Central bank purposes new mortgage protection rules

_Kaiser_ wrote: »

What this will do is push the younger end of the market into even more overpriced, effectively-unregulated private rentals, and encourage those who took early retirement a few years back and got plenty of cash for it to buy a nice investment, as well as the multinational investors that NAMA is busy selling stock too.

In theory this move today is actually the right move - but without significantly increased supply AND a reform of the private rental sector to support the notion of long-term affordable tenancies that people can make homes, all this will do is make an already bad situation much much worse for most people!

I think its more likely to lead to more people purchasing more affordable homes in order to continue saving and buying family homes later on. A property ladder.

Rental reforms need to be looked at now, hopefully the restrictions on BTL's of 30% will limit an increase of amateur landlords.

realweirdo wrote: »

I explained how the bubble happened in an earlier post. The bad old days of 100% mortgages and up to 9 times salary. We are far removed from that now. Another factor in the bubble bursting was the collapse of the economy. We are faced now with an even worse bubble of people being forced to rent indefinitely, driving up rented accomodation.

The Irish Central Bank never get it right unfortunately.

I would say the bubble started when Bertie let developers in on the first time property market, ie the beginning of the end

The next step is to limit the banks lending to developers and the property industry. And to put an overall cap on the banks lending as a whole. Looking at the figures, by simple basic measures the banks were lending vastly, vastly more than they ever had ever before in modern Irish history. And vastly, vastly more than banks in other European and international states were.

Irish banks should be fitted with L plates and not left unattended with anything bright, sharp or sparkly or they'll probably eat it.

Sand wrote: »

If after many years of saving you and your OH cant afford 20% of the purchase price of your ideal home, then its too much for you. Interest rates are as low now as they will ever be and the banks are gouging people on variable mortgages. It will only get worse when the Eurozone (eventually) recovers. The 80% rule protects everyone from the risk involved.

Normally that risk would be entirely your problem. And it should be. But given the government happily robs the taxpayer blind to bail out their mates in the banks, every taxpayer should be delighted to see the 80% rule. The only people against this will be the banks-property-political complex in this country and people who cant afford to buy a house. And even that latter case ought to be grateful for rules that help keep themselves out of trouble.

The problem here that you seem to be missing is your definition of who can afford a mortgage. Under these rules, most people will be deemed to be unable to afford a mortgage and will end up spending many multiples on rent over the course of their life than they would have on getting a mortgage, thus creating an even bigger poverty trap.

At the moment, on many properties (certainly the ones where people actually want to live), the rent greatly exceeds the what they would be paying on a mortgage. Thus, for most people who are renting now, they will simply never be able to afford to save up these large amounts.

The simple reality is that these caps bear very little resemblance to actually determining if a person can afford a mortgage or not. All they do is ensure that a lot of people who definitely can afford a mortgage won't be able to get one.

KomradeBishop wrote: »

Are people fúcking insane or something? People view limiting the size of mortgages as a bad thing?

This is good - a very good - thing, and it doesn't go far enough really, as there should be a lot of other protections in place, for the future.

Yes, limiting the size of a mortgage a person can get based solely on political rants is a terrible thing. Mortgages should be limited to what people can afford, not some notional rules that make no sense and do very little to determine if a person can afford the mortgage or not.

I agree with a minimum deposit in principle but not 20%, it's too high

Don't forget this is still only a proposal and likely they've sugested a 20% with a view of getting knocked back to 10%.

Th bigger issue is that if this goes ahead people stuck in NE from the boom will likely be in negative equity for another 5-10 years.

Negative equity mortgages will become useless as people won't be able to save up their 20% deposit anyway!

Bank lending revenues will reduce due to the low loan amounts. This will result in variable and fixed rate increases to support like for like revenue figures.

FTBs who are saving will now have to save for another year or two which effectively will reduce consumer spend while they push hard to get into the market.

The housing market wil go crazy until jan with prospective sellers trying to get out while they can and buyers trying to get on before they can't purchase (anything sound familiar here???)

This will likely induce another property related recession and push a lot of people who purchased this year into negative equity.

Let's also not forget that the majority of housing purchases this year were cash purchases so lending availability hasn't affected market rates, it's basic supply and demand now.

The whole thing sticks of the banks covering their asses when in reality they should have burned the bond holders to save the country.

Cue recession 2, bubble bursting 2 and mass emigration!

KomradeBishop wrote: »

What is funny about it though? It's like people don't understand that this (excessive) is a major part of what caused our economic troubles.

No, it was probably about 30 people in this country that caused our economic troubles.