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Government Funds Local Authority Housing Scheme

  • 22-01-2018 10:09am
    #1
    Closed Accounts Posts: 1,758 ✭✭✭Pelvis


    The government will be providing 200m to local authorities this year to provide low interest mortgages (2%-2.25% over 25-30 years) for people who have been denied by the banks (at least twice). Sole applicants must earn no more than 50k, with couples earning no more than 75k. If buying in Dublin, Cork or Galway then you could borrow up to €320k.

    https://www.irishtimes.com/news/politics/government-to-fund-local-authority-mortgage-scheme-1.3363411

    I don't really understand this. If you're a couple and two banks has deemed you're not eligible to get a mortgage, then you can go to your local authority and get a potentially larger mortgage for a lower interest rate. While someone else in similar circumstances but who may have been more prudent financially, is rewarded with a lower mortgage by the bank at a higher interest.

    Am I missing something?


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Comments

  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,460 Mod ✭✭✭✭johnnyskeleton


    Sounds the same as the old home choice loan scheme that was set up and afaik is still going. Apparently they issued less than a dozen mortgages.


  • Registered Users Posts: 310 ✭✭thelibertyboy


    yeah i was wondering this to i called dcc they had an eligibily list and that does sound so wierd oh your not financially viable and a danger but we will give you money but not someone with a good record hmmmmm


  • Registered Users Posts: 1,578 ✭✭✭JDD


    Assuming they can be discerning about who they approve for these mortgages, I imagine they're not going to lend to people who have terrible credit ratings, but might lend to those who are prudent financially but have fixed outgoings such as childcare which means they don't meet the banks disposable income requirements. Or one applicant might have health issues which prevents them from obtaining life assurance, thus stopping them from getting a mortgage.

    This seems a bit like the affordable housing scheme that was around a while back. A friend of mine was earning €35k and applied for that scheme, helping her buy an apartment that she could never have gotten approval to buy otherwise. I think the apartment was €280k, a two bed, and she got a mortgage for €140k and the council paid for the other half. Ten years later he has rented out the second bedroom, never missed a mortgage payment and has paid off a chunk (or perhaps all? I'm not sure) of the council's investment in the house.

    Having said all of that, I think they'd be better off trying to fix the supply issue with the €200 million they're spending on this rather than increasing the amount of people in the market for houses. I suppose it might take some people out of the rental system, which may have a trickle on effect of reducing the attractiveness of property to cash buyers, but a scheme this small isn't going to make much of a dent in that.


  • Registered Users Posts: 26,283 ✭✭✭✭Eric Cartman


    every 3 bed semi within 1 hour of the m50 just became 320k


  • Registered Users Posts: 3,098 ✭✭✭Browney7


    every 3 bed semi within 1 hour of the m50 just became 320k

    Every 2 bed apartment more like


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  • Registered Users Posts: 33 Giuseppe90


    That's for sure - more potential buyers for the same inadequate supply .....


  • Registered Users Posts: 11,205 ✭✭✭✭hmmm


    FFS. This does nothing for supply, just drives up prices.

    Put the 200 million into building new houses, not property owners pockets.


  • Registered Users Posts: 1,288 ✭✭✭Fanny Wank


    Good ****ing god......

    The 9 most terrifying words in the English language: I'm from the government and I'm here to help


  • Registered Users Posts: 521 ✭✭✭Bargain_Hound


    I'm just above the threshold(s) and currently in the bidding process for a house in Dublin which is looking competitive and unlikely to succeed. This has me really worried what may lay ahead at this low price entry point into the market.


  • Registered Users Posts: 2,682 ✭✭✭LookingFor


    I'm just above the threshold(s) and currently in the bidding process for a house in Dublin which is looking competitive and unlikely to succeed. This has me really worried what may lay ahead at this low price entry point into the market.

    Ditto. I had an idea of what I was targeting, years of saving leading up to what I hoped would be a purchase later this year.

    Now I'm a lot less sure I'll be able to afford what I hoped I could, if the market 'welcomes' hundreds of people with bigger mortgages that I can access, into this range of the market (200-300k).

    How stupdendously unfair, right?


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  • Registered Users Posts: 1,341 ✭✭✭miezekatze


    I don't get this either. None of the current rules seem to apply either - someone with an income of 40k potentially getting a mortgage of 200k?! The interest rates are much better than what you'd currently get from a bank too, and fixed for the duration of the loan. It seems really unfair. Imo if someone is getting rejected by multiple banks for a mortgage then there's usually a good reason for that, and that's not the council's problem to sort out.


  • Registered Users Posts: 2,499 ✭✭✭Carlos Orange


    LookingFor wrote: »
    How stupdendously unfair, right?

    Things like this usually are seen as unfair since they benefit some people at the expense of others.


  • Registered Users Posts: 2,682 ✭✭✭LookingFor


    It's just...nuts.

    If you're in the 50-100K bracket, and you've been working toward a first house, saving and scraping...little did you know you were also working so that, via your tax euros, someone earning less than you can potentially now come in now and outbid you on a property.




  • Back to square one for a lot of people.

    Nonsense


  • Moderators, Regional East Moderators Posts: 23,195 Mod ✭✭✭✭GLaDOS


    Myself and my girlfriend are a little above the joint threshold.

    Sometimes I wonder why we bother working.

    Cake, and grief counseling, will be available at the conclusion of the test



  • Closed Accounts Posts: 1,758 ✭✭✭Pelvis


    There's a website for this.

    http://rebuildingirelandhomeloan.ie/

    Using the calculator provided. A single applicant earning 50k gross with zero monthly commitments living in Dublin on a 25 year fixed rate of 2% can get an "Indicative Maximum Loan Amount" of €251,167, with repayments being €1,064.

    WTF??? Five times their salary?? That can't be right? A bank will only give 175k ffs.


  • Registered Users Posts: 3,205 ✭✭✭cruizer101


    I'm due a rise which would take me above a bit above the limit, nearly having to consider should I try negotiate a lower rise, the mind boggles at the idea this government comes up with.

    €200 Million, why not just build houses with it for feck sake


  • Registered Users Posts: 2,682 ✭✭✭LookingFor


    Pelvis wrote: »
    There's a website for this.

    http://rebuildingirelandhomeloan.ie/

    Using the calculator provided. A single applicant earning 50k gross with zero monthly commitments living in Dublin on a 25 year fixed rate of 2% can get an "Indicative Maximum Loan Amount" of €251,167, with repayments being €1,064.

    WTF??? Five times their salary?? That can't be right? A bank will only give 175k ffs.

    On a 30 year they can get €278.5K.

    It is completely perverse. Someone just above the threshold on 60K is limited to 210K in a mortgage, and will be competing with this now on the market.


  • Registered Users Posts: 12,473 ✭✭✭✭Varik


    The LTI limits still apply, just seen mention of the 10% deposit.


  • Registered Users Posts: 13,682 ✭✭✭✭markodaly


    A bit bizarre. The issue is not that people cannot get mortgages, is that there are too few properties out there to buy. This fixes a problem that does not exist and will just push up the low end of the market. Also curious of the details of this as it seems the government is not competing with banks for mortgages? Did they get the go ahead from Europe on this as it seems to circumvent banking lending rules.


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  • Registered Users Posts: 23,180 ✭✭✭✭ted1


    Pelvis wrote: »
    The government will be providing 200m to local authorities this year to provide low interest mortgages (2%-2.25% over 25-30 years) for people who have been denied by the banks (at least twice). Sole applicants must earn no more than 50k, with couples earning no more than 75k. If buying in Dublin, Cork or Galway then you could borrow up to €320k.

    https://www.irishtimes.com/news/politics/government-to-fund-local-authority-mortgage-scheme-1.3363411

    I don't really understand this. If you're a couple and two banks has deemed you're not eligible to get a mortgage, then you can go to your local authority and get a potentially larger mortgage for a lower interest rate. While someone else in similar circumstances but who may have been more prudent financially, is rewarded with a lower mortgage by the bank at a higher interest.

    Am I missing something?

    Banks will stress test repayments at much higher interest rates , however these are fixed at 2.25% so will pass a stress test


  • Registered Users Posts: 2,682 ✭✭✭LookingFor


    Varik wrote: »
    The LTI limits still apply, just seen mention of the 10% deposit.

    Not according to their calculator. Pop in 50K and a 30 year term and you get value of 5.6 times gross. A deposit rule of 10% applies*, but Loan to Income Value limits seem out the window for this.

    *That rule typically turns into 20% on the private market for single beds, and even some two beds, in Dublin for a first time buyer. If it remains at 10% under this scheme, it's another boost for buyers under this scheme vs those in the open market.


  • Registered Users Posts: 945 ✭✭✭Colonel Claptrap


    Well that's one way to buy an election.

    Let's see if I have this right. Rather than save for a deposit wisely, curb my spending habits, pay down my loans and cut up my credit card I'm now being encouraged to abuse my overdraft facility, take on an extra dependent (get my GF knocked up), stop working hard (in case I get a pay rise) and wait for the state to hand me a dirt cheap mortgage with a rock bottom rate locked in for 25 years?

    I'm literally being encouraged to "game the system".


  • Registered Users Posts: 23,180 ✭✭✭✭ted1


    Well that's one way to buy an election.

    Let's see if I have this right. Rather than save for a deposit wisely, curb my spending habits, pay down my loans and cut up my credit card I'm now being encouraged to abuse my overdraft facility, take on an extra dependent (get my GF knocked up), stop working hard (in case I get a pay rise) and wait for the state to hand me a dirt cheap mortgage with a rock bottom rate locked in for 25 years?

    I'm literally being encouraged to "game the system".

    By other Euro zone countries It’s not a rock bottom rate , it’s the rate that all banks especially state owned ones should be offering


  • Registered Users Posts: 2,314 ✭✭✭McGrath5


    Flooding the market with cheap credit, a fantastic idea that has never been tried before.....oh wait :rolleyes:


  • Registered Users Posts: 525 ✭✭✭irish_major


    What would happen here if your original application was rejected because of an average ICB report?


  • Registered Users Posts: 1,288 ✭✭✭Fanny Wank


    ted1 wrote: »
    By other Euro zone countries It’s not a rock bottom rate , it’s the rate that all banks especially state owned ones should be offering

    You can actually repossess in other countries though


  • Registered Users Posts: 3,042 ✭✭✭Wabbit Ears


    Seriously though... we have low supply so the soloution is to increase demand?

    Conspiricy theory time... The powers that be are purposefully orchestrating another crash. I can think of no other reason why anyone would have thought this is a good idea if you werent setting something up for a fall.


  • Registered Users Posts: 945 ✭✭✭Colonel Claptrap


    ted1 wrote: »
    By other Euro zone countries It’s not a rock bottom rate , it’s the rate that all banks especially state owned ones should be offering

    25-30 years fixed?


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  • Registered Users Posts: 23,180 ✭✭✭✭ted1


    ted1 wrote: »
    By other Euro zone countries It’s not a rock bottom rate , it’s the rate that all banks especially state owned ones should be offering

    25-30 years fixed?
    Yes. 1.9% for 20 years. In Spain
    We are being screwed here.

    http://fuster-associates.com/top-five-fixed-rate-spanish-mortgages/

    1.85 for 20 years in France.
    https://www.aplaceinthesun.com/articles/2017/01/historically-low-rates-for-french-mortgages


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