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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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[Deleted User]

Ireland has fastest growing property market in the world.

MarkAnthony

El_Dangeroso wrote: »

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.

People have had the money and time (and great imagination) to launch all sorts of challenges based on the principle bot against tax and otherwise. They have met with very limited success. Keep reading - Art 45 is completely nonjusticiable.

dynamited

Greyian wrote: »

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.

It's all well a good to look at figures for Adam and Eve but what happens when Eve gets up on one of the neighbours and Adam wants to split

Eve will then get half

Figures won't look so good then

MarkAnthony

Deleted User wrote: »

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).

I think the rules are a great idea, but they should have been kept under the radar (as much as possible) until a firm date could have been set. The cynic in me is seeing conspiracies everywhere

Greyian

dynamited wrote: »

It's all well a good to look at figures for Adam and Eve but what happens when Eve gets up on one of the neighbours and Adam wants to split

Eve will then get half

Figures won't look so good then

Again, my point was actually thought I felt that the single earner on €60k (who only has himself/herself to support) should really be in a better position than 2 €30k earners.
It seems odd to me that the couple in this example are offered more.

dynamited

The rules are more than welcome

The market is only the way it is because of a supply issue, but the media aren't helping either by hyping it up left right and center.

If the CB lending rules weren't put into place you would have people panic borrowing and buying at ridiculous prices in the middle of a recession ( yes we are still in recession )

I wish people would stop comparing prices to the boom and i am using a comparison here ( don't hate) but during the boom people bought houses for crazy prices but were on decent wages, if these rules are not brought in you will have people buying houses at crazy prices but poor wages

The rules are a good thing for the majority of the population as we are still in trouble and the way Europe is looking there may be another dip on the way

Greyian

Deleted User wrote: »

Ireland has fastest growing property market in the world.

article wrote:

Thanks to an annual growth rate of 15 per cent

article wrote:

Ireland has out-performed...to place first out of 54 countries

article wrote:

it’s a remarkable turnaround for a property market which languished at the foot of the index table for most 2009 to 2012

Phrases like that in the article are truly worrying. You'd swear we'd cured cancer, AIDS and EBOLA with the optimism and positivity in the article.

El_Dangeroso

Michael D Not Higgins wrote: »

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.

As clarified, I'm just talking about the tax system, a married couple earning 30K each come home with more than a married couple where one earns 60K.

MarkAnthony wrote: »

People have had the money and time (and great imagination) to launch all sorts of challenges based on the principle bot against tax and otherwise. They have met with very limited success. Keep reading - Art 45 is completely nonjusticiable.

I'm interested, how do you mean? Not an expert on constitutional law by any means.

[Deleted User]

Greyian wrote: »

Phrases like that in the article are truly worrying. You'd swear we'd cured cancer, AIDS and EBOLA with the optimism and positivity in the article.

We won, we won! Boomiest Boom of the Year 2014

Greyian

Deleted User wrote: »

We won, we won! Boomiest Boom of the Year 2014

https://www.youtube.com/watch?v=okwaHbuW-Hc

seamus

Greyian wrote: »

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

I totally did

My suspicion here is that even though the differencein take-home is only €700, the day-to-day spending of two cohabiting individuals does not add up to €8400/year more than those of a single individual.

Consider how many costs are socialised when you have two people - rent/mortgage, light, heat, TV, internet, repairs. Even things like food on the whole work out that little bit cheaper (than two single individuals) because you buy in large quantities and use more of what you buy, rather than let it go to waste.
I suspect social costs are probably somewhat cheaper too, as a couple will forgo more nights out in the pub in favour of a bottle of wine and a chinese.

Really the only major differences are going to be in transport and discretionary spending. Transport isn't that expensive, unless both drive big cars long distances to work every day. Where one or both partners take public transport (or walk/cycle), their costs are less than €100/month. Discretionary spending of course can be a big one, but I would have a gut feeling that in a relationship people are less likely to splurge and arrive home one day with new €1k TV or a PS4

All in all, I can see how that €700 extra a month could manage to translate into just a little more disposable income for two individuals, even after additional costs are factored in.

I guess you could rephrase the question as - "If someone had no bills and no rent, could they save money on a €700/month salary?" I would say "Yes", absolutely.

Greyian wrote: »

Phrases like that in the article are truly worrying. You'd swear we'd cured cancer, AIDS and EBOLA with the optimism and positivity in the article.

To be fair, it's an article in a property supplement, relaying the details of a report from estate agents. Therefore property values going up == good.

Greyian

seamus wrote: »

I totally did
but I would have a gut feeling that in a relationship people are less likely to splurge and arrive home one day with new €1k TV or a PS4

I bought a PS4 when it came out, and bought a brand new €1k TV on Black Friday. Who are you, and how do you know what I'm doing?

Sala

Greyian wrote: »

Again, my point was actually thought I felt that the single earner on €60k (who only has himself/herself to support) should really be in a better position than 2 €30k earners.
It seems odd to me that the couple in this example are offered more.

They are offered more as they take home more. A single person on 60k takes home less than two on 30k each. Running the figures through deloitte and mortgages.ie it appears 30 year old professionals:

Single, 60k, net take home €3360, can borrow €231k / 3.85 times income
Cohabitants, 30k each, take home €4142, can borrow €279k / 4.65 times inc
Married, one income 60k, net €3,647, can borrow 250k/4.1 times income
Married 30k each, take home €4,143, can borrow €299k / 4.9 times inc

No idea why the married couple earning the exact same as the cohabitants get more.

Greyian

Sala wrote: »

They are offered more as they take home more. A single person on 60k takes home less than two on 30k each. Running the figures through deloitte and mortgages.ie it appears 30 year old professionals:

Single, 60k, net take home €3360, can borrow €231k / 3.85 times income
Cohabitants, 30k each, take home €4142, can borrow €279k / 4.65 times inc
Married, one income 60k, net €3,647, can borrow 250k/4.1 times income
Married 30k each, take home €4,143, can borrow €299k / 4.9 times inc

No idea why the married couple earning the exact same as the cohabitants get more.

Again, I understand that, but the couple would also have higher expenses (apart from the mortgage/home insurance etc) than the single person. The single person only needs 1 car/1 public transport monthly ticket, whereas the couple need 2 (or some combination of the 2) in most cases. The couple is also likely to have 2 mobile phone bills, spend more on food (maybe not as much per person, but still more combined than the single person) etc.

I seem to remember at some point, people were saying banks were looking for ~€1k per adult + €250 per child after mortgage payments (i.e. a couple with take home of €4k combined, with 2 children, could have a mortgage payment of ~€1.5k (4k - 2*1k - 2*250)).
Using those figures, the single person could afford €2.3k mortgage/month (€3.3k-€1k), while the couple could afford €2k (€4k-€2k).
In both cases though, I still think those are excessive mortgage repayments (and they would fall well short on the new LTI limits anyway).

The_Conductor

Michael D Not Higgins wrote: »

But they are favoured over single people.

Not anymore, they're not.
You can pool Tax Free Allowances- but not credits.
Two people are better off single- than married- esp. if one of them isn't earning enough to use up all their credits.......

Families where one partner stays at home to mind the children- are now discriminated against- in the Irish tax code.

As for two single people- versus one person earning twice as much as the two single people combined- a far higher portion of their income will be at the lower rate- than for the single higher earner- thus their NET pay after tax- will be considerably higher than for the person on the income of similar to their combined incomes.

Sala

The question would be is the difference of €780 less than or more than the extra costs of the extra person. I suspect you my be right, even with pooled resources such as heat, there are a lot of extras such as food, bus tickets, clothes, doctor, socialising that would use up the extra funds and put them at best on the same footing as the single earner. Maybe it's a risk thing- ie if one person loses their 60k job the bank is in a worse position than if one of the 30k earners does

Michael D Not Higgins

The_Conductor wrote: »

Not anymore, they're not.
You can pool Tax Free Allowances- but not credits.
Two people are better off single- than married- esp. if one of them isn't earning enough to use up all their credits.......

I stand corrected

MarkAnthony

El_Dangeroso wrote: »

I'm interested, how do you mean? Not an expert on constitutional law by any means.

Sorry on a reread my post came across as condescending that wasn't my intention. By keep reading I meant look at Art 45 which is ignored by the courts; bold statements on social policy but if they were the subject of judicial decisions we'd be (maybe not even) one step removed from a socialist state.

Women in the Home - this has been the subject of judicial decisions, the one that springs to mind is the beneficial ownership of property in the area of equity. The woman's work within the home was not enough to grant a share in the beneficial ownership of a property. Note this was before the Family Home Protection Act but I don;t think i was the family home in question anyway - could be wrong.

Tax regimes have been challenged successfully with some amazing judicial gymnastics then attached in relation to the decisions. The case name escapes me but a challenge was taken on an issue, by the time it hit the Supreme Court it had been going on for years. It was held that the couple could claim for themselves but no-one who hadn't already challenged could claim (no one else had launched a challenge!) and that situation stands to this day.

Basically when it comes to tax you're got every which way!

Sala

Murphy v attorney general?? Some weird excuse as to why they only had to give them a rebate as opposed to all the others penalised by same to system whereas in reality it was just to protect the state from a massive bill (that may be a but simplistic!)

MarkAnthony

Sala wrote: »

Murphy v attorney general?? Some weird excuse as to why they only had to give them a rebate as opposed to all the others penalised by same to system whereas in reality it was just to protect the state from a massive bill (that may be a but simplistic!)

That's the one I think. No it really was that simple - it is frequently and I say this with the greatest respect to the Irish Judiciary (having had the opportunity to meet three Supreme Court Justices and a number of High Court Judges). The court frequently falls back on the 'resources' argument and don't get me started on the logic regarding the safety of criminal convictions in certain similar circumstances.

It's not satisfactory from a fairness and justice point of view but unfortunately this area is firmly in the purview of politics.

El_Dangeroso

Sorry to derail the thread slightly but that's fascinating, thanks for enlightening me!

gaius c

mum's heartbreaking letter to Taoiseach

The woman's letter to Mr Kenny was released under the Freedom of Information Act to RTE's 'Morning Ireland' programme.

No agenda here. No sireee.

zl1whqvjs75cdy

gaius c wrote: »

mum's heartbreaking letter to Taoiseach

No agenda here. No sireee.

Irish independent? Yeah you can pretty much ignore everything in that rag, they aren't even being subtle about their agenda anymore. House prices and SF bashing are all they are interested in.

Michael D Not Higgins

gaius c wrote: »

mum's heartbreaking letter to Taoiseach

No agenda here. No sireee.

Jesus, a bit heavy handed on the aul emotions there. They can't afford a house at the moment as she already said, so how does leaving things as they are help them? And they want another kid too? How do they think they'll pay for everything, with the magic Fine Gael mortgage insurance scheme?

Greyian

donkeyoaty0099 wrote: »

Irish independent? Yeah you can pretty much ignore everything in that rag, they aren't even being subtle about their agenda anymore. House prices and SF bashing are all they are interested in.

And the letter doesn't even really have anything to do with the deposit requirements. She's saying she's getting outbid by other people. Changing LTI or LTV requirements would just give everyone else more/less money too, so her relative position would be the same.

hmmm

gaius c wrote: »

mum's heartbreaking letter to Taoiseach

No agenda here. No sireee.

Talk about over the top. "Save the country" indeed.

Michael D Not Higgins

Greyian wrote: »

And the letter doesn't even really have anything to do with the deposit requirements. She's saying she's getting outbid by other people. Changing LTI or LTV requirements would just give everyone else more/less money too, so her relative position would be the same.

They can leave the system how it is and save to afford a higher price while the prices continue to spiral, or they can accept the new proposals and save to afford a higher deposit while prices are reined in by proper regulation.

The shortsightedness is what gets me. They want the house now, even though they can't afford it. They want another child, even though they can't afford it. These people are exactly the kind who should be welcoming some regulation, except that it means that they won't have a house in the next 12 months.

Edit: they even said the house went from 173 to 199, a rise of 15%. That's more than they'd have to save under the new deposit rules.

seamus

The entire crux of the issue is summed up in one line in her letter.

Do you realise that my husband feels so guilty that he cannot provide enough for us as a family that he thinks we may be renting for the rest of our lives?

Renting is seen as the pauper's solution - something that only the young and the desperate do - and if you cannot buy a house, you're a failure in life.
There doesn't seem to be any reference to means or rationality; she wants to buy a house because she doesn't comprehend that it could be any other way.

Perhaps the government needs to look at providing better protection for tenure in the rental market so that people see it as a viable option for building a home - tax rebates for long-term lease agreements (5 years+), etc?

[Deleted User]

+1 to both of the above.

It also underlines a key problem with our political system and public expectations. The independent Central Bank launched a public consultation process - yet people are writing to politicians.

One of the letters asks the Taoiseach to 'force the Central Bank to abandon this policy'. Another demands that he 'canvass the appropriate authorities' so that they can't pass the regulations.

If the Central Bank capitulates to this political lobbying they are forever impotent. (Of course, any watering down would be couched in other terms: 'On mature reflection, having looked at other evidence that must have escaped our detailed literature review first time around, we think our idea was actually not so great after all.'

chris85

seamus wrote: »

Renting is seen as the pauper's solution - something that only the young and the desperate do - and if you cannot buy a house, you're a failure in life.
There doesn't seem to be any reference to means or rationality; she wants to buy a house because she doesn't comprehend that it could be any other way.

Perhaps the government needs to look at providing better protection for tenure in the rental market so that people see it as a viable option for building a home - tax rebates for long-term lease agreements (5 years+), etc?

I would agree that is a good idea. Some extra security for renters looking to for a home rather than a house.