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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

Where in the name of hell are they pulling these building costs from?

If they're to be believed no building should have ever or will ever take place outside of Dublin/London and a few other places. I know I'm probably missing something but do bricks cost €100 each?

[Deleted User]

I agree, it's baloney. Started with this kind of thing: New mortgage rules 'madness' says developer and crystalised into this: Half of new homes face axe over mortgage proposals

As you say, no houses would ever be built outside Dublin if that were the case.

Michael D Not Higgins

ciaranlong wrote: »

How can you back up your claim that the bubble was *not* driven by speculation over additional properties to the family-home?

I agree that the Government is at fault. And I think that they should be the ones acting as opposed to the Central Bank. As we're dealing with a "supply" problem here. Not a "demand" one.

Well you suggested it was driven by second homes so I'll let you field that one. It's clear there are more principal homes than second homes so it stands to reason the principal home had more of an effect on the market.

You still haven't grasped the reasoning of the regulations. You still think the central bank are trying to control the housing market. They're not, they're regulating the lending industry.

dynamited

Estate agent got back to me again wondering if i was still interested in the property i looked at in July which i left straight away after he told me " they had multiple bids " over the asking price

He told me last week it dropped 10k, he then contacted me yesterday evening stated it has dropped a further 5k

They're getting desperate, i wonder if this will be a sign of things to come when the new lending rules take effect

The_Conductor

Seeing similar here. I'm looking on behalf of my father-in-law at the moment. Properties we ruled ourselves out of on price grounds- are making a reappearance months later, normally at 5-10% below the levels at which we bowed out. This is in the Lucan area by the way- and is from all 4 estate agents here, along with one in Celbridge and one in Maynooth- it seems to be across the board.

Also- talking to a receiver (KPMG) yesterday- hes trying to sell a reasonable 3 bed in Lucan village for most of the year now. His 4th purchaser pulled out yesterday. He genuinely doesn't know whats happening.

Annecdotally- even at current rental levels- property prices in the Dublin area are no longer of interest to investors- the return on investment is not there, the figures do not add up.

We appear to be experiencing the beginnings of a correction of sorts- which is only going to be amplified by new lending rules. The big issue is lack of supply in the rental sector- alongside prices in the selling sector. Our prices are wholesale out of kilter with fundamentals, once more...........

dynamited

The_Conductor wrote: »

Seeing similar here. I'm looking on behalf of my father-in-law at the moment. Properties we ruled ourselves out of on price grounds- are making a reappearance months later, normally at 5-10% below the levels at which we bowed out. This is in the Lucan area by the way- and is from all 4 estate agents here, along with one in Celbridge and one in Maynooth- it seems to be across the board.

Also- talking to a receiver (KPMG) yesterday- hes trying to sell a reasonable 3 bed in Lucan village for most of the year now. His 4th purchaser pulled out yesterday. He genuinely doesn't know whats happening.

Annecdotally- even at current rental levels- property prices in the Dublin area are no longer of interest to investors- the return on investment is not there, the figures do not add up.

We appear to be experiencing the beginnings of a correction of sorts- which is only going to be amplified by new lending rules. The big issue is lack of supply in the rental sector- alongside prices in the selling sector. Our prices are wholesale out of kilter with fundamentals, once more...........

Very informative post there, I've spoken to alot of people who are in the same position and they all state that pretty much the same thing is happening to them

I'm looking in the D15 area but have had my eye on Lucan, my price range is only 180k as I've only been offered 80k by the bank , I can't speak for any of the activity that is happening at the higher end of the market but my prediction would be that the new rules will have a knock on effect on the lower end 150k-250k, i could be wrong though

Here's to hoping

El_Dangeroso

From a Galway perspective, the 'heat' definitely seems to be dissipating out of the market a little. At yesterday's O'Donnellen and Joyce auction, many properties went for less than comparable houses in the summer auctions.

One particular example is a big house in Salthill sold for €360k when a smaller house in worse condition went for €395K in July.

The_Conductor

Prices are already correcting- but a sharp shock will do no-one any favours- and would effectively close down lending once more- which would kill all sectors........ The 9.6% rise that the CSO reported for Dublin property prices in the last 12 months- has already tapered into negative territory- that much is clear........ There are a number of interesting building projects underway- that developers are doing their damndest to get out the door- I have never seen developments thrown up at the speed you see some around Lucan and Clonee- they need to get them sold asap- and then reassess the situation.

I'm not predicting anything- there are far too many unknowns out there- but the market is behaving very strangely at the moment- and it doesn't auger well for anyone.........

Lucy B

Was just looking at ulster banks website and it says, "don't have your 20% deposit, we still have a range of options". Wonder what they could be?

The_Conductor

Lucy B wrote: »

Was just looking at ulster banks website and it says, "don't have your 20% deposit, we still have a range of options". Wonder what they could be?

Ask them?
When you find out- please do post back here- as there are a lot of us who would like to know what they have in mind.........

makeorbrake

The_Conductor wrote: »

Ask them?
When you find out- please do post back here- as there are a lot of us who would like to know what they have in mind.........

Link

Looks like they are using this as an opportunity to push people towards their fixed rate products.

dearg lady

Well the new regulations were never intended to cover all mortgages, so it's hardly surprising that there are other options available

TheDriver

i don't get it? They can have products which cover over 80% LTV?

SpaceTime

You'd swear that speculating on property was something the Government thought we should all be doing.

Why give a CGT exemption on property?

How about giving that CGT exemption to something socially useful instead? Maybe entrepreneurs setting up businesses, or I donno: maybe do something for once that isn't sucking money out of the economy and handing it to the banks, speculators and golden circle.

Property bubbles are bad things, excessively high house prices are bad things.

Do they not understand that it's not even a zero-sum game? Money actually exits the economy and much more so than in the past due to the open capital flows in and out of the country.

When property prices and rents are too high, money is actually sucked out of the real economy and squirrelled away into speculators accounts which are often completely outside the Irish economy anyway.
It's basically a respectablised pyramid scheme.

MarkAnthony

While EAs are definitely becoming less busy we're currently going through the final stages with mortgage approval with Ulster Bank at the moment, they seem very busy!

Less people buying but more people finalising I think - understandable given the background and time of year.

I think Q1 2015 is going to be very interesting in terms of the market position.

MarkAnthony

SpaceTime wrote: »

You'd swear that speculating on property was something the Government thought we should all be doing.

Why give a CGT exemption on property?

If you can't beat um, manipulate 'um. The CGT exemption has meant that people who are cash rich have sunk money into fixer-upers which will end up on the rental market for the next few (upto 7 years). It's not done much but it's a start. It's resulted IMHO in people selling who may not have done otherwise and given us some nice headline figures in the growth of the property market.

Next years proposal is income tax relief on the old housing in Dublin City. Again it's all nibbling round the edges but it's a step in the right direction.

MarkAnthony

PS if anyone wants to take a city centre 1 bed off my hands for 250K PM me with you and your carers details :pac:

gaius c

The_Conductor wrote: »

Seeing similar here. I'm looking on behalf of my father-in-law at the moment. Properties we ruled ourselves out of on price grounds- are making a reappearance months later, normally at 5-10% below the levels at which we bowed out. This is in the Lucan area by the way- and is from all 4 estate agents here, along with one in Celbridge and one in Maynooth- it seems to be across the board.

Also- talking to a receiver (KPMG) yesterday- hes trying to sell a reasonable 3 bed in Lucan village for most of the year now. His 4th purchaser pulled out yesterday. He genuinely doesn't know whats happening.

Annecdotally- even at current rental levels- property prices in the Dublin area are no longer of interest to investors- the return on investment is not there, the figures do not add up.

We appear to be experiencing the beginnings of a correction of sorts- which is only going to be amplified by new lending rules. The big issue is lack of supply in the rental sector- alongside prices in the selling sector. Our prices are wholesale out of kilter with fundamentals, once more...........

One thing to look for and it seems to be from certain EA's is that an ad is being taken off DAFT/Myhome and then brought back on as a new ad to try and hide the price drop.

Will be interesting to see what next spring brings but the outright panic in the Indo (something like 6 articles raving about the new CB rules in the last fortnight) make me think that better times for FTB's are on the way.

gaius c

Lucy B wrote: »

Was just looking at ulster banks website and it says, "don't have your 20% deposit, we still have a range of options". Wonder what they could be?

They are still allowed to give out some mortgages at over 80% LTV.

MarkAnthony

gaius c wrote: »

They are still allowed to give out some mortgages at over 80% LTV.

I'm open to correction but the 3.5x salary LTI must not be exceeding in more than 20% of circumstances which gives them some play there as well.

The_Conductor

gaius c wrote: »

They are still allowed to give out some mortgages at over 80% LTV.

15% of mortgages (though they are lobbying to bring this up to 25%).
I don't see what their alternative products for those without the 20% deposit is though- someone (above) suggested it was a ploy to sell various fixed rate products- but that simply doesn't add up for me......... (unless the fixed rate products are more profitable than the variable rate products- and by agreeing to go fixed rate- the bank then bump you into the 15% of customers they are allowed to bring over the threshold........)?

The big thing that seems to be happening, in my opinion- is investors have stopped buying- and several have been actively bailing over the past few months (to get favourable tax treatment on gains before the end of the year). The volume change in properties for sale- isn't enormous- but there is more choice for purchasers. Simultaneously- buyers are pulling out of purchases left right and centre- for a wide and varying list of reasons. Bridging finance- which BOI and AIB were willing to countenance earlier in the year- for those selling property- has dwindled to nil. So- if you're in a chain- you're in trouble.........

Its all a bit of a mess- and getting messier and messier by the minute.

Wholly aside from the changes to mortgage rules- the change in the tax regime for investors at the year's end, may have a far higher impact than any other single factor- on the immediate market.

BarneyThomas

Having watched and participated in the property market and the commentary from all over the place on it for about 20 years I can only say that anyone who tries to draw any conclusions on the market from October to February is purely guessing.
Every year there is either slowdown or speedup for that period, for all sorts of reasons (tax returns/budgets/holidays/new year resolutions/bonus time and hundreds more reasons). Then people draw all sorts of conclusions from this and invariably its back to the drawing board around March/April for them because they were totally pulling their reasoning out of the air out of desperation.

Have a look at all the posts around December for the last two years for example and you will see this in action on any message board.
Read what people posted last year about what the "evidence" is pointing to. Be they bulls or bears. Then compare that to what actually happened. Im too lazy to read it here, but its in all message boards, so im 100% sure its there on boards.ie too

I know out of all the people I know personally, its the same people who come up with various theories every year, forgetting that their theories were totally different, put pointing to the same outcome, that never seems to happen for them even just the year before.

Never try to read anything into a property market at this time of year. Its impossible.

El_Dangeroso

Ah Barney, you're no fun, we'd have nothing to talk about if we didn't make predictions!:)

Based on your 20 year experience in the property market, are YOU planning to invest or sell in the next year? I won't make a house purchase based on your answer I promise.:)

BarneyThomas

El_Dangeroso wrote: »

Ah Barney, you're no fun, we'd have nothing to talk about if we didn't make predictions!:)

Based on your 20 year experience in the property market, are YOU planning to invest or sell in the next year? I won't make a house purchase based on your answer I promise.:)

Im all for a bot of craic, but basing any predictions on anything happening at this time of year you might as well throw darts at a dart board. Not that its not always just throwing darts, but this time of the year is worse.

Just to put my cards on the table since you've asked, ive been buying one investment property every year since 1998 (except in 2008 because i thought i was going to be totally ruined at that stage and got scared), regardless of where i think the market is going to go - because im usually wrong about whats about to happen

I treat it like i treat equities. Just buy them on a regular basis and dont try to second guess where they are going to go.

Barely Hedged

MarkAnthony wrote: »

You're not increasing debt, you are simply spreading it out not allowing capital to become concentrated in to a smaller and smaller number of people. I'm well aware many will disagree there

you're right I got you confused with someone else.

Thats because you didn't read/understand the entire proposition, thats fine I think we both had our minds made up coming into this.

But your whole premise to reinstate 100% mortgages and load people with as much debt as their willing to take on assumes that all borrowers are rational and that abuse of the system wont take place not to mention the resulting asset inflation from providing people with unleveraged finance to buy said asset with.

Im sorry, but your points are completely detached from the reality of the situation. This is why we have regulators and central banks. To ensure that people do not get ahead of themselves and that balanced growth is achieved. The whole aim of a government is to improve the wealth of society not improving the amount of credit available to them. The two are very different things and one has serious consequences if abused.

MarkAnthony

Barely Hedged wrote: »

But your whole premise to reinstate 100% mortgages and load people with as much debt as their willing to take on assumes that all borrowers are rational and that abuse of the system wont take place not to mention the resulting asset inflation from providing people with unleveraged finance to buy said asset with.

Im sorry, but your points are completely detached from the reality of the situation. This is why we have regulators and central banks. To ensure that people do not get ahead of themselves and that balanced growth is achieved. The whole aim of a government is to improve the wealth of society not improving the amount of credit available to them. The two are very different things and one has serious consequences if abused.

I'm sorry but it's you who is detached from reality. You're allowing the capital with in market to become more and more focused within the hands of a smaller and smaller group of people. Asset inflation is happening there and to a much greater degree than limited 100% mortgages would.

Forcing people to rent at amounts much higher than a mortgage is simply madness when those people are settled and means that they have no hope of saving a 20% deposit. It's all right patting oneself on the back at the moment when you've a few properties in a portfolio and are reaping the returns, but when the middle is forced out by an investment firm they'll be screaming blue murder.

Everything, including a crisis in the rental market has serious consequences if abused. Also yet again you've completely missed the point and safeguards suggested and attempted to quote out of context.

Barely Hedged

MarkAnthony wrote: »

I'm sorry but it's you who is detached from reality. You're allowing the capital with in market to become more and more focused within the hands of a smaller and smaller group of people. Asset inflation is happening there and to a much greater degree than limited 100% mortgages would.

Its absolute rubbish to suggest 100% mortgages should be reinstated for anybody regardless of circumstances. In fact 100% loans/transactions to any type of individual, even on the interbank market are close to extinction. There are siginificant historical reasons why this is happening. People need to be responsible for their investments, lenders need some recourse and by introducing 100% loans heavily weights the outcome of this transaction.

MarkAnthony wrote: »

Forcing people to rent at amounts much higher than a mortgage is simply madness when those people are settled and means that they have no hope of saving a 20% deposit. It's all right patting oneself on the back at the moment when you've a few properties in a portfolio and are reaping the returns, but when the middle is forced out by an investment firm they'll be screaming blue murder.

Again - it is much better to refuse people credit than to burden them with a debt they cant pay. You are completely mismatching long term liabilities with short term ones. This is a situation that will not resolve itself over night. It will take up to 5 years. To suggest that we should give people 100% mortgages for 20/25/30/35 years to solve something that will take 5 years to sort out is mind boggling.

Sure landlords are benefiting now, but what about in the years of late 07 - early 2013 when rents fell dramatically? What about in 5 years when rents fall due to an increase in the number of people buying there own homes. Sounds like youre shouting blue murder.

MarkAnthony wrote: »

Everything, including a crisis in the rental market has serious consequences if abused. Also yet again you've completely missed the point and safeguards suggested and attempted to quote out of context.

What safeguards and what have i quoted out of context? I think, yet again, youre confusing me with somebody else

the groutch

makeorbrake wrote: »

Link

Looks like they are using this as an opportunity to push people towards their fixed rate products.

AIB have already pushed their 5 year fixed down to 3.9%.
They know which way interest rates are going to go, and are trying to lock people into fixed rates for as long as possible.

gaius c

MarkAnthony wrote: »

I'm sorry but it's you who is detached from reality. You're allowing the capital with in market to become more and more focused within the hands of a smaller and smaller group of people. Asset inflation is happening there and to a much greater degree than limited 100% mortgages would.

Forcing people to rent at amounts much higher than a mortgage is simply madness when those people are settled and means that they have no hope of saving a 20% deposit. It's all right patting oneself on the back at the moment when you've a few properties in a portfolio and are reaping the returns, but when the middle is forced out by an investment firm they'll be screaming blue murder.

Everything, including a crisis in the rental market has serious consequences if abused. Also yet again you've completely missed the point and safeguards suggested and attempted to quote out of context.

You seem to be under the misapprehension that giving people more credit to people without capital, helps them compete with those who have capital/equity. It doesn't (or it's an extremely short term boost) because they have to bear the cost of compound interest, while those with capital don't.

More credit makes you poorer in the long run.
Heard of Elizabeth Warren? Have a watch of this and come back to us.
https://www.youtube.com/watch?v=akVL7QY0S8A

Sala

gaius c wrote: »

One thing to look for and it seems to be from certain EA's is that an ad is being taken off DAFT/Myhome and then brought back on as a new ad to try and hide the price drop.

Will be interesting to see what next spring brings but the outright panic in the Indo (something like 6 articles raving about the new CB rules in the last fortnight) make me think that better times for FTB's are on the way.

I have noticed this as well. I would have thought they'd have to pay for this though. Do price drops really influence people that much