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Central Bank to limit amount banks lend for home purchase

handlemaster

http://www.irishtimes.com/business/sectors/financial-services/central-bank-to-impose-limits-on-home-loans-1.1948176

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MarkAnthony

Do bear in mind there a slow down this time of year anyway.

dynamited

MarkAnthony wrote: »

Do bear in mind there a slow down this time of year anyway.

A bit of slow down is expected

But there is still a huge amount getting put on the market everyday

Desperate to sell/buy before new rules kick in in January?? Perhaps

MarkAnthony

dynamited wrote: »

A bit of slow down is expected

But there is still a huge amount getting put on the market everyday

Desperate to sell/buy before new rules kick in in January?? Perhaps

I think the rules have been delayed. In all honesty I see them as a croc, they've done exactly what they were designed to stop; increasing house prices. I think there are some Jonny-come-lately sellers probably spurred on by EAs telling them the markets going to nose dive in the new year/new rules which I doubt.

As for Sundays - seeing this more and more where viewings are being accommodated on Sundays. I'm also seeing more private/semi-private viewings and EAs actually engaging with the customers and doing a bit of a sell job rather than simply looking on with disdain at the massive crowd.

[Deleted User]

MarkAnthony, have you been reading the Indo again? Tut, tut...

The 'delay' is based on what Prof Honohan said at the Oireachtas Committee which was that it might be a bit of a push to have them in on New Year's Day but he added 'we're not hanging around' and the rules will come in asap. The Indo spun that as a 'glimmer of hope for hard-pressed something somethings...'

The bit about the rules having increased prices is even worse. They are claiming that because the October CSO figures showed strong price rises, the Central Bank's plan is a bad idea. Or something.

The proposal was announced in October. Figures that pop up in the CSO data for October are houses that went sale agreed in the summer. The official data lags reality by a couple of months at least.

Anyway, the rules aren't in force yet so it's a bit unreasonable to brand them a failure at this stage. Even if prices are still rising, surely that's an argument for introducing the new rules rather than leaving things run their course (which is what we did last time a bubble was developing).

Sala

Deleted User wrote: »

The 'delay' is based on what Prof Honohan said at the Oireachtas Committee which was that it might be a bit of a push to have them in on New Year's Day but he added 'we're not hanging around' and the rules will come in asap. The Indo spun that as a 'glimmer of hope for hard-pressed something somethings...'

The bit about the rules having increased prices is even worse. They are claiming that because the October CSO figures showed strong price rises, the Central Bank's plan is a bad idea. Or something.

The proposal was announced in October. Figures that pop up in the CSO data for October are houses that went sale agreed in the summer. The official data lags reality by a couple of months at least.

Anyway, the rules aren't in force yet so it's a bit unreasonable to brand them a failure at this stage. Even if prices are still rising, surely that's an argument for introducing the new rules rather than leaving things run their course (which is what we did last time a bubble was developing).

Agree, the papers have been spinning things in a very specific way. Suggesting that Honohan was considering a U turn or lending supporting to the deposit scheme, using headlines that suggested the new rules are delayed when that was a very minor part of what he said overall, and with no implication the delay will be substantial.

And suggesting that house prices rocketed in October due to the rules is ridiculous, any journalist who did an ounce of research would know that that the CSO figures and Property Price Register figures in October could not possibly have been influenced in any way by the announcement, it takes months from a house being sale agreed to showing up in either.

The reaction from some vested interests to the new rules in my opinion demonstrates exactly why they are necessary. Banks are starting to lend and have been offering some ridiculous salary multiples already, offering incentives such as paying stamp, people are panicking if they don't get on the "ladder" now they never will.... we'll end up back in the same place in a few years pointing the finger of blame at everyone but ourselves and going cap in hand to Europe like fools saying sorry, but we did it again.

Barely Hedged

Sala wrote: »

Banks are starting to lend and have been offering some ridiculous salary multiples already

What banks and what are the multiples on offer?

dynamited

Barely Hedged wrote: »

What banks and what are the multiples on offer?

X2

Most banks i went too were very stingy but i'm happy as i don't want to borrow my life away!

Barely Hedged

Sala wrote: »

And suggesting that house prices rocketed in October due to the rules is ridiculous, any journalist who did an ounce of research would know that that the CSO figures and Property Price Register figures in October could not possibly have been influenced in any way by the announcement, it takes months from a house being sale agreed to showing up in either.

Any journalist worth his salt would have more sources than the two mentioned.

A decent journalist would have a contact in the biggest estate agents where he/she could ring and anecodotally ask how the news went down. Id imagine the biggest estate agents in Dublin would have collated sales/enquiries information from all their offices around the country and could give quite a good indicator

Barely Hedged

dynamited wrote: »

X2

Most banks i went too were very stingy but i'm happy as i don't want to borrow my life away!

x2 is signing your life away?

dynamited

Barely Hedged wrote: »

x2 is signing your life away?

I was referring to his comment

I only come out with 2000 per month , atm i'm borrowing around 80k ( 100k deposit) which will work out at around 344 per month

I'd rather live within my means than borrow just to keep up with the Jones thank you very much

Barely Hedged

dynamited wrote: »

I was referring to his comment

I only come out with 2000 per month , atm i'm borrowing around 80k ( 100k deposit) which will work out at around 344 per month

I'd rather live within my means than borrow just to keep up with the Jones thank you very much

I thought you meant the multiple of x2 of salary was ridiculous. I didnt realise you were agreeing with me

Michael D Not Higgins

dynamited wrote: »

I was referring to his comment

I only come out with 2000 per month , atm i'm borrowing around 80k ( 100k deposit) which will work out at around 344 per month

I'd rather live within my means than borrow just to keep up with the Jones thank you very much

In the other thread you said it was 78k mortgage and you were earning 26k. That's bang on 3 times LTI.

dynamited

Michael D Not Higgins wrote: »

In the other thread you said it was 78k mortgage and you were earning 26k. That's bang on 3 times LTI.

I've been approved 80k , haven't spent it yet

Michael D Not Higgins

dynamited wrote: »

I've been approved 80k , haven't spent it yet

But you just said you had X2?

ionapaul

My wife and I were approved for x4 gross annual income earlier this year, we didn't end up drawing down on that approval, and went back asking to be approved for less when we needed it renewed! As a first time buyer I'm really happy that the CBI is stepping in and hope the proposals are not diluted at all.

Also, another worthless anecdote; we've noticed that EAs are much more responsive now and they were pursuing us about houses we had expressed an interest in earlier in the year. Also know of a few houses in south Dublin that don't have any offers yet, after being on the market for a while - some crazy asking prices out there at the moment!

Sala

Barely Hedged wrote: »

What banks and what are the multiples on offer?

I know one person offered 4.5 times from BOI in principal, another couple offered 5 times (unsure which bank this was) and the Head of Ulster Bank publicly said 68% of FTBs in 2014 would have fallen outside the new LTV /LTI limits - if it was only the deposit he would have said that... he said both, which suggests that a proportion of these loans are in excess of 3.5 times income.

Barely Hedged

Sala wrote: »

I know one person offered 4.5 times from BOI in principal, another couple offered 5 times (unsure which bank this was) and the Head of Ulster Bank publicly said 68% of FTBs in 2014 would have fallen outside the new LTV /LTI limits - if it was only the deposit he would have said that... he said both, which suggests that a proportion of these loans are in excess of 3.5 times income.

I think it should be 4 max. 5 is very excessive unless they had a lot of equity invested in the property or collateral from another property.

Greyian

Barely Hedged wrote: »

What banks and what are the multiples on offer?

I'm not sure how relevant it is, but this is the AIB Mortgage calculator with a bunch of different salaries inputted.

Just to mention, those are all based on a single applicant, with no dependents. I did find it interesting that 2 people are €30,000 each would qualify for €267,000 total, compared with a single person on €60,000 qualifying for €259,000. Would 2 people earning €30,000 each really be better off than 1 person on €60,000 supporting only him/herself?

ardmacha

Greyian wrote: »

Just to mention, those are all based on a single applicant, with no dependents. I did find it interesting that 2 people are €30,000 each would qualify for €267,000 total, compared with a single person on €60,000 qualifying for €259,000. Would 2 people earning €30,000 each really be better off than 1 person on €60,000 supporting only him/herself?

The two people would pay little or no tax, the Single person would pay a fair bit.

The_Conductor

Greyian wrote: »

I did find it interesting that 2 people are €30,000 each would qualify for €267,000 total, compared with a single person on €60,000 qualifying for €259,000. Would 2 people earning €30,000 each really be better off than 1 person on €60,000 supporting only him/herself?

With individualisation of the tax regime- yes, 2 people on 30k each- are significantly better off- net- than one person on 60k...... Of course the flipside of that coin- is two people on 30k each- are more likely to go down to 1 person on 30k at some stage- than a person on 60k is to drop to 30k (and if children are involved- the cost of childcare etc- would presumably enter the equation- which can be quite crippling!)

dynamited

Michael D Not Higgins wrote: »

But you just said you had X2?

My god i was " X2'ing " his comment

Michael D Not Higgins

dynamited wrote: »

My god i was " X2'ing " his comment

You have to admit it's confusing, he asked a simple question referring to another person's comment about ridiculous multiples and you respond with X2.

El_Dangeroso

The_Conductor wrote: »

With individualisation of the tax regime- yes, 2 people on 30k each- are significantly better off- net- than one person on 60k...... Of course the flipside of that coin- is two people on 30k each- are more likely to go down to 1 person on 30k at some stage- than a person on 60k is to drop to 30k (and if children are involved- the cost of childcare etc- would presumably enter the equation- which can be quite crippling!)

I've always thought that was unconstitutional, there's a (now really outdated) section of the constitution that states:

41.2.1 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.
41.2.2° 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

If someone had a lot of time and money to lodge an appeal that the current tax system should be reformed upon that basis I'd say they'd have a good chance.

Michael D Not Higgins

El_Dangeroso wrote: »

I've always thought that was unconstitutional, there's a (now really outdated) section of the constitution that states:

If someone had a lot of time and money to lodge an appeal that the current tax system should be reformed upon that basis I'd say they'd have a good chance.

What exactly are you arguing? A couple with one stay at home spouse and the other earning 60k are in the same position as a couple each earning 30k. What I don't know is if they offer the same mortgage to a couple with one earning 60k and the other earning nothing as they do to a single person earning 60k.

The bank are perfectly entitled to (and should) adjust their lending based on risk.

jay0109

Michael D Not Higgins wrote: »

The bank are perfectly entitled to (and should) adjust their lending based on risk.

Wrong end of the stick again!
He's talking about the tax individualisation and whether the tax system should favour single people over married people given what the Constitution says on the family.

seamus

Greyian wrote: »

I'm not sure how relevant it is, but this is the AIB Mortgage calculator with a bunch of different salaries inputted.

Just to mention, those are all based on a single applicant, with no dependents. I did find it interesting that 2 people are €30,000 each would qualify for €267,000 total, compared with a single person on €60,000 qualifying for €259,000. Would 2 people earning €30,000 each really be better off than 1 person on €60,000 supporting only him/herself?

Yes. Pooled resources, for a start. The running costs of a two-person household are less than twice that of a one-person household. Just to take two examples;
1. Heating. A house with two people will not be heated twice as much as a house with one, even if those people are in separate rooms.
2. Electricity. TVs, lights, cookers, all consume the same amount of electricity no matter how many people are using them concurrently. OK, the cooker uses a little more, but not twice as much.

Michael D Not Higgins

jay0109 wrote: »

Wrong end of the stick again!
He's talking about the tax individualisation and whether the tax system should favour single people over married people given what the Constitution says on the family.

But they are favoured over single people.

Sala

Interesting... under the how much can I borrow calculator on mortgages.ie (which hasb't been updated re 3.5 times for 2015 yet) the multiples vary widely:
A single 30 year old professional earning 100k can borrow €375k, or 3.75 times income whereas two 30 year old married professionals earning 40k each (80k total) can get 408k, or 5.1 times salary.

According to the deloitte calculator a single person earning 100k takes home less than two people earning 80k combined, I presume this explains the difference

dynamited

Michael D Not Higgins wrote: »

You have to admit it's confusing, he asked a simple question referring to another person's comment about ridiculous multiples and you respond with X2.

Let's end this once and for all

Roll on January and bring on the new CB lending rules

Greyian

seamus wrote: »

Yes. Pooled resources, for a start. The running costs of a two-person household are less than twice that of a one-person household. Just to take two examples;
1. Heating. A house with two people will not be heated twice as much as a house with one, even if those people are in separate rooms.
2. Electricity. TVs, lights, cookers, all consume the same amount of electricity no matter how many people are using them concurrently. OK, the cooker uses a little more, but not twice as much.

I understand that, but I think some people have misunderstood what I've asked.

Would 2 people on €30k each be better off than single person on €60k, who doesn't have anyone to support. Obviously a couple (no kids) each earning €30k would be better than a couple where one person earns €60k and the other earns nothing.
But, if Adam and Eve are a couple, and each earn €30k, they'd have a combined take-home of ~€4050/month. If Bob is single and earns €60k, he'd have a take-home of €3360, or €700 less per month.
The €4050 take-home for Adam and Eve has to feed 2 people though, cover the cost of getting to/from work for 2 people etc. Meanwhile, Bob only has to meet expenses for a single person (himself). I'd be inclined to believe that a single person on €60k gross, with no-one but him/herself to take care of, would be better able to meet mortgage repayments than a couple each earning €30k.