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11-02-2019, 13:10   #451
klaaaz
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I'm well aware of that, those hoping to buy in a drop will struggle to get finance at all.
Not so. Those with a good savings history with that hefty deposit will still get credit, just like in the last crash. Lending from banks back then for mortgages was reduced not wiped out.
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11-02-2019, 13:14   #452
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Not so. Those with a good savings history with that hefty deposit will still get credit, just like in the last crash. Lending from banks back then for mortgages was reduced not wiped out.
Yes. It was reduced.

The reason property prices drop is because it is difficult to get credit.

If property prices drop a little bit, it's because getting credit has got a little bit more difficult.

If they drop a lot, it's because getting credit has got a lot more difficult.

The reason property prices dropped so much last time was most people couldn't get credit to buy.

The biggest benefactors of a big, fast drop are cash buyers and investors, who'll be laughing. For the average person, not so great a scenario.

Last edited by awec; 11-02-2019 at 13:20.
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11-02-2019, 13:14   #453
InstaSte
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Not so. Those with a good savings history with that hefty deposit will still get credit, just like in the last crash. Lending from banks back then for mortgages was reduced not wiped out.
I work with mortgages so I'll just take my own opinion on this one.
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11-02-2019, 13:19   #454
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I work with mortgages so I'll just take my own opinion on this one.
I don't think increasing the LTI ration during a market slowdown/crash makes sense from a risk perspective. The risk of significant income loss is much higher for dual income earners. Twice as likely really.
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11-02-2019, 13:43   #455
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Yes. It was reduced.

The reason property prices drop is because it is difficult to get credit.

If property prices drop a little bit, it's because getting credit has got a little bit more difficult.

If they drop a lot, it's because getting credit has got a lot more difficult.

The reason property prices dropped so much last time was most people couldn't get credit to buy.

The biggest benefactors of a big, fast drop are cash buyers and investors, who'll be laughing. For the average person, not so great a scenario.
The main reason proces dropped so much last time was people were over extended, with 100% interest only mortgages on multiple properties, that the banks then closed in on. The owners had no choice but to sell, therefore prices plummeted. The lending rules this time mean that there is much more equity in property so that there is less likely to be a firesale and therefore less likely they will fall dramatically. There might be a small reduction in values, but not at the level seen in the crash. That was the only time in history that houses values dropped at that rate. Even in recessions before then property didn't collapse in the same way. There's no reason to believe it would happen during the next recession.
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11-02-2019, 13:57   #456
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The biggest benefactors of a big, fast drop are cash buyers and investors, who'll be laughing. For the average person, not so great a scenario.

Big, fast drops are very rare in the property market even in the worst recession in the State's history, the biggest single year drop was 13.6% in 2012 (open to correction on this).

You're assuming these canny investors can call the bottom of the market accurately. What happened during the recession from 2008-2013 was, nobody was buying because if they waited a year they could get a double-digit % discount on the current price.
The people who can call the top/bottom of markets accurately are most likely already rich and have information the wider public aren't aware of yet. As an example, I find the behaviour and recent activity by international REITs, pouring billions into the Irish property market at a time of (generally perceived) uncertainty a little suspicious.
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11-02-2019, 14:50   #457
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I work with mortgages so I'll just take my own opinion on this one.
I can definitly confirm that it was no problem to get mortgage approval during the recession if you had decent savings and a full time permanent position with decent salary.

Plenty of mid level IT/finance workers in my circle did get approvals and as a matter of fact banks would welcome safe enough borrowers with open arms as they were desperate for more business at higher rates than tracker mortgages.

Reduced lending wasn’t really due to banks having more drastic lending criteria compared to nowadays (they didn’t), it was more than less people did meet those criteria. But there was no issue for those who did.

Last edited by Bob24; 11-02-2019 at 14:54.
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11-02-2019, 15:45   #458
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Big, fast drops are very rare in the property market even in the worst recession in the State's history, the biggest single year drop was 13.6% in 2012 (open to correction on this).
It's all relative obviously....
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11-02-2019, 17:30   #459
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Having had the displeasure but also good luck to be in a position to buy during the 'crash' it was slim pickin's for sure. People stayed put.
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11-02-2019, 18:03   #460
InstaSte
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I can definitly confirm that it was no problem to get mortgage approval during the recession if you had decent savings and a full time permanent position with decent salary.

Plenty of mid level IT/finance workers in my circle did get approvals and as a matter of fact banks would welcome safe enough borrowers with open arms as they were desperate for more business at higher rates than tracker mortgages.

Reduced lending wasn’t really due to banks having more drastic lending criteria compared to nowadays (they didn’t), it was more than less people did meet those criteria. But there was no issue for those who did.
I said struggle, I didn't say impossible.

Seems to be no middle ground with this thread, an all or nothing approach taken by both sides.
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12-02-2019, 10:28   #461
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I said struggle, I didn't say impossible.

Seems to be no middle ground with this thread, an all or nothing approach taken by both sides.
You said “those hoping to buy in a drop will struggle to get finance at all”.

As I was saying, there is a decent group of people for which the above statement didn’t apply the last time around (many of them in my group of friends/colleagues including myself). Which is why I think putting everyone in the same basket (of “those hoping to buy”) and saying they’ll all struggle to get finance at all is a bit of a bold statement, and needs to be made a bit more moderate.

I also don’t think I offered an all or nothing view, as I clearly stated that in a recession the total amount of borrowing does indeed drop due to less people meeting the bank’s lending criteria.

Last edited by Bob24; 12-02-2019 at 10:36.
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12-02-2019, 12:05   #462
klaaaz
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Originally Posted by InstaSte View Post
I said struggle, I didn't say impossible.

Seems to be no middle ground with this thread, an all or nothing approach taken by both sides.
Have a look at the Irish Banking Federation stats on mortgage lending over the last decade, they still lent to first time buyers and movers at the time. It was much reduced, but that reduction was from crazy unsustainable levels of around 2005/6. Lots of occupations unrelated to the fallout of the crash, who had met the criteria of being prudent and have some job security were able to borrow for a mortgage.
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12-02-2019, 14:03   #463
InstaSte
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Originally Posted by klaaaz View Post
Have a look at the Irish Banking Federation stats on mortgage lending over the last decade, they still lent to first time buyers and movers at the time. It was much reduced, but that reduction was from crazy unsustainable levels of around 2005/6. Lots of occupations unrelated to the fallout of the crash, who had met the criteria of being prudent and have some job security were able to borrow for a mortgage.
Completely agree, I remember friends buying at the depths in 2012.
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12-02-2019, 14:17   #464
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Completely agree, I remember friends buying at the depths in 2012.
Look back at the old threads here, there was a panic on to draw down by the end of 2012 to get MIR/TRS, fairly significant number of posters were buying with mortgages at the time.
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12-02-2019, 14:37   #465
InstaSte
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Look back at the old threads here, there was a panic on to draw down by the end of 2012 to get MIR/TRS, fairly significant number of posters were buying with mortgages at the time.
Yeah I see that, I'd imagine not as many as are drawing them down now though, looking at the Saving/Applying for a mortgage 2015/16/17/18/19 thread.
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