20% Deposit for New Mortgages

[mikehunt]

Looking at Prime Time the other night and seen that rent a quote mortgage broker Karl Dieter slamming the Central Banks decision to tighten rules for mortgages. I can understand individuals being angry with this but this has to be a good thing for the economy. Forcing people to be disciplined in relation to saving for a house is also a good thing. The crash happened because of individual and corporate indiscipline which led to cheap credit, 100% mortgages and crazy spending. Their argument that it will force 1st time buyers and low earneres out of the market. These people want them to buy something beyond their means which resulted in the situation we have now where people are in houses that are too small (were told to get on the f**king ladder) and/or are in negative equity. If these rules were before the crash I don't think there would be as many families in trouble. 

[WT4E]

Looking at Prime Time the other night and seen that rent a quote mortgage broker Karl Dieter slamming the Central Banks decision to tighten rules for mortgages. I can understand individuals being angry with this but this has to be a good thing for the economy. Forcing people to be disciplined in relation to saving for a house is also a good thing. The crash happened because of individual and corporate indiscipline which led to cheap credit, 100% mortgages and crazy spending. Their argument that it will force 1st time buyers and low earneres out of the market. These people want them to buy something beyond their means which resulted in the situation we have now where people are in houses that are too small (were told to get on the f**king ladder) and/or are in negative equity. If these rules were before the crash I don't think there would be as many families in trouble.

What a load of sh1t your talking!

Help the rich - penalise the poor - that's what I see

[armaghniac]

Help the rich - penalise the poor - that's what I see

Perhaps you lack the ability to look at the big picture? That is the problem in this country, people refuse to look at the aggregate effects of things.
These limits might inconvenience the individual buyer, but they will moderate the overall price of houses making life easier for buyers in general.

[mikehunt]

Looking at Prime Time the other night and seen that rent a quote mortgage broker Karl Dieter slamming the Central Banks decision to tighten rules for mortgages. I can understand individuals being angry with this but this has to be a good thing for the economy. Forcing people to be disciplined in relation to saving for a house is also a good thing. The crash happened because of individual and corporate indiscipline which led to cheap credit, 100% mortgages and crazy spending. Their argument that it will force 1st time buyers and low earneres out of the market. These people want them to buy something beyond their means which resulted in the situation we have now where people are in houses that are too small (were told to get on the f**king ladder) and/or are in negative equity. If these rules were before the crash I don't think there would be as many families in trouble.

What a load of sh1t your talking!

Help the rich - penalise the poor - that's what I see

Not sure how discouraging people from spending beyond their means penalises the poor. I consider myself working class on an average industrial wage. If I can't afford something I don't buy it. If I can credit to buy something I can't afford, then that put's me in an even worse position. Those that give me that credit need to be taken to task. This is what this is about imo.

[God14]

Negative equity is a real bar steward.

My 3 year fixed rate ended in 2010. I was on a good rate at 70% LTV. Have been stuck on standard variable rate ever since as bank did a computer generated revaluation post crash & informed me they would have no deal to offer, other than standard variable. It has been 3.89% for yonks.

Ive been lucky with the low interest rates, but the rises are not far away.

On the bigger picture im definitely with Mike here, but those trapped in negative equity - through no fault of their own - are suffering

[WT4E]

Help the rich - penalise the poor - that's what I see

Perhaps you lack the ability to look at the big picture? That is the problem in this country, people refuse to look at the aggregate effects of things.
These limits might inconvenience the individual buyer, but they will moderate the overall price of houses making life easier for buyers in general.

O sorry thanks for point out my ability on things - do you ever get tired of looking down your nose at people.

10% is plenty to expect first time buyers to raise - the problem in the past was that 100% (or close to) mortgages where being handed out. That's when the problems occurred imo.

Answer me this who will be able to buy houses on 20% deposits - only the rich surely.

[bcarrier]

Negative equity is a real bar steward.

My 3 year fixed rate ended in 2010. I was on a good rate at 70% LTV. Have been stuck on standard variable rate ever since as bank did a computer generated revaluation post crash & informed me they would have no deal to offer, other than standard variable. It has been 3.89% for yonks.

Ive been lucky with the low interest rates, but the rises are not far away.

On the bigger picture im definitely with Mike here, but those trapped in negative equity - through no fault of their own - are suffering

People may have been unlucky and bought at the wrong time in the cycle but I dont buy into the no fault of their own idea. Nobody was forced to buy a house.

[mikehunt]

Help the rich - penalise the poor - that's what I see

Perhaps you lack the ability to look at the big picture? That is the problem in this country, people refuse to look at the aggregate effects of things.
These limits might inconvenience the individual buyer, but they will moderate the overall price of houses making life easier for buyers in general.

O sorry thanks for point out my ability on things - do you ever get tired of looking down your nose at people.

10% is plenty to expect first time buyers to raise - the problem in the past was that 100% (or close to) mortgages where being handed out. That's when the problems occurred imo.

Answer me this who will be able to buy houses on 20% deposits - only the rich surely.

It's all relative. These "rich" people you are on about won't be looking to buy the houses the "poor" are no longer able to afford because of the increase in deposit. Because of the 20% deposit requirement there will be less people in a position to buy houses. Less buyers = less demand = lower prices. This is the Cenral Bank's job, to control inflation and regulate domestic banks. They shoud have maintained these kind of principles years ago and the boom and crash would not have been as extreme.

[WT4E]

We'll have to see how this pans out but one thing is for sure - the bank always wins!!!

[muppet]

In the good times people always find ways around the regulations. It usually starts with Wall Street. They create a market for some new product, think CDOs (piles of high interest mortgages given to people who could never dream of paying them back) which became so popular that mortgage brokers were going into parts of the USA that are really not safe - to hand out mortgages.

In Ireland we used to have a minimum, depending on the bank. I recall AIB I think offered 92%. But people simply borrowed the 8% from the credit union, or their parents or somewhere else. I suspect that is why the Central Bank has pushed it up to 20%. But people will still get around it.

[seafoid]

Buying a house is riskier now than it was 20 years ago. Before bertie you'd get 3 times salary as a loan and max term was 25 years. As house prices rose the norms became 5x and 35 years. Higher prices are more volatile and a lot of people are not getting pay rises like in the good old days. The central bank is a bit late doing things now but they want to ensure that those who buy can absorb price falls. The problem with house price rises is that they leave a lot of legacy issues.  The banks need higher prices to stop their losses but the higher prices go the bigger the risk of a crash.

Maybe max 3x salary would be better than 20% deposits.

[theskull1]

No doubt about it 3 x Salary (& 2.5 x joint salary) would be the way to way to truly stabilize the property market, but it would take commodity prices globally to drop. Hard to know how it will sort itself out

[Bord na Mona man]

I suspect the government are going to come up with some scheme to assist people in getting around this.
They have probably the biggest vested interest in keeping the property market rising - to offload Nama stock and improve the balance sheet of banjaxed nationalised banks.

[Rossfan]

I suspect the government are going to come up with some scheme to assist people in getting around this.
They have probably the biggest vested interest in keeping the property market rising - to offload Nama stock and improve the balance sheet of banjaxed nationalised banks.

As the Public debt ( i.e us) is already so high it's hard to see how Govt ( i.e us taxpayers) can assist.
As you say too many people have vested interests in shoving up prices again and to hell with the future as usual.

[ardtole]

I would imagine that because of the 20% deposit requirement now imposed to buy a property, it will take a lot of customers out of the market, which will lead to a higher demand for rental property, which is already getting out of hand in dublin.

First time buyers are going to be forced into renting, and trying to save a deposit, their rent will go up annually due to high demand for rental property, leaving them less money to save each month. Over a period of time this should lead to house property prices falling, which will not help people currently in negative equity. Id say landlords across the country are rubbing their hands at this development.