Central bank purposes new mortgage protection rules

realweirdo · 07-10-2014 09:09PM

Reckless Abandonment wrote: »

This will just send rents through the roof, and if rents go up and keep going up, good luck saving for a 20% deposit for your own place. It's a pent up demand and extremely short supply that Is causing this mini "bubble" , love them or hate them we need the property developers back to work

Its a very short-sighted measure alright.

Whats the bets the sons and daughters of those who actually caused the mess in the first place will be easily able to afford these mortgages, with loans from their cashrich parents. Everyone else will be screwed.

These moves will benefit a rich elite and penalise the vast majority.

KomradeBishop · 07-10-2014 09:10PM

Lord Trollington wrote: »

I think you are missing the point here.

For the past 7 years the country has been in the sh!t. Unemployment was massive and for those who were employed during that time (myself) we cut to the bone.

For the past 7 years I have had to fund the banks and unemployed in taxes whilst providing for my wife and child. For the most past ordinary people had no disposable income to save a 20% deposit. Personally I was worried about paying for childcare and household bills and hoping my private sector job would still be there next week.

I would like to buy my own house rather than pay rent for the rest of my life. These measure makes it extremely difficult to buy in what is a basketcase of a housing market in Ireland. As some said earlier all this will serve to do is drive rent prices higher by attracting investors to the market rather than people who want to buy a house to make it a home.

I think you (and many other) people are missing the point...as a country, we can't afford to be handing out any more mortgages, that can potentially become unsustainable in the future - we're not even out of the woods yet as far as economic crisis goes.

Remember: Prior to the economic crisis, a great deal of the now-unsustainable mortgages, were perfectly sustainable then - until the economy went to crap, and people lost jobs, took wage cuts etc..

KomradeBishop · 07-10-2014 09:14PM

matt-dublin wrote: »

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

Eh? It was banks lending excessive amounts of money to buyers, funding the property bubble, which caused the economic trouble.

It's more than a little bit worrying, that many people don't seem to know this.

realweirdo · 07-10-2014 09:16PM

dotsman wrote: »

But they did enforce "their own rules" their own rules said they could lend for those amounts!

Officially, they do represent us. They may not do a good job of it, but it is they who represent us. They are controlled by the government who we elect.

Not sure what regulations you are referring to. Banks have been fined for breaches of regulations. Similar to the first comment, you are forgetting that there were no real regulations governing "caps" on how much a customer could borrow etc.

Actually, it was IFRSA during the boom, then "The Financial Regulator" before responsibility was handed over the Central Bank (and The Financial Regulator disbanded)

Regulations around you know ensuring people could actually afford a mortgage. Regulations around stress testing. Regulations around banks such as Anglo not lending to pals to buy shares or secret off the book loans, or regulations around actually double checking documents in support of mortgage applications. It was totally lawless. If proper rules were followed we wouldn't be in half the mess.

Iwasfrozen · 07-10-2014 09:17PM

I need to read more on it but from that article it seems like a good idea to prevent another bubble.

realweirdo · 07-10-2014 09:18PM

KomradeBishop wrote: »

I think you (and many other) people are missing the point...as a country, we can't afford to be handing out any more mortgages, that can potentially become unsustainable in the future - we're not even out of the woods yet as far as economic crisis goes.

Remember: Prior to the economic crisis, a great deal of the now-unsustainable mortgages, were perfectly sustainable then - until the economy went to crap, and people lost jobs, took wage cuts etc..

But the children of rich bankers and developers will still be ok and afford mortgages.

Can you not see what a farce this country has become in recent years?

matt-dublin · 07-10-2014 09:19PM

KomradeBishop wrote: »

Eh? It was banks lending excessive amounts of money to buyers, funding the property bubble, which caused the economic trouble.

It's more than a little bit worrying, that many people don't seem to know this.

You seem to forget the commercial loan that the banks lent the 700 odd developers around the country that really caused the recession. Oh and the dodgy deals in Anglo. Everyone loves a bit of insider trading there!

If the banks were controlled back then in their commercial dealings the property boom may have been more controlled.

I agree the 100% mortgage was madness but the People trying to find a 20% deposit is a bit harsh and will crush the market. I don't fancy re-writing everything I said in my previous post :-)

Specialun · 07-10-2014 09:19PM

KomradeBishop wrote: »

I think you (and many other) people are missing the point...as a country, we can't afford to be handing out any more mortgages, that can potentially become unsustainable in the future - we're not even out of the woods yet as far as economic crisis goes.

Remember: Prior to the economic crisis, a great deal of the now-unsustainable mortgages, were perfectly sustainable then - until the economy went to crap, and people lost jobs, took wage cuts etc..

I dont think you understand the dangers out staling the house market..its not just about the buying/selling of houses..its about the spin off also

Construction could be affected hughly too

KomradeBishop · 07-10-2014 09:22PM

realweirdo wrote: »

But the children of rich bankers and developers will still be ok and afford mortgages.

Can you not see what a farce this country has become in recent years?

They already 'won' years ago, and the rest of the country has had to pick up the tab (and will be, far into the future) - it's far too late to do anything about that, they got away with it - these policy changes, are about preventing all of that from happening all over again, and we should be very glad of that.

Gael23 · 07-10-2014 09:24PM

House prices will freefall as a result but that can be seen as either positive or negative

Frank Lee Midere · 07-10-2014 09:24PM

realweirdo wrote: »

Its a very short-sighted measure alright.

Whats the bets the sons and daughters of those who actually caused the mess in the first place will be easily able to afford these mortgages, with loans from their cashrich parents. Everyone else will be screwed.

These moves will benefit a rich elite and penalise the vast majority.

In this thread and the accommodation and property thread you fail to understand basic economics.

realweirdo · 07-10-2014 09:27PM

This measure will practically eliminate all new mortgage applications.

No mortgage applications, no arrears. Problem solved for the Central Bank. A very cynical approach.

BTW, Bankers including Central Bankers don't represent the people, they represent banks, full stop. Surely we have learned that by now.

Frank Lee Midere · 07-10-2014 09:28PM

ryanf1 wrote: »

House prices will freefall as a result but that can be seen as either positive or negative

Most of the detractors don't get that.

I've been amusing myself looking at house prices on daft and thinking.

That 3 bed in a normal northside suburb needs a 90k deposit? And 100k income. Lol.

As for the southside recent listings are pie in the sky. Apartments for 400k plus.

2006 called and wants its 100% mortgage back. Until then I would take that off the market.

realweirdo · 07-10-2014 09:28PM

Frank Lee Midere wrote: »

In this thread and the accommodation and property thread you fail to understand basic economics.

From reading your posts, it was your grasp of economics that was frankly embarrassing.

WoollyRedHat · 07-10-2014 09:28PM

Alongside this we need rent control, for both personal and business rents.
Rents have long been the elephant in the room, particularly in regards to commercial premises and upwards renting. High rent rates aren't just a problem in Dublin, they're disportionate in other major cities such as London, New York, San Francisco, to name but a few.

Frank Lee Midere · 07-10-2014 09:30PM

realweirdo wrote: »

This measure will practically eliminate all new mortgage applications.

No mortgage applications, no arrears. Problem solved for the Central Bank. A very cynical approach.

BTW, Bankers including Central Bankers don't represent the people, they represent banks, full stop. Surely we have learned that by now.

No central bankers job is not to represent the banks. But to control them. That they didn't do that in the last boom is what nearly crippled the economy for good.

The banks and the developers do love people who think 100% mortgages and. 6X salaries are good things.

KomradeBishop · 07-10-2014 09:30PM

matt-dublin wrote: »

You seem to forget the commercial loan that the banks lent the 700 odd developers around the country that really caused the recession. Oh and the dodgy deals in Anglo. Everyone loves a bit of insider trading there!

If the banks were controlled back then in their commercial dealings the property boom may have been more controlled.

I agree the 100% mortgage was madness but the People trying to find a 20% deposit is a bit harsh and will crush the market. I don't fancy re-writing everything I said in my previous post :-)

Overlending to developers and overlending to homeowners are two sides of the same problem - anything being done to tackle either, is good.

What matters is sustainability for the mortgages, above all else - if people find it hard to save up a 20% deposit, then that's a fair call for judging that their mortgage is more likely to be risky.

Frank Lee Midere · 07-10-2014 09:33PM

realweirdo wrote: »

From reading your posts, it was your grasp of economics that was frankly embarrassing.

Feel free to point out any errors you find. You can't seem to understand the remedial fact that is credit is increased while supply is limited prices will go up but the same number of houses would be sold. Just at higher prices.

And it is attitudes like yours which caused the near destruction of the Irish economy.

Iwasfrozen · 07-10-2014 09:33PM

Upward only rents are killing business in Dublin.

realweirdo · 07-10-2014 09:33PM

Frank Lee Midere wrote: »

Most of the detractors don't get that.

I've been amusing myself looking at house prices on daft and thinking.

That 3 bed in a normal northside suburb needs a 90k deposit? And 100k income. Lol.

As for the southside recent listings are pie in the sky. Apartments for 400k plus.

2006 called and wants its 100% mortgage back. Until then I would take that off the market.

Frank. The new rules will eliminate about 80% of potential buyers from the market.

There will still be 20% who can afford the properties you mentioned and will pay for those properties, at any price.

You are simply naive to believe property prices will come down significantly. You seem to think we live in a country where normal laws of economics apply to property prices. They don't.

This country has a long history of trying to screw FTBs and trying to squeeze every last ounce out of them.

This time next year Frank, you will be complaing of high property prices, and in 5 years and even in 10 years. You can put your house on that!

KomradeBishop · 07-10-2014 09:33PM

Specialun wrote: »

I dont think you understand the dangers out staling the house market..its not just about the buying/selling of houses..its about the spin off also

Construction could be affected hughly too

Stalling the housing market? There is a bubble in the housing market, and it needs to be tempered - this is good.

Construction needs to be based on sustainable development, not overinflated property prices - look where that lead us already...

realweirdo · 07-10-2014 09:35PM

Frank Lee Midere wrote: »

Feel free to point out any errors you find. You can't seem to understand the remedial fact that is credit is increased while supply is limited prices will go up but the same number of houses would be sold. Just at higher prices.

And it is attitudes like yours which caused the near destruction of the Irish economy.

Please grow up. Comments like this will lead to you being ignored.

realweirdo · 07-10-2014 09:36PM

Frank Lee Midere wrote: »

No central bankers job is not to represent the banks. But to control them. That they didn't do that in the last boom is what nearly crippled the economy for good.

The banks and the developers do love people who think 100% mortgages and. 6X salaries are good things.

More misrepresentation Frank? Did I say it was ok to give out 100% mortgages? Read back over the thread and then apologise.

matt-dublin · 07-10-2014 09:36PM

KomradeBishop wrote: »

Overlending to developers and overlending to homeowners are two sides of the same problem - anything being done to tackle either, is good.

What matters is sustainability for the mortgages, above all else - if people find it hard to save up a 20% deposit, then that's a fair call for judging that their mortgage is more likely to be risky.

No it's not, It means for the 30 something's haveing to save for another year or two thus reducing their borrowing power. Effectively killing people hopes of being able to buy a decent house, settle down and have kids.

10% I could live with, but 20% will personally potentially stop me being able to buy the house I want for 5 years. But then I won't be able to borrow for the same term so again I still can't buy the house I want.

The 20 something's can't get jobs anyway so how are they supposed to save their 20% before they hit 30 especially when grad salarys start at 26-28k.

There's so many variables here which could potentially throw us into recession.

It's a total knee jerk and in reality should be introduced over 5 years increasing 2% every year rather than killing the market.

matt-dublin · 07-10-2014 09:40PM

Not to mention, now I can afford to pay the mortgage I need to buy the house I want, and will be able to afford another 4-5% in interest hikes. I just can't afford the deposit.

moxin · 07-10-2014 09:42PM

realweirdo wrote: »

Frank. The new rules will eliminate about 80% of potential buyers from the market.

There will still be 20% who can afford the properties you mentioned and will pay for those properties, at any price.

All the mortgaged buyers will be in the same boat with less credit power. Prices will come down to reflect that or the sellers will have a very long wait to get their sales cash. The sellers who have sense will bite and sell at a reduced price, they did it already in the crash.

KomradeBishop · 07-10-2014 09:42PM

matt-dublin wrote: »

No it's not, It means for the 30 something's haveing to dive for another year or two thus reducing their borrowing power. Effectively killing people hopes of being able to buy a decent house, settle down and have kids.

10% I could live with, but 20% will personally potentially stop me being able to buy the house I want for 5 years. But then I won't be able to borrow for the same term so again I still can't buy the house I want.

The 20 something's can't get jobs anyway so how are they supposed to save their 20% before they hit 30 especially when grad salarys start at 26-28k.

There's so many variables here which could potentially throw us into recession.

It's a total knee jerk and in reality should be introduced over 5 years increasing 2% every year rather than killing the market.

The bolded part of your post: How on earth are you cognizant of people being unable to put together a deposit in a new recession, and not cognizant of people being unable to pay a mortgage due to a new recession?

Banks must lend sustainably. No exceptions. If that means someone with a low paying job can't afford a mortgage (and I sympathize, as obviously there are loads of people out there without a job), then that's that - tough.

Otherwise, what we will see if/when a new recession hits, is an economy in an even worse state of indebtedness, and likely more bank bail-outs (and bail-ins, like Cyprus).

Unsustainable debt is bad. Measures taken to prevent unsustainable debt, are good.

Frank Lee Midere · 07-10-2014 09:43PM

realweirdo wrote: »

Frank. The new rules will eliminate about 80% of potential buyers from the market.

There will still be 20% who can afford the properties you mentioned and will pay for those properties, at any price.

You are simply naive to believe property prices will come down significantly. You seem to think we live in a country where normal laws of economics apply to property prices. They don't.

We have a long history of trying to screw FTBs and trying to squeeze every last ounce out of them.

This time next year Frank, you will be complaing of high property prices, and in 5 years and even in 10 years. You can put your house on that!

Real. If you think that removing 80% of the potential buyers won't reduce prices you don't understand prices.

If you think it's the same 20% who would he buying anyway then why would they be paying more?

Look. Remedial as possible. 10 houses for sale. 100 potential buyers all determined to pay what they can get. The tenth richest buyer(s) earn 100k.

I am making the sums easy. Let's forget deposits for a moment.

If the maximum anybody can borrow is 3.5 times salary then the lowest priced house is 350k. If the maximum is 6 times salary the lowest priced house is 600k.

And so on.

You are like someone earning 60k in the situation where the limit is 3.5 income thinking you could afford a house if you could just get 6X income. You couldn't because other people richer than you can also get 6x.

If you want cheaper housing send a letter to your TD demanding increased supply. Instead you want the banks to charge you more for housing,to increase your liability. Nuts.

realweirdo · 07-10-2014 09:45PM

At the peak of the boom, we built 90,000 houses a year.

We now build about 8,000 houses a year.

We need to build more houses and that will bring the prices down, nothing else.

But these measures will certainly not encourage that.

Guy on primetime agrees with me.

Frank Lee Midere · 07-10-2014 09:46PM

moxin wrote: »

All the mortgaged buyers will be in the same boat with less credit power. Prices will come down to reflect that or the sellers will have a very long wait to get their sales cash. The sellers who have sense will bite and sell at a reduced price, they did it already in the crash.

Well because nobody is repossessing they can do what they want. We do need more supply.