2Pack will call the bottom now!


#601

@2Pack
I see your friend Mario will be exiting stage left in Oct.

It has been a wild decade, and it’s worth remember how far things have changed post crisis to now.
rte.ie/radio1/doconone/2009/0528/645985-anatomy_of_a_recession/


#602

It does not look likely the ECB will raise any rates on his watch and if you look at my ‘next peak’ forecast some months back I think the market will peak before the ECB can be blamed for any of it. :slight_smile:

Mario would have loved to have raised interest rates at some stage in his career as chairman, now he never will. Nor do I think that rates will rise by more than 1% over the next 3 years no matter who is in charge of the ECB.


#603

I got a message about that, here is my answer.

"Your choice is rent or mortgage in Dublin.

Will Dublin rents cost more than a mortgage on the same property would, the way things look now they could. Will it always be like that from now on? Probably not once supply kicks in, but in the short term it could well be a mortgage is cheaper than renting and the short term could be 5 years.

Then again you need savings to get a mortgage nowadays, for Dublin this would mean €50k worth of savings. If not you will have to rent somewhere else whether you want to or not.

It is this difficulty in saving that leaves people ‘stuck’ with the vagaries of the rental market nowadays, If you have savings in the €50k range you have the choice, when I was first in the market for a 90% mortgage approval took 20 minutes, I showed 3 clear credit card statements and I simply got the 10% from the credit union at the last minute and paid half of it back when the first time buyer grant came in a few weeks later. Now you must produce bales of paperwork to get a mortgage and you need to show a savings capability to pass the stress test. "


#604

Yes, the ‘proof of savings record’ piece is the biggest piece of box-ticking BS by the banks.

Once they have a deposit they should be happy*. And in reality it doesn’t matter what your deposit is if you can’t pay the mortgage! LTI is a far more relevant variable for assessing probability of default than LTV.

Banks and regulators don’t really get this.

I went through hoops with bank for my mortgage in 2012.
Banks: “You have accounts all over the place and it’s not clear how much you’ve been saving monthly”
Me: “Well clearly I’ve been chasing yield for several years to assemble a deposit”
Bank: “Why didn’t you just save €x in a regular saver account for five years?”
Me: “Cos my income was volatile and I was chasing yield”
Bank: [delay of six weeks] “okay”

*oops I forgot repossession is near-impossible in Ireland


#605

Leaving out the income in question what was the LTV % you generally proposed during the haggle. ???


#606

At the time I pushed it to 92% which was the max they would allow. We needed to hold on to cash for renovations.

LTI was only 3.0 or so for us as a couple, and this was scraping against what the bank would allow.

Now it would seem only about 85% LTV is allowed, but LTI of 3.5. Far less prudent I think.


#607

92% LTV was bloody high mid crash you must admit. :slight_smile:

My LTI was 90% in a stable to rising market many many years ago but one then also had to buy an indemnity bond to insure the bank/bs on the portion between 75 and 90%. That cost around 1-1.2% of the house price at the time. Seemingly these bonds disappeared in the early 00s or the banks insured themselves by other means or something.

They would only nod through 20 years. 2.5x main and 1x second income in my day and oddly enough they would go to 3x main income but were rather difficult about a 25 year or longer term back then.

The way things went with repos in Ireland I would think an indemnity bond is now impossible so the bank wants skin in the game instead. I have heard of people who were told that they would only get 75% but they had all spent some time out of Ireland in the previous 5 years or were less than 5 years here.

This showing savings records mallarkey is very old school, you would have had to do that as normal up to the 1970s by joining the building society at least 2 years before you ever ever asked them for a mortgage. AIB and BoI were not even in the mortgage market until the 1960s IIRC and all the banks had a tied Building society in the 1970s and 1980s they would tell you to sod off to rather than give you a mortgage.

BUT the decision to give you a mortgage until the 1980s was a branch decision, now it is
some muppet in a call centre on a box ticking rampage. :frowning:

Frankly I feel all these call centres and computer scoring programmers are in Dublin (or London) and that accounts for the relative bubbles in financial centres since 2010. They should move these autonomous scoring and approval systems out of Dublin and the morkesh would probably stop rising as fast. :smiley:


#608

Interesting 2pack.

My parents - probably of your vintage - got married and bought a house in their mid-20s as was the vogue in the late 70s.

They were squeezed tight with the mortgage payments due to interest rates but inflation at least saw LTV fall due to inflation.

They got a 25-year mortgage I think, which I think was a novelty compared to the standard 20-year term. Nothing longer allowed by the building society.

This left them and all their friends mortgage free by their *early *50s at the latest. This has helped fund the odd property empire and plenty early retirements too.

Not a luxury their kids will enjoy. Generally not buying until their 30s and with a 30-year mortgage term.


#609

I’m sure that is statistically true, but anecdotally there appear to be loads of rural new builds done by people in their twenties. I lurk a bit on the Self Build and Renovations Ireland Facebook group, and there was recently a thread about “what age you built your house” that was eye opening. They’re often massive too - 300sqm+.

I assume these are at least part financed with family money.


#610

I’m not sure it’s super common quite so young.

Look at figure 3.5 here.

Only 23% of 29 year olds own, with or without a mortgage.

By 39 it’s 65%.

The transition from renting to owning is fastest in early 30s.


#611

My parents and their six siblings were all born in the 1950s and grew up in Dublin

Literally all of them had not just a job but a *career *by 23.

I think one uncle and his wife bought a house at 24. The latest any of them bought was 31.

This pattern would be very unusual for people born in the 1990s.


#612

:smiley:

My findings are probably just selection bias around people who brag about their fancy houses.


#613

My apologies :smiley:

Most people’s anecdotes trump statistics though. I too am hypothesising from own family instead of hunting down the 1986 Census report.


#614

I look at that group too though I’m renovating and was having the exact same thoughts

No small gaffs there!

I can only assume the attitude is" I got the site for free so it makes sense to build say a 400k house on it as my friends are spending 400k on a gaff in town’

Or else the site itself is theoretically worth say 300k so I can spend 400k and still have a low loan to value ratio

:confused:

Not representative of the overall property morkesh I reckon though


#615

That IS the morkesh where I live. :smiley:

10% of the current housing stock is one off and all built since 2008. Generally they are 200sq m ish rather than outright ranchos.


#616

Am I way off in my theory as to why self builders build such big houses??


#617

200m sq would be the norm where I am. Some bigger some smaller. 400m sq is rare.


#618

On bottom or whatever, I bought a gaff in D4 for € 1M in mid 2013, gaff next door not selling for € 1.1M (admittedly probably needing € 75K to modernise).Still almost back to 13 level.


#619

Did Sherry Fitz advertise it as a gaff? Or a dream home?


#620

Self build is basically impossible where I live (single-digit even postcode).

But if I was going to the hassle of building my own house I wouldn’t bother for less than 200sqm.