40% of first time buyers have 35-39 yr loan

This is a total disaster.
47% of FTBers are taking out ultra long mortgages and most of them hope to sell after 5-7 years.
I think a lot of these people will be holding on to their first house a lot longer than they think and thats assuming that they can hold on that long.

Better report here:https://www.finfacts.com/irelandbusinessnews/publish/article_1011365.shtml
Of the FTBers that take out an open ended 100% mortgage 44% do so because they don’t have to pay any deposit and 17% want to spend their savings elsewhere.

After 7 years on a 40 year mortgage you have paid of about 5% of the capital.

Assuming no negative amortisation, payment holidays, interest only etc.

One of the sad ironies of this situation is that the longer the term (duration) of the mortgage, the greater the sensitivity of payments to interest rate changes.

So we have a situation where the very people least able to cope with an increase in repayments (i.e. they went extremely long in order to maximise the amount borrowing they could service) are far more exposed to increasing repayments.

Let’s not forget the record prinicipals either but sure that’s where the insidious length of the term comes from…

Record Principal X Increasing Interest Rates X Longest Mortgage Term Limits Ever

You know it makes sense. Come in and let’s have a chat about our first time buyer’s package…

Look at this for a ridiculous contradiction!

According to the report,

  • 52% of those with 100% mortgages were joint applicants (i.e. they had two incomes).
  • Only 35% of those with sub-90% mortgages were joint applications.

It’s completely paradoxical, if you’re a single earner, you’re more likely to have a lower LTV value than joint earners.

You would imagine that people with two income’s would be more likely to go for mortgages with a smaller LTV. This would lead me to believe that there are an enormous amount of couples out there with two poor salaries who were given mortgages that they *might *not be able to repay.

Thoughts?

Nobody put a gun to their heads but clearly these people believed in the “property ladder”
:frowning:

I imagine its pretty hard for a single earner to borrow enough to buy a house/apt etc unless they had substantial savings or a very substantial income.
A lowish income couple could however get a mortgage with their dual incomes and multipliers taken into account.

Thinking about it, just makes things even more precarious when you consider that many couples at some point want to have kids and one of the parents stay at home looking after them.

I wonder how long term this is going to play out.
I can see baby boom turning to baby bust - who’s going to buy our houses when we want to retire?..who’s going to look after us when we retire?
This is already happening in Japan - Land of the rising geriatrics.

Its frightening just what the last ten years or so has done to our country, the long term implications are frankly more than a little scary unless we start to seriously start long term planning…when was the last time an Irish politician did that?

Very true, i personally know 3 people who bought as single FTB’s with substantial savings on apts within last 3yrs

However, all types of buyers forget negative equity will hit them very hard for long if they ever want to move or lose that well paying job or change in other circumstances

And the notion of just handing your keys back to your bank uk-style if they wanna jump ship will be a right shocker when they learn Ireland is different in this area(eg: you can’t walk away) and they realise they are stuck there forever depending on how long negative equity lasts which looks like years.

Yeah but you need to recognise that the past ten years were a disaster for us long term. At the moment its still seen as the Irish hey day.

Yep, thats exactly it, the vast majority of the public seem to think that the housing boom and easy money of the last few years has been brilliant…sure aren’t we the richest country in the world mentality.

It really going to come home to roost I feel, worst thing is its the young people today, that are paying the huge amounts for their homes and funding the good life for the 50+ age group right now, that will suffer worst when they reach that age themselves.

Its very unfair!, but I suppose we get the government and economy we deserve. We (collective we…not I) voted in the same government in for a third time …we deserve what we get.

I’m still shocked at those figures.I thought only a small proportion took out those long mortgages and now we’re told almost 1 in 2 FTBers are at it :open_mouth:
What the hell were these people thinking?
Sorry, stupid question.

**Longtermrenter wrote:
**

If this situation occurs:

We will have to develop intelligent robots to take care of the elderly :wink:

See, this is the kind of statement that allows the Pollyanna brigade to paint all of us bears as doom-mongers, Cassandras and misanthropes! :wink:

If you’d said that the past FIVE years will prove to be a disaster for us long term, you’d have had a point.

Up until 3 or 4 years ago, that was quite correct (speaking as someone that used to work for a credit institution), and not only that, but 100% financing was similarly extremely rare. Banks would occasionally grant 100% mortgages to employees but certainly not to members of the public.

Yeah your right , good point well made!!

There’s that word “savvy” again, which seems to be an industry insider term for “I can’t believe the eejit fell for it.”

The simple rule was always that if you cannot afford 90% LTV and over 20 years or 25 years max then its too expensive.

Looks like prices have a LooooOOOOOng way to fall then . About year 2003 levels logically and with an overshoot towards 2000 levels as they chunter inexorably downwards .

Around those levels prices will get support from investors again based on the Jim Power logic that investments follow ‘fundamentals’ . I note Jim is eeerily quiet these days .

He’s still around and throwing down the gauntlet to you

Who will be right in their predictions for house completions next year Jim Power or 2pack?