Central Bank Consultation - Policy for mortgage lending


#1129

Obviously the CB rules should remain, but I think it’s unlikely they will. Every day the media runs a story against them and powerful vested interests dislike them, as do populist politicians (and most of our politicians are populists).

In any event, I fully expect that whatever government is formed will immediately move to install a scheme that gives people access to more credit. They can thereby claim to be helping young couples ‘get on the ladder’ and other such shite. Such a scheme will be difficult to administer and will be of no merit, but I’d say it’s almost certainly on the way.


#1130

Quite probably, and we’ll soon be back to the same situation that led to the IMF having to come in and run our fiscal policy. Best hope for the short term would seem to be the continued failure to form a government.


#1131

Yes there will be a government led incentive. I think the rules will remain for the most part with perhaps a little tweaking for FTBs.

The vested interests narrative has certainly found its way into the chattering classes as most potential buyers I talk to give out about the rules. I’d was talking to a teacher living in Dublin yesterday complaining that she would only be granted a mortgage of € 129 k. The issue is that that should be stretching further for her in terms of buying options i.e. the prices should be at affordable levels. But it’s amazingly difficult to explain to some that the rules are not the real problem as most people think “mo debt less problems”.


#1132

irishtimes.com/business/econ … -1.2583355

There is more…

How refreshing.


#1133

Maybe it’s just that I’m so rapidly in favour of the new rules that people are afraid to tell me, but most people I’ve come across seem to feel they’re a good thing.

Not exactly scientific, but they get pretty high support here too
boards.ie/vbulletin/showthre … p=98988596


#1134

Very Bad: 1

Noonan has a boards account. Who knew?


#1135

+1
All of the FTBers I know through work believe the rules are helping them. I agree (but to be fair a lot of these FTBers are earning more than an average salary).

One lad said recently, with some justification, “At least our saving counts for something in last 12 months - whereas for the 3 years before, the price increases were a multiple of our annual savings. It was getting pointless. At least now the limited supply isn’t being chased by massive over-extended credit, leading to bigger price increases.”
Hard to not agree.


#1136

I’ve said it a few times on here, the media often throw out words like “controversial” as in “the CBI’s controversial new mortgage rules” or have a property VI moan that something is “controversial”. However I rarely meet anyone who agrees with the sentiment.

Anyone I’ve heard moaning about the fairness of rules are older people who aren’t looking to buy. To be fair to them I don’t think it’s a case of wanting to increase the value of their own homes (I’d know very few people with BTLs) I think they genuinely think getting “on the ladder” should be encouraged at all costs. Again many of them saw their mortgages eroded away by double digit inflation however which may colour their judgement somewhat


#1137

That’s reassuring, I must say. Thanks. I was using my own conversations and not a terribly large sample size I guess. Plus, I wasn’t just talking about conversations with FTBs.


#1138

Again +1
Very few people I talk to who are my parents age (late 60s) can understand that “getting on the ladder” can be a bad thing when it’s done at any cost. Precisely because the low inflation environment is totally alien to them when it comes to buying a house.
And yes, I know “interest rates were much higher then”. But in the 30yrs that most of them were buying houses - their 30/40k house went up to 350/400k value. Their wages increased by maybe 10 fold… their debt did not.
It’s next to impossible to explain to them that for many people now, their 2016 net pay is quite similar to their 2006 pay. A decade with no significant change.

Also, if this generation were to witness similar house “value” inflation over 30yrs, the average 350/400k house would need to be worth 3.5/4Million in 30 years.
There’s sweet FA chance of that!

Although maybe I’m underestimating the power of Irish Gubbernment policy… :-GC


#1139

Subsidies for home buyers were also much higher until the mid 1980s. Buyers could avail of home purchase grants and renovation grants and also means tested grants on top of that. Mortgage interest relief was also available at the higher rate of tax meaning that although buyers paid a high theoretical interest rate their actual rate of payment was much lower.

Due to the availability of these subsidies as well as the positive impact of inflation on wages home buying was a win/win deal for my parents generation. With the subsidies gone and wages flat or falling the calculation is different.


#1140

youtu.be/m4ylSG54i-A?t=1575
This interview with economist Michael Hudson explains (starting here at 26:15) explains very clearly the reason for why buying a house now is different from how it was a generation ago. The earlier part of the interview is also worth watching but is more concerned with the historical context for this.


#1141

The number of people chasing properties has increased massively in a generation due to the increased workforce participation by women.

I know saying this might be somewhat triggering, but its simply true. :nin

Single income households are fuarked these days. You would have thought productivity improvement and more efficient building and planning in the last generation would have compensated - but they haven’t. Planning and housing technology needs to be modernised post haste - its a messy byzantine system comprising of layers of processes.


#1142

a z list celebrity who over paid for his own gaff offers his opinion …christ!!

independent.ie/business/pers … 75118.html

nobody gives a shit what you think Brendan …get a real job and contribute to the economy you muppet.


#1143

Thats some article…he sounds desperate


#1144

It’s hard to know where to begin with this one. My god, I’m speechless.


#1145

The thing that infuriates me about these commentards is their inability to grasp the simple concept that if demand exceeds supply then there needs to be some mechanism for deciding who gets to own a property, the most obvious of which is who has the most money.

The only practical solutions are to rebalance supply and demand, for instance:

  • Increase supply by making land cheaper (rezoning) AND reducing state costs on new housing (reducing state costs alone will just increase land prices)
  • Encourage people to move out of the big three cities (e.g. mass relocation of social tenants, huge tax incentives for businesses relocating)
  • Disincentivise landlording through taxation changes (this has been partially done already, I think, although the CGT exemption period hasn’t ended)
  • Disincentivise landlording through regulation changes (e.g. removal of the right evict to sell or house family, enforcing standards of rental accomodation)
  • Remove all unreasonable limits on repossession, to encourage unencumbered banks to enter the market and reduce interest rates

But no, the commentards instead rail on the one aspect that makes the square root of fuck all difference to supply and demand, and that’s the CB regs.


#1146

Clear and concise. But seemingly not grasped by those with authority to institute such changes.


#1147

Brendan knows it too …but pointless “celebrities” regularly makes fools of themselves for a few column inches.


#1148

Not ‘grasped’ or not in keeping with the wishes of VIs?