Irish Economy at risk of overheating.

05-06-2018 11:16am

FreudianSlippers wrote: »

Even a variable at around 3% is around €3,500/month. €200k joint income for a married couple is approx €10k/month.

Therefore well within the 1/3 salary range of affordability.

Doesn't seem you have much to add other than to quibble about the specifics of mortgage rates?

lol

variable rates have a habit of going up.

You made a point that was complete and utter horsesh1t, there is no fixed term product on the market that is as you described initially.

FreudianSlippers · 05-06-2018 11:18am

Augeo wrote: »

lol

variable rates have a habit of going up.

You made a point that was complete and utter horsesh1t, there is no fixed term product on the market that is as you described initially.

So your saying that an LTV of 80% is too much and people purchasing houses at this rate are totally screwed?

My point was not about variable or fixed mortgage rates - if you have a point of merit that discusses my underling point that's "hosesh1t" (sic) then I gladly await to debate it on its merits.

05-06-2018 11:22am

FreudianSlippers wrote: »

So your saying that an LTV of 80% is too much and people purchasing houses at this rate are totally screwed?

..........

No, I'm not saying that.
Expecting to borrow €800k over 30 years and to repay €3500/month is IMO ludicrous as interest rates are quite low currently and quite likely to rise over the next decade .... or two.

FreudianSlippers wrote: »

.........

A house that costs €1m in Dublin at the moment has a possible LTV of 80%, monthly repayments of about $3k on a fixed 30-year mortgage. If one follows standard best practice a couple on a combined income of €200k can easily afford that house..............

There is no 30 year fixed rate product.

FreudianSlippers wrote: »

Even a variable at around 3% is around €3,500/month. €200k joint income for a married couple is approx €10k/month.

Therefore within the 1/3 salary range of affordability.

.....

Variable rates can go up, a €4000 repayment is outside the 1/3 salary range of affordability that you mention. €3500 is actually just about scraping it.

FreudianSlippers · 05-06-2018 11:29am

Augeo wrote: »

No, I'm not saying that.
Expecting to borrow €800k over 30 years and to repay €3500/month is IMO ludicrous as interest rates are quite low currently and quite likely to rise over the next decade .... or two.

There is no 30 year fixed rate product.

Variable rates can go up, a €4000 repayment is outside the 1/3 salary range of affordability that you mention. €3500 is actually just about scraping it.

So are you saying that 80% LTV is too much? Are you suggesting that a couple earning €200k gross can't afford an €800k mortgage?

What point exactly are you trying to make in relation to the topic of discussion?

I'm not suggesting that ones mortgage will always be the exact same amount -which seems to be your issue here. Maybe you're looking for the banking/mortgages forum?

05-06-2018 11:35am

FreudianSlippers wrote: »

.So are you saying that 80% LTV is too much? Are you suggesting that a couple earning €200k gross can't afford an €800k mortgage?............

I'm not suggesting that ones mortgage will always be the exact same amount -which seems to be your issue here. Maybe you're looking for the banking/mortgages forum?

You specified a 30 year fixed rate and €3k/month ish repayments as a point of affordability.

I asked where this rate (2.9% you then mentioned) was available and you said KBC.

None of your utterings are correct.

You then mention the 1/3 affordability, the couple you mentiuon just about scrape into that criteria now.

If folks want to stay within the 1/3 affordability guideline they need to earm more than €200k/year if they are borrowing €800k over 30 years.

Seems as you brought up fixed rates etc and mortgages themselves maybe you're looking for the banking/mortgages forum !!

FreudianSlippers · 05-06-2018 11:41am

Augeo wrote: »

None of your utterings are correct.

None of your utterances are relevant, so...

You specified a 30 year fixed rate and €3k/month ish repayments as a point of affordability.

I asked where this rate (2.9% you then mentioned) was available and you said KBC.

You then mention the 1/3 affordability, the couple you mentiuon just about scrape into that criteria now.

If folks want to stay within the 1/3 affordability guideline they need to earm more than €200k/year if they are borrowing €800k over 30 years.

1) A couple earning €200k in 2018 can pay €3,395/month as 1/3 of their salary, exactly as I said in the first post;
2) As you point out, mortgage rates can increase or decrease - as do income taxes, salary rates, etc.

None of the "utterings" (sic) you make address the underlying point made in my post (and if you think it's the specifics of the mortgage then you're wrong).

Either way, you haven't addressed a single relevant point: whether you are suggesting that 80% LTV is too high or whether this mortgage is affordable on the mooted income?

(as a personal aside, I probably wouldn't buy a house today for €1m if my household income was only €200k p.a.)

Seems as you brought up fixed rates etc and mortgages themselves maybe you're looking for the banking/mortgages forum !!

You've cherry-picked one line from my post and are attempting to derail the thread, ignoring the underlying point which I've now pressed you on no less than 3 times.

05-06-2018 11:46am

cherry picked?

Your post mentioned a 30 year fixed rate that doesn't exist, that was key to the affordability claim.

After several to and fro posts you now claim that "as a personal aside, I probably wouldn't buy a house today for €1m if my household income was only €200k p.a."

I'm happy to have helped you see the light

FreudianSlippers wrote: »

...........

It makes little difference if there is a correction or even a significant drop in the value of that house unless they're basically flippers.

LTV makes no difference either

You seem fixated on the 80% LTV for some reason, it's largely meaningless. Repayments and potential repayments as a % of income and likely future incomes are far more important.

If you think the 1/3 ration is meaningful starting out in and around that with both working is ludicrous IMO

FreudianSlippers · 05-06-2018 11:51am

Augeo wrote: »

cherry picked?

Your post mentioned a 30 year fixed rate that doesn't exist, that was key to the affordability claim.

After several to and fro posts you now claim that "as a personal aside, I probably wouldn't buy a house today for €1m if my household income was only €200k p.a."

I'm happy to have helped you see the light

LTV makes no difference either
You seem fixated on the 80% LTV for some reason, it's largely meaningless. Repayments and potential repayments as a % of income and likely future incomes are far more important.

If you think the 1/3 ration is meaningful starting out in and around that with both working is ludicrous IMO

This is like taking blood from a stone.

What exactly is the point you're trying to make here?

Are people "paying above the odds" exposed in Dublin? If yes, how so?

Is the 80% LTV too high in your opinion? If yes, why?

The example was not "key to the affordability claim" (which wasn't even the claim btw).

There's no light to see here. There are various reasons I wouldn't recommend spending €1m on a house in Dublin at the moment, but affordability on a gross joint income of €200k (presuming usual salary increases) is not one of them.

05-06-2018 11:52am

And to think you responded to someone with this as opener ......

FreudianSlippers wrote: »

Nothing personal, but this post personifies the real lack of understanding of general economics and housing that seems to be prevalent in Ireland .............

FreudianSlippers · 05-06-2018 11:53am

Augeo wrote: »

And to think you responded to someone with this as opener ......

So you've got nothing then?

05-06-2018 11:54am

FreudianSlippers wrote: »

................

Is the 80% LTV too high in your opinion? If yes, why?............

I have never said that and answered several times

It's largely meaningless as the value can fluctuate wildly.
The repayments and likely future repayments along with income are key.

05-06-2018 11:55am

FreudianSlippers wrote: »

So you've got nothing then?

Well

30 year fixed rate - doesn't exist
2.9 % KBC - doesn't exist
1/3 affortability - just scraped in

I think it is you who has "got nothing"

FreudianSlippers · 05-06-2018 12:02pm

Augeo wrote: »

I have never said that and answered several times
It's largely meaningless as the value can fluctuate wildly.
The repayments and likely future repayments along with income are key.

You didn't answer several times actually.

So do you agree with my initial point that:

1) Paying "above the odds" has little to do with "exposure to problems" if the price paid is affordable to the buyer?
2) Investment in a home (in the context in which we're discussing) as a long-term asset is linked to affordability as opposed to normal fluctuation of market rates, buoyed by the 80% LTV limit of lending.

Regardless of your need to nitpick the (as I said approximate) calculation, the underlying point I made is sound.

05-06-2018 12:04pm

FreudianSlippers wrote: »

You didn't answer several times actually.
................

I think you'll find I answered that immediately

FreudianSlippers wrote: »

So your saying that an LTV of 80% is too much ...............

Augeo wrote: »

No, I'm not saying that.
..........................

Your example was poor, badly backed up as it was based on non existing products and the latest general questions you have I never commented on or discussed with you. I presume they are rhetorical.

Do re read one of my earlier posts "It's largely meaningless as the value can fluctuate wildly.
The repayments and likely future repayments along with income are key." You should be able to see my thoughts from there.

FreudianSlippers · 05-06-2018 12:07pm

Augeo wrote: »

Expecting to borrow €800k over 30 years and to repay €3500/month is IMO ludicrous as interest rates are quite low currently and quite likely to rise over the next decade .... or two.

Nowhere did I suggest that to be the case, nor did I suggest that interest rates do not or would not fluctuate.

There is no 30 year fixed rate product.

I didn't suggest there was.

Variable rates can go up, a €4000 repayment is outside the 1/3 salary range of affordability that you mention. €3500 is actually just about scraping it.

The 1/3 salary rage is suggested not imperative; as salaries increase so do variable rates.

I wouldn't suggest €4k/month repayment is "unaffordable" for someone on €10k/month net. There are various factors in play here.

FreudianSlippers · 05-06-2018 12:10pm

Augeo wrote: »

Your example was poor, badly backed up as it was based on non existing products

The example was, as I pointed out, largely irrelevant to the underlying point of my post.

and the latest general questions you have I never commented on or discussed with you. I presume they are rhetorical.

They aren't "the latest questions", they're the underlying and fundamental point of the post which you have decided to nit-pick on an irrelevant and estimated example.

You're ignoring the underlying points here in an attempt to derail, deflect and point-score.

05-06-2018 12:14pm

Augeo wrote: »

.......There is no 30 year fixed rate product .........

FreudianSlippers wrote: »

..............
I didn't suggest there was.................

FreudianSlippers wrote: »

..................

A house that costs €1m in Dublin at the moment has a possible LTV of 80%, monthly repayments of about $3k on a fixed 30-year mortgage. If one follows standard best practice a couple on a combined income of €200k can easily afford that house.
..............

You mentioned fixed 30 year mortgage, fixed refers to interest rate.

I queried this ........you clarified it was 2.9% with KBC

Augeo wrote: »

What institution are offering 2.1% 30 year fixed mortgages to folk living in Dublin?

FreudianSlippers wrote: »

It's 2.9% (I said about €3k) and it's KBC.

I just roughly used a mortgage calculator - the specifics don't negate my underlying point.

FreudianSlippers · 05-06-2018 12:20pm

Augeo wrote: »

You mentioned fixed 30 year mortgage, fixed refers to interest rate.

As you are well aware "fixed" refers to the amount of years the rate is fixed, not the duration of the mortgage. I never suggested there was a 30 year fixed mortgage; manifestly different to a fixed [term] 30-year mortgage. If you were such an expert on the rates (as you appear to be holding yourself out to be and which I'm not holding myself out to be) then you would have clearly seen I was referring to a 1-year fixed 30-year mortgage based on the figures in my example.

Either way, the example is largely irrelevant to the underlying point which you have and continue to ignore, instead insisting on deflecting to nit-pick the example. Either you do or you don't agree with the actual point here, regardless of your views on the affordability (or otherwise, as I don't recall you've never actually said that you don't believe it's affordable) of the example.

05-06-2018 12:25pm

Augeo wrote: »

What institution are offering 2.1% 30 year fixed mortgages to folk living in Dublin?

FreudianSlippers wrote: »

As you are well aware "fixed" refers to the amount of years the rate is fixed, not the duration of the mortgage. I never suggested there was a 30 year fixed mortgage; manifestly different to a fixed [term] 30-year mortgage. If you were such an expert on the rates (as you appear to be holding yourself out to be and which I'm not holding myself out to be) then you would have clearly seen I was referring to a 1-year fixed 30-year mortgage based on the figures in my example..........................

That was not at all clear, I'm sure you can appreciate.
Especially in the context that I asked you to clarify it more than once.
I'm not at all an expert on rates btw, I know where to find them of course for reference. But I'm not going to trawl when I can just ask the person with the example.

I cannot fsthom why someone would use an example that's largely irrelevant BTW

FreudianSlippers wrote: »

The example was, as I pointed out, largely irrelevant to the underlying point of my post.
.............

FreudianSlippers · 05-06-2018 12:37pm

Augeo wrote: »

why someone would use an example that's largely irrelevant BTW

Probably the same reason someone would fixate on an example, ignoring the underlying point and then refuse to state whether they agree with the underlying point or whether they disagree with the affordability of the mortgage in the example.

BTW: examples which are irrelevant to the underlying point can be or are useful in illustrating the underlying point. Only where someone decides to cherry-pick an example to nitpick it in an attempt to deflect from the validity of the underlying point does the example become relevant.

05-06-2018 12:42pm

Also you initially mentioned

FreudianSlippers wrote: »

...............
A house that costs €1m in Dublin at the moment has a possible LTV of 80%, monthly repayments of about $3k on a fixed 30-year mortgage. If one follows standard best practice a couple on a combined income of €200k can easily afford that house.
.................

I don't think couple borrowing 4 times their combined income is the way things are done now, after the ole lessons learned from the past etc etc

https://www.centralbank.ie/financial-system/financial-stability/macro-prudential-policy/mortgage-measures

KingCong · 12-06-2018 2:30pm

Augeo wrote: »

I think you'll find I answered that immediately

Your example was poor, badly backed up as it was based on non existing products and the latest general questions you have I never commented on or discussed with you. I presume they are rhetorical.

Do re read one of my earlier posts "It's largely meaningless as the value can fluctuate wildly.
The repayments and likely future repayments along with income are key." You should be able to see my thoughts from there.

How about ye both just drop it and stop derailing this thread?

ancapailldorcha · 12-06-2018 4:24pm

KingCong wrote: »

How about ye both just drop it and stop derailing this thread?

Stop backseat moderating. There is a report function for a reason.

Harry Palmr · 18-07-2019 6:15pm

Gentle bump for the latest economic report from trade Union backed Nevin Economic Research Institute which once again says Ireland is on the verge of overheating while also saying No Deal = recession.

Presumably an orderly exit will be a bit like Goldilocks with a spread sheet declaring the outlook is not too hot and hot too cold.

https://www.businessworld.ie/news-from-ireland/A-hard-Brexit-would-do-significant-damage-to-both-economies-on-the-island-572627.html

blanch152 · 18-07-2019 6:33pm

6541 wrote: »

The Irish Economy is at risk of overheating according to many news reports today. It is true the place has the feel of a boom, everywhere is busy, a lot more money around. What I can't get my head around is it is clear we have a housing shortage and I think the OECD are blaming housing, but how is that when we have a shortage of housing ? So how does overheating correlate to housing ?

It is news reports of a report by the Nevin Economic Institute, not necessarily something we should be worrying about.

FreudianSlippers · 19-07-2019 4:46pm

Truly shocked that the trade union economic lobby group is warning that things are going to be awful if we don't only tax the well-off and leave the poor blue-collar workers alone!

A Shropshire Lad · 20-07-2019 1:46pm

Geuze wrote: »

There is a shortage of housing as way too few units have been built since 2008.

Ans still output is way below where it should be.

The housing shortage leads to escalating rents and house prices, which may lead to higher wage demands.

Not just supply. Demand has exploded in the past few years. There has been a lot on immigration to the cities, especially Dublin. Particularly more recently, non EU immigration. You would wonder do the people who hand out the Visas ever think, 'where are all these people going to live'?

Irish Economy at risk of overheating.

Comments