Central Bank Consultation - Policy for mortgage lending


We can surely only be another McCarthy article away from a politician telling him to “stop talking down the (insane) house price recovery!”

Then we’ll KNOW the boom is back.


A rock of sense. Compare and contrast with the unworkable, click bait gibberish from that preening ginger toss-pot


Colm McCarthy has been saying the same about land use in Dublin before, during and after the boom. I have more time for an opinion that is invariant to fashion:-D

Inside the M50 there are about 10 golf courses, working farmland, large tracts abandoned to semi-feral horses as well as several hundred playing fields most of which are in use less than 2% of daylight hours.

The public sector is the worst offender in many ways. It faces no financial or other penalty for in efficient land use.


If only there was some sort of annual tax on land that might help develop and efficiently use it. A tax based on its zoned value not its current use value. That would probably be sufficient to stimulate its use as a utility.

For want of a better word you could call it “property tax”


Too obvious for our betters (and far less politically palatable which was main reason it wasn’t implemented)



Central Bank lending rules fuelling wage war

independent.ie/business/pers … 06381.html

Most of the example mentions public service, who can’t wage a wage war because they are signed up to Haddington Road.


When I read shit like that I truly despair for the future of this country.


I really hate the way they talk about starting salaries and not being able to qualify/pay a mortgage on the starting salary.
There’s a whole 5 - 10 years worth of incremental salary increases between qualification and most people even thinking about buying a house.


Some pearls of wisdom from the IT for those who wish to skirt around the CB rules - Mortgages: How to get around the Central Bank’s borrowing rules


As far as I know this is just plain wrong. The exceptions as I understand them are based on a percentage of the value of loans not on a percentage of the number of loans.

The article seems to think that exceptions to the rules will be curtailed in future (quoting example of Norway). The lobbying against this move in Ireland would be immense so it would be a significant test of the independence of the Central Bank.


Interesting -

However, as reiterated so forcibly in recent weeks by Central Bank economist Gabriel Fagan, the rules are not only here to stay, they may be tightened further.
And if there is one area that the regulator might tighten, it is in relation to exceptions.
Last year for example, Norway closed a loophole in its mortgage lending rules, first introduced in 2010, which limited LTVs to 85 per cent.
Initially, banks were allowed to offer higher LTVs on a certain proportion of loans, but any room to deviate from the 85 per cent rule has since been cut sharply. It is possible the regulator here may take a similar approach.*


I think the LTV limit is a bit pointless/counterproductive without a proper PPR repo regime in place, and bearing in mind the volatility of prices.

As mortgages are paid down you’re unleashing a wave of people with positive equity who can trade up. That can create significant self-reinforcing upwards price pressure than can only be countered by LTI limits, but if it’s one or the other then we’re back in crazy town.

It also severely delays purchase for people with stable incomes who are paying high rents.


Regarding the exemptions, it was reported some banks gave out too many in H1 2015 and were trying desperately to get under their limit in H2.

Some banks may have breached their limits overall in 2015 in which case the CB will be aware but have not published this data so far. Those banks may face sanctions but CB may give leeway as it was the first time banks had to deal with this.

This could feed into CB’s assessment end of Summer 2016 of how the rules have worked/not worked. The exemption threshold may be tightened, esp. since banks are trying to curtail it with 2% back offers and €1,500 off your legal fees.

Personally, I can’t see CB tightening exemptions without a carrot. Perhaps it will go from mortgages over 220K+ needing a 20% deposit to those over 250K.

Time will tell and lots more monthly CSO figures due before then (likely) showing how annual prices have fallen in Dublin.


The part about deposit requirements is also incorrect (or misleading at best). It’s not 10% outside Dublin and 20% inside. The 20% is calculated on the amount in excess of €220,000 so, if the house costs €290,000 (average given for Dublin) the deposit requirement will be 12.4% (€36,000), not 20%.


Central Bank wants views of the public on mortgage deposit rules ahead of review
independent.ie/business/iris … 64493.html


In a bit of a rush here, can someone set up a new thread on this review.

We can collect points to submit on this

No repos policy. :neutral_face:
41% dirt discouraging saving. :angry:
High mortage rates. :angry:
Byzantine planning system. :angry:
Zero leadership. :imp:


This is a very good point. You could argue it is moot too. In the original CBI analysis they found that overdoing it on LTV and LTI were highly correlated (and in turn highly correlated with arrears).

The problem is that LTI can be gamed by mortgagee and/or bank. This is much more difficult to do with LTV.

Having both in place is a sensible double lock on madness by either mortgage holders or banks. People have 80% stuck in their head because it was in the original proposal, subsequently amended to 10% up to 220k and 20% on anything over it. Median dwelling still changes hands in Ireland for <200k for which you only need a 10% deposit.


**IMF Global Housing Watch
imf.org/external/research/ho … f/0416.pdf


Ireland’s below average scores on most metrics offers price growth opportunities :slight_smile: