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What were the lending rules pre 2008 financial crash for a mortgage

24

Comments

  • #32
    DubCount
    Registered Users Posts: 1,064 ✭✭✭DubCount


    cruizer101 wrote: »
    Just for reference my parents bought a house in 94 and my recollection was 2.5 or maybe 3 times the primary earners salary plus 1 times the secondary. I suppose the logic being people would buy a house and then have kids so good chance the secondary earnings might disappear or at least be sucked up by childcare.
    Again that wasn't a hard rule but I do think at the time it was a standard most banks stuck to close enough.

    I was going to say this. I got a mortgage in 95. The rule was 2.5x primary salary plus 1x secondary salary. My calculation was about £300 short of the amount I wanted to borrow, and the bank branch had to apply to head office for an exemption.


  • #33
    Buddy Bubs
    Registered Users Posts: 3,441 ✭✭✭Buddy Bubs


    I got mortgage for 6 times salary post crash in 2010. Zero underwriting.


  • #34
    Cuddlesworth
    Registered Users Posts: 13,980 ✭✭✭✭Cuddlesworth


    Buddy Bubs wrote: »
    I got mortgage for 6 times salary post crash in 2010. Zero underwriting.

    Thats odd, most people I know found it difficult to get anything post 2008. I never looked into mortgages, but as somebody earning f all, I was being offered 15k credit cards at the time.


  • #35
    eviltwin
    Registered Users Posts: 17,495 ✭✭✭✭eviltwin


    I bought my house in 2003 and I don’t recall it being that easy. We got turned down by every bank bar the one we got the mortgage with. I did hear stories of people borrowing crazy sums of money but that was never an option for me.


  • #36
    Sleeper12
    Registered Users Posts: 16,865 ✭✭✭✭Sleeper12


    For what it's worth banks were strict in the early 90s. If both were working the formula was twice or two & half times the bigger wage & once the smaller one. You had to have 10 percent deposit as maximum they would loan was 90 percent of what they valued the property.


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  • #37
    irishguy
    Registered Users Posts: 3,299 ✭✭✭irishguy


    In 2017 within 16 minutes in a branch on my own (gf wasn't even with me) they offered me 8 times our joint income @100% LTV, we were both out of college 12m.
    Even with a small increase in interest rates we would have had no chance of paying it, forget about the tax increases that came after or having kids etc.


  • #38
    NIMAN
    Registered Users Posts: 32,925 ✭✭✭✭NIMAN


    I always remember an audience member on one of rtes studio audience shows, around 2011 when all the post mortems were still being carried out, saying she got a mortgage 11 times her salary. Or was it 13!

    She was single.


  • #39
    javaboy
    Registered Users Posts: 15,094 ✭✭✭✭javaboy


    irishguy wrote: »
    In 2017 within 16 minutes in a branch on my own (gf wasn't even with me) they offered me 8 times our joint income @100% LTV, we were both out of college 12m.
    Even with a small increase in interest rates we would have had no chance of paying it, forget about the tax increases that came after or having kids etc.

    2017 or 2007? In Ireland?


  • #40
    Nijmegen
    Registered Users Posts: 3,086 ✭✭✭Nijmegen


    People at the moment looking for a mortgage regularly decry the current rules around 90% LTV and the 3.5x earnings in particular. What they don’t seem to cop is that it’s a con on them if the rules were looser - the same number of houses are there to be bought. Either the price will go up more than they can afford or they’ll end up in the same house with a bigger mortgage.

    Of course, had anyone figured that out in about 2000 we’d likely be a lot better off today as a country…


  • #41
    Buddy Bubs
    Registered Users Posts: 3,441 ✭✭✭Buddy Bubs


    Cuddlesworth wrote: »
    Thats odd, most people I know found it difficult to get anything post 2008. I never looked into mortgages, but as somebody earning f all, I was being offered 15k credit cards at the time.

    1 payslip. No p60.
    6 times my income of 35k as a mortgage.
    I put in 10% deposit
    Took about 2 days to get approved
    My broker had a contact in the bank.
    Shenanigans.
    But anyway, my income is much higher now and I'm still in same house. Never struggled to pay really.


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  • #42
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    Sleeper12 wrote: »
    For what it's worth banks were strict in the early 90s. If both were working the formula was twice or two & half times the bigger wage & once the smaller one. You had to have 10 percent deposit as maximum they would loan was 90 percent of what they valued the property.

    Outwardly they were strict, but if you knew the manager or were introduced to him, they became very flexible and led you to the correct answers.

    In many cases the manager had the final decision on the loan.

    The deposit though was strict. But loans were to 92% and you had the first time buyers grant (£3,000 I think) which builders would deduct from the deposit once you signed a form.

    In 1990 you'd buy a new 3 bed semi in ballinteer for £63,000 :)


  • #43
    Flinty997
    Registered Users Posts: 11,424 ✭✭✭✭Flinty997


    Darc19 wrote: »
    Outwardly they were strict, but if you knew the manager or were introduced to him, they became very flexible and led you to the correct answers.

    In many cases the manager had the final decision on the loan.
    ...

    Was strict when everyone I know started buying late 90s early 2000s. I know people with 33% deposits that were refused.

    2.5 x1 salary + 1x1 a second salary. Was just after the high inflation. The rules were set by the banks. It's really only when banks lifted their rules did you start seeing crazy loans. The govt should have stepped then. instead they talked it up adding fuel to the fire. Took over a decade for regulator to get their finger out.


  • #44
    Chris_5339762
    Registered Users Posts: 5,848 ✭✭✭Chris_5339762


    Mine was about 3.5 times salary, back in 2010 or 2011, I can't remember which.

    The permanent public sector contract was what allowed it then, the broker told me.


  • #45
    Tork
    Registered Users Posts: 3,242 ✭✭✭Tork


    Chris_5339762 wrote: »
    Mine was about 3.5 times salary, back in 2010 or 2011, I can't remember which.

    The permanent public sector contract was what allowed it then, the broker told me.

    That was the era when getting a mortgage went from "you have a pulse, here have a mortgage" to being a lot harder to get one. If you could afford it, it was a good time to buy.

    I have a friend who bought a house in the mid 2000s despite having 4-5k of a credit card debt. I was shocked when she told me. I can't remember now if it was a 100% mortgage but it could easily have been if she was telling the truth about the credit card. She had a good job though.


  • #46
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    Mortgages took off when it became more common than not for 2 incomes to buy a house. Prices shot up then. Double the mortgage amount was available and they were competing with other double income buyers for the most part.
    Previously double income buyers would not be competing with many other double income buyers, so prices were relatively low as there werent that many.


  • #47
    gibgodsman
    Registered Users Posts: 563 ✭✭✭gibgodsman


    Shows how absolutely mad it is, I have 26k ready for a deposit, a combined income with the other half of 50k and still cannot get a home in Navan, yet anyone over the age of 40 has a home they bought in the 00's with awful jobs and incomes.

    Being told "Get a gift from a family member" by a financial advisor to be able to get a mortgage is the norm now and its disgusting


  • #48
    Flinty997
    Registered Users Posts: 11,424 ✭✭✭✭Flinty997


    I think there's more to these stories than people let on. They've probably pulled all sorts of tricks, to get past any requirements. But they won't have told you that bit.


  • #49
    Flinty997
    Registered Users Posts: 11,424 ✭✭✭✭Flinty997


    JimmyVik wrote: »
    Mortgages took off when it became more common than not for 2 incomes to buy a house. Prices shot up then. Double the mortgage amount was available and they were competing with other double income buyers for the most part.
    Previously double income buyers would not be competing with many other double income buyers, so prices were relatively low as there werent that many.

    Double incomes was norm in early 2000s. Last I heard of people able to it on a single income was 80s~90's. That's 30~40yrs ago. Its along time ago.


  • #50
    [Deleted User]
    Posts: 18,749 ✭✭✭✭[Deleted User]


    Flinty997 wrote: »
    Double incomes was norm in early 2000s. Last I heard of people able to it on a single income was 80s~90's. That's 30~40yrs ago. Its along time ago.

    In the 2000s, me and six of my female single friends all bought 3 bed houses, money was thrown at everyone!


  • #51
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,520 Mod ✭✭✭✭L1011


    Flinty997 wrote: »
    I think there's more to these stories than people let on. They've probably pulled all sorts of tricks, to get past any requirements. But they won't have told you that bit.

    The brokers / mortgage agents in banks were usually the ones pulling tricks and presenting it as a fait accompli to borrowers.

    Flinty997 wrote: »
    Double incomes was norm in early 2000s. Last I heard of people able to it on a single income was 80s~90's. That's 30~40yrs ago. Its along time ago.

    I bought on a single income in 2012. I was offered sufficient in the boom time.

    Two of my siblings also bought on single incomes, in 99 and the mid 00s (very close to the top)


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  • #52
    Smee_Again
    Registered Users Posts: 1,984 ✭✭✭Smee_Again


    Flinty997 wrote: »
    Double incomes was norm in early 2000s. Last I heard of people able to it on a single income was 80s~90's. That's 30~40yrs ago. Its along time ago.

    Or 2018 in my case and a few people I know.


  • #53
    Feisar
    Registered Users Posts: 6,596 ✭✭✭Feisar


    wally1990 wrote: »
    It is currently a standard 3.5 your wage and 10% deposit

    What were the standard lending rules back then ?

    Rules? It was like 'Nam, there were no rules.

    First they came for the socialists...



  • #54
    [Deleted User]
    Posts: 0 ✭[Deleted User]


    Flinty997 wrote: »
    Double incomes was norm in early 2000s. Last I heard of people able to it on a single income was 80s~90's. That's 30~40yrs ago. Its along time ago.

    Wrong.


  • #55
    NSAman
    Registered Users Posts: 3,386 ✭✭✭NSAman


    Like a fool.. or now I consider it smart...(it was actually LUCK pure and simple) when I got my mortgage in Ireland, I only wanted a small one (no puns). We were buying a family property and it was regularly priced, nothing crazy of expensive.

    I remember going to the mortgage broker, said could I get a mortgage, I told him the amount he said "is that all?" Just for divilment I asked how much I could actually get. He said leave it with me.

    The next meeting was a day or so later. Mortgage was approved and all that remained was the amount. I kid you not 5 Million.

    NO wonder people were buying houses left right and centre. No wonder expensive cars were all the rage. No wonder holiday homes were being bought in Spain and elsewhere. Like a schmuck I just worked all the time and rarely took holidays, drove a regular car and saved every penny I made. I was glad in the end that I did.

    I just took the small amount that I needed and could afford and bought the house which I still have, and those lovely ECB dropped the Interest rates to 0%, no now paying an interest rate of .5% on my mortgage.... So just to finish it off, have been over paying and hopefully clear it off in the next year. Happy out!


  • #56
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Projected salaries, Rent a room income taken into account mortgages based on 'affordability' rather than linked to salary and valuers that essentially asked you what you wanted to be put down on the form. Oh and no deposit, in fact why not have some money to gut the place and buy a new car.


  • #57
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    Flinty997 wrote: »
    Double incomes was norm in early 2000s. Last I heard of people able to it on a single income was 80s~90's. That's 30~40yrs ago. Its along time ago.


    And hous prices took of in the second half of the 90s


  • #58
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Oh and to add if you haven't seen the Big Short it's well worth a watch - I reckon there were a few brokers in Ireland that made the lads in that look professional.

    NINJA applicants :pac:


  • #59
    elefant
    Registered Users Posts: 4,647 ✭✭✭elefant


    Darc19 wrote: »
    Some will think this is a flippant answer, but the be reality is it is fairly correct.

    You'd go into your bank, you'd have joint salary of circa €85,000 and they'd offer you 500,000 without question.

    In the Netherlands right now, you'd get a 100% mortgage of over 450,000 with a joint income of 85,000. And that's without providing any bank statements or proof of consistent monthly savings etc.

    Genuine question: while understanding the residual trauma of the collapse of the housing bubble naturally leads to greater caution, why is it that banks other countries in Europe can be so much more liberal with their lending? Are the current Irish lending rules the sensible ones and other countries are being reckless?


  • #60
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    elefant wrote: »
    In the Netherlands right now, you'd get a 100% mortgage of over 450,000 with a joint income of 85,000. And that's without providing any bank statements or proof of consistent monthly savings etc.

    Genuine question: while understanding the residual trauma of the collapse of the housing bubble naturally leads to greater caution, why is it that banks other countries in Europe can be so much more liberal with their lending? Are the current Irish lending rules the sensible ones and other countries are being reckless?


    How is the Netherlands for repossessing - in case everyone loses their jobs who has a 100% mortgage. In Ireland we dont do repossessions really.


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  • #61
    elefant
    Registered Users Posts: 4,647 ✭✭✭elefant


    JimmyVik wrote: »
    How is the Netherlands for repossessing - in case everyone loses their jobs who has a 100% mortgage. In Ireland we dont do repossessions really.

    I don't know, to be honest! Labour laws are very strong though; once you have a permanent contract in the Netherlands it's pretty difficult to get laid off unless the company has no other option.


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