much. I'd love to get a 100% mortgage on a property circa 100,000 / 125,000. Should be possible on my salary.

Stop looking at the % and judge the problem by the monetary value it represents. It's absolutely insane.

I'd go further, they are only a problem if you cant afford to repay them, there was inadequate stress testing.

It doesnt really matter if your house in Celbridge is worth 50% now, unless you want to move. If you cant afford to move then you stay where you are. Its not a financial crisis unless you can no longer pay the mortgage AND its worth 50% now.

Dravokivich · 24-07-2018 11:00PM

Esse85 wrote: »

What's the bigger challenge of the two for a single first time buyer, is it

a) saving the actual deposit

or

b) the 3.5x your salary

For 98,000. There won't be much i could buy. Even if I got a deposit saved up for it. I wouldn't be able to get my son to school and me to work.

MidMan25 · 24-07-2018 11:01PM

no.8 wrote: »

MidMan25 wrote:

It would solve the issue of people being well able to afford a mortgage repayment but not to save the 10% deposit while paying high rent, on the other hand as others said prices will be driven up.

If you can't afford the 10% deposit you can't afford the house. Currently renting as well, it is a pox for what you get but saving for a deposit is also a massive lesson in discipline and determination through saving.

Nonsense. Rents in Ireland are exorbitant but for most people a necessity, especially young people who moved to Dublin for work. House prices are much higher relative to salaries than they used to be. You cant expect people to just find the money for a 10% deposit when that could be 40-50k on top of a yearly outlay of >18k on rent. That's 5 years of a couple putting 28k a year of their earnings into keeping a roof over their heads and saving to get on the property ladder. Not to mention the other considerable costs associated with buying a house that need to be covered somehow.

Dravokivich · 24-07-2018 11:03PM

GreeBo wrote: »

I'd go further, they are only a problem if you cant afford to repay them, there was inadequate stress testing.

It doesnt really matter if your house in Celbridge is worth 50% now, unless you want to move. If you cant afford to move then you stay where you are. Its not a financial crisis unless you can no longer pay the mortgage AND its worth 50% now.

I'm not sure what you are getting at. I don't agree with the "property ladder" nonsense if you think that's what I was getting at. The percentage doesn't matter because it's only trivializing the actual amount of money in question.

LirW · 24-07-2018 11:03PM

no.8 wrote: »

Not seen that way everywhere. Some cultures have established rental markets..Generations who rent at fair cost. Its not dead because you get something from it...a roof over your head and a place to call home

There's a weird shift though even in established rental markets to maximise profits, when unlimited contracts where the norm 10-15 years ago still, it's really difficult finding one now that is longer than 3 years.
Established rental countries face some strange times at the moment, there's a shortage of affordable housing everywhere in Europe where jobs are.

Dravokivich · 24-07-2018 11:06PM

GreeBo wrote: »

Its dead money when your rent is more than your mortgage would be for the same property. Whats the point in renting if its costing you more than ownership would?

Renting is a service. Using a service usually costs more than owning it yourself as you are paying for the provider to also manage the property on your behalf. Out of 3 times I've rented, there's only been 1 landlord who didn't really acknowledge that. Wasn't with'em too long.

GreeBo · 24-07-2018 11:10PM

Dravokivich wrote: »

I'm not sure what you are getting at. I don't agree with the "property ladder" nonsense if you think that's what I was getting at. The percentage doesn't matter because it's only trivializing the actual amount of money in question.

My point is that the amount of the mortgage is actually irrelevant, its your ability to pay thats important.

100% mortgage on a €500K house should be fine if I'm earning €150K/year.
Why wouldnt it be?

Obviously €500K mortgage would be crazy if I'm earning €50K/year, but equally restricting me to €300K wouldn't make sense for €150K/year.

All that matters is what you can repay, with sufficient stress testing.

Ladders or otherwise are irrelevant.

Why does the actual amount bother you? Who cares what its valued as, as long as there is a market for it. Otherwise why do you we an investment market for stocks/metals/bonds etc?

Kuva · 24-07-2018 11:10PM

It's not a housing problem, its a to many people problem.

Donald Trump · 24-07-2018 11:12PM

Deleted User wrote: »

Meanwhile I have spent 66,000 euro on rent in the last 4 years. I'd be delighted if 100% mortgages came in. So long as it was done sensibly such as only people in permanent positions, 3.5 times of their salary etc.

Yeah. But do you not realise that the reason you can't buy a house is that you are being outbid. The price of a house is one Euro more than the second highest bidder is willing to pay. (Or at least aimed at that hypothetical figure).

So if you can pay 90k with the help of a 90% mortgage and Johnny down the road can pay 100k, well that house down the road that you both want will be sold for 91k to Johnny.

Once they bring in 100% mortgages, and you both want the same house, Johnny is still going to buy it - just this time for 101k. Because you can both get 100% mortgages now you can go as far as 100k but he can go to ~110k.

Better off to bring in a decent property tax. Dampen down speculation and keep a normal rate of increase on the houses. Although politics being politics, there are a lot of voters out there who are happy to be lifted out of negative equity at your expense

GreeBo · 24-07-2018 11:13PM

Dravokivich wrote: »

Renting is a service. Using a service usually costs more than owning it yourself as you are paying for the provider to also manage the property on your behalf. Out of 3 times I've rented, there's only been 1 landlord who didn't really acknowledge that. Wasn't with'em too long.

Agreed, but the differential right now is way higher than the cost the service should be.
Otherwise why would anybody rent, especially in a country where people typically dont want to rent, they want to own. Clearly there is a problem if you cant afford to save while you rent and it would be cheaper to just buy?

Dravokivich · 24-07-2018 11:14PM

GreeBo wrote: »

My point is that the amount of the mortgage is actually irrelevant, its your ability to pay thats important.

100% mortgage on a €500K house should be fine if I'm earning €150K/year.
Why wouldnt it be?

Obviously €500K mortgage would be crazy if I'm earning €50K/year, but equally restricting me to €300K wouldn't make sense for €150K/year.

All that matters is what you can repay, with sufficient stress testing.

Ladders or otherwise are irrelevant.

Why does the actual amount bother you? Who cares what its valued as, as long as there is a market for it. Otherwise why do you we an investment market for stocks/metals/bonds etc?

Your opening there is exactly what I said. So I'm a bit confused now as I'm rather tired. Where you disputing what I said or supporting it?

Donald Trump · 24-07-2018 11:18PM

100% mortgages are retarded.

How about remove the cap but also make mortgages non-recourse?

Lets see how many spastic Banks are happy to give out 100% mortgages then. And make recovery of the asset quicker and simpler. You wouldn't have this stupid problem of having defaulters clogging up the housing market then.

GreeBo · 24-07-2018 11:18PM

Dravokivich wrote: »

Your opening there is exactly what I said. So I'm a bit confused now as I'm rather tired. Where you disputing what I said or supporting it?

My reading of your post is that you have some upper limit of €300,000, which to me is a meaningless magic number.

The upper limit has to be a function of your income otherwise you are ascribing a "poor persons" limit to all mortgages.

mugsymugsy · 24-07-2018 11:19PM

Kuva wrote: »

It's not a housing problem, its a to many people problem.

Some would argue not enough people when you look at the future pension to people working ratio problem coming down the line

https://www.independent.ie/business/personal-finance/pensions/irelands-ticking-pensions-timebomb-34772541.html

Badly Drunk Boy · 24-07-2018 11:21PM

rob316 wrote: »

When you have couple's out there who would have the means to pay back 2k a month but can't get mortgages because 1500 of that goes on rent. I don't see why a 100% mortgage would be a problem.

That's all well and good until the bubble messes up the economy again, and one or two of that couple lose their job and wouldn't be able to pay the €1500 rent, never mind the €2000 a month mortgage.

Straylight · 24-07-2018 11:25PM

I work for a bank, although thankfully not one that's involved in mortgage lending. I was in a pub for lunch with a colleague one day when the news came on the TV and the top story was that Bank of Scotland (I think) were about to start doing 100% mortgages. Even though we were both well down the food chain and nowhere near where such decisions would be made, we both had the same immediate reaction, that this wasn't going to end well. Unfortunately we were proved right a few years later.

I know that people always blame the banks, and I agree that it was immoral how anyone could in good conscience push people who were already clearly stretched into accepting a 100% mortgage, but people just lost the run of themselves once they saw that getting onto the property ladder was no longer a pipe dream. Of course the developers saw all this cash floating around as a lottery win and started lashing up properties all over the shop at increasingly ridiculous prices. And despite all this the Central Bank still allowed banks to throw money at people and people to gladly accept it. Had they been doing their job even half as well as they were supposed to be doing it a lot of the sh*tstorm that befell the country could have been avoided, or at least its impact lessened massively.

I'd like to think that the regulators learned their lesson from the last fiasco and would immediately put a stop to any lender offering 100% mortgages again. I'd like to think that, and then I look at the current property bubble and realise that we appear to be incapable of learning from our past mistakes in this country, so it's only a matter of time before someone starts offering 100% mortgages again. As the French say, plus ca change....

madmac187 · 24-07-2018 11:27PM

Speaking as someone that has a mortgage and am the only one paying it, I don’t see why everyone should think they are all entitled to a mortgage or own their own home. No to 100% mortgage, live within means and can’t afford it, they shouldn’t have it. People at the minute have to work hard to get a deposit and cut out none essential costs. It’s sacrifice that’s what you do for things you want bad enough. Am I wrong?

Also the same way that people think that housing is the governments problem, people should look after themselves and not the state having to do it.

Donald Trump · 24-07-2018 11:28PM

GreeBo wrote: »

My point is that the amount of the mortgage is actually irrelevant, its your ability to pay thats important.

Your concrete "ability to pay" depends on what you have in your pocket right now.

GreeBo wrote: »

100% mortgage on a €500K house should be fine if I'm earning €150K/year.
Why wouldnt it be?

Number 1 - you could lose that job or get hit by a bus

Number 2 - If you earn 150k a year and have no discernible assets to put down as collateral, I hope a Bank manager doesn't give you a 100% mortgage for a 500k property.

GreeBo wrote: »

Obviously €500K mortgage would be crazy if I'm earning €50K/year, but equally restricting me to €300K wouldn't make sense for €150K/year.

It might. See above.

GreeBo wrote: »

All that matters is what you can repay, with sufficient stress testing.

Ladders or otherwise are irrelevant.

From your point of view, yes, but not from the lenders point of view.

GreeBo wrote: »

Why does the actual amount bother you? Who cares what its valued as, as long as there is a market for it. Otherwise why do you we an investment market for stocks/metals/bonds etc?

That's fine, and I'd agree with you if the house was a more liquid investment asset only. But for most people it's not that - it's a home. Most don't cash it in if their particular house outperforms the market for example

24-07-2018 11:29PM

Its all interlinked, but:

- parroting "supply and demand" as if there was only one type of the latter and not several competing types (renters, owner-occupiers, small landlords, housing authorities, large landlords/REITs) and as if supply wasn't deeply interfered with through planning, through vested interests in developers, banks, politicians and through the varying interested property owners (negative equity, no mortgage, looking to move on/sell). this market is poorly defined and non-functional so barking "supply and demand" as if the market is going to spew out the right type of accommodation in the right place at the right price within a reasonable timeframe is absolutely vapid. (nb even if this did happen the block of votes and political donations currently deeply reliant on this overheated market would still ensure total upheaval)

-possibly ive missed it, but has any serious survey been done by a credible party (lol where'd u find one of those lol i know i know) that actually seeks to identify the latent and actual demand for housing in the country:
* how many rental units of 2/3/4 beds, apt or house, along what viable commuter services
* "" "" units to buy "" "" "" etc
* what % of tenants have a preference to purchase if their housing needs set out above could be met at a range of purchase prices eg 150k-250k-350k so on
* what % of tenants have a preference to remain as tenants if their housing needs set out above were met at a range of stable monthly rents and protected by strong tenants rights legislation (think german model)

etc etc

every interest group has their own figure and every one of them blatantly pad the numbers as it suits them, and you never see it seriously questioned whether anything other than a mad fukkin dash to the bottom rung of the insane ladder of home ownership is what people currently renting actually want.

the fact that irish ppl still see the value of a house as (value of living in house/renting it out)+(value of definite, absolutely-has-to-happen 5-10% growth in value every year) is the major input into the crazy prices everyone is in such a rush to pay but nobody ever seems to want to question. if we broke the "investment" out of the "housing demand" we'd start to see the full picture of what was actually required and we'd start to see some progress.

unfortunately that wouldnt suit our govt, the banking system, the large rump of owners quite happy with capital growth and rents collected.

so, rent and be damned glad to get it. or, rent, save and get on the gravy train. no third way lads!

GreeBo · 24-07-2018 11:35PM

Donald Trump wrote: »

You're concrete "ability to pay" depends on what you have in your pocket right now.

If that was true no one would need a mortgage as they would have the cash.
Its patently not true and has never been true so Im not sure where you are going with it?

Donald Trump wrote: »

Number 1 - you could lose that job or get hit by a bus

Number 2 - If you earn 150k a year and have no discernible assets to put down as collateral, I hope a Bank manager doesn't give you a 100% mortgage for a 500k property.

Sure you could lose your job, thats why it should be stress tested. worst comes to the worst then the bank takes the house back, thats why the hold onto the deeds.
(if you get hit by a bus your life assurance will cover the mortgage, thats why its mandatory)

Donald Trump wrote: »

It might. See above.

It doesnt, see above.

Donald Trump wrote: »

From your point of view, yes, but not from the lenders point of view.

well clearly the lender is going to have to value the property in question, again not sure what point you are trying to make here?

Donald Trump wrote: »

That's fine, and I'd agree with you if the house was a more liquid investment asset only. But for most people it's not that - it's a home. Most don't cash it in if their particular house outperforms the market for example

Why does its liquidity matter? The value of anything is what someone else is willing to pay for it when you want to sell it. You can call it a home or an investment or a place to hold your cash, it doesnt really matter to the mortgage.

Donald Trump · 24-07-2018 11:40PM

GreeBo wrote: »

If that was true no one would need a mortgage as they would have the cash.
Its patently not true and has never been true so Im not sure where you are going with it?

Sure you could lose your job, thats why it should be stress tested. worst comes to the worst then the bank takes the house back, thats why the hold onto the deeds.
(if you get hit by a bus your life assurance will cover the mortgage, thats why its mandatory)

It doesnt, see above.

well clearly the lender is going to have to value the property in question, again not sure what point you are trying to make here?

Why does its liquidity matter? The value of anything is what someone else is willing to pay for it when you want to sell it. You can call it a home or an investment or a place to hold your cash, it doesnt really matter to the mortgage.

There are some basic concepts that you don't seem to too familiar with.

GreeBo · 24-07-2018 11:46PM

Donald Trump wrote: »

There are some basic concepts that you don't seem to too familiar with.

Such as defending your post?

Should 100% mortgages return?

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