Central Bank Consultation - Policy for mortgage lending


IIRC he’s been called out more explicitly before and kept his fat head down.
I’d put it up to him on twitter except he’s blocked me… Anyone care to provoke the bear?

Any chance his mate Gurdiev the economist would make his views known?


Main letter in today’s Irish Times…are they really promoting the return to mortgages of up to 9 times basic income!

irishtimes.com/opinion/lette … -1.2924665


^^ it’s hardly surprising that an Irish bank would be cautious about lending to a London banker for a BTL property in Dublin. If the British banks are so wonderful, why doesn’t he borrow from them for his Dublin BTL?


Higher loan multiples is top of the agenda for the property cartel - expect almost daily articles moaning and whinging until we have higher house prices than Sydney. Disgraceful & corrupt gangsters.


Average cost of three-bed semi in Dublin now above €400,000

irishtimes.com/business/econ … -1.3026124

Well fcuking d’oh, what did they expect to happen?


this boom is getting boomier


And this from yesterday’s Sindo

independent.ie/business/pers … 65678.html


…it’s all working out exactly like the Gubbernment intended?
Perfect! XX


Philip Lane before the Oireachtas Fianance committee today

Help-to-buy scheme is ‘of course’ pushing up house prices - Central Bank
thejournal.ie/central-bank-h … 4-Apr2017/

Coveney was at pains on the radio.TV yesterday to say that his scheme wasn’t driving up prices and if you thought so, your were basically dumb and didn’t understand economics!


The cost of housing is driven as much by government policy as it is external factors like the cost of labour and materials.

People like to home in on this scheme because it is simple and you can quantify it. Government policy on land use has a much bigger impact on prices but gets far less attention because it is very hard to measure.


Latest info from the CB out on LtV exceptions

centralbank.ie/news/article … ld-lending


Back in 1965, we had to live with a “credit squeeze” imposed not by the Central Bank but by the Bank of England. Amazing how we accepted British monetary policy, and the chronic weakness of Sterling, as a fact of life. 50 years after 1916 and we were still a colony in financial terms.

RTE reported that “upper-income families are laying out hard cash” for “luxury houses” but “the middle-income buyer was being squeezed by credit restrictions”.

You could buy a “luxury house” for 4,950 Pounds back then, equivalent to approx. €105,000 today. Sounds great, but if you invested that amount at just 3% interest p.a., for 52 years, you would have €500,000.

rte.ie/archives/2015/0506/69 … ing-market.


Thank you Lefournier for that information. The ECB failed us Irish Banks. It’s systems of regulations were not strong enough or up and running. They were playing catch up on regulations. Their mechinisms wern’t properly thought out. We were the fall guys the scapegoats in all this poor regulation. Our banks are still looking very weak, could all this mortgage back lash take one of them down. The ECB are looking for Public Consultations from all of us. What should we say. We definitely want the taxpayers money back.


Blaming lack of ECB regulation for the crash is like blaming interpol when your house gets burgled.

Supervision of Irish banks is the responsibility of the Irish authorities.


You’re compounding inflation and deposit rate. Why?. There is no safe investment which will give you 3% real rate of return

The best measure of affordability is mortgage payments as a proportion of net disposable income, factoring in how these vary over the lifetime of the loan.


The general collective memory of what Britain was like pre eec seems very poor. During the referendum I would have put it front and centre but it hardly got mentionned. Post WW2 if was one balance of payments or STG crisis after another, with the associated knock on effect on the Irish economy and the punt. It is within living memory but has largely been forgotten in the public eye.


Not any more. Since 2014 the supervision of ptsb, AIB and BoI has been the direct responsibility of the ECB, in consultation with the Central Bank.

Everything else - and the credit unions - is still regulated supervised by the Central Bank.

This is all part of the post-crisis Banking Union reform.

Pre-crisis, J-C Trichet had made the point that the Maastricht Treaty had allowed for the option of letting the ECB supervise banks. But that the member states had never given these powers to the ECB, preferring to keep them local. When the crisis came the ECB basically had one tool - provision of emergency lending to ailing banks - to help support the system. It had no formal powers to order restructuring of banks, sale of assets, change of board, write-down of liabilities, etc, which it has now.


Latest Mortgage Review being published today

rte.ie/news/2017/1128/92329 … ge-review/

I simply can’t see them tightening the rules further. I can however see them relaxing some of them!




centralbank.ie/docs/default … f?sfvrsn=2

The full report highlights two basic facts: 1. these measures “aim to increase both bank and borrower resilience and mitigate the risks of credit-house price spirals emerging”.
2. “These aims are achieved by limiting the volumes of high loan-to value
(LTV) and high loan-to-income (LTI) mortgage lending.”

So the aim is to increase financial resilience/mitigate risks and this is achieved by limiting the volumes of risky loans.

The only change seems v. minor - “From January 2018, up to 20 per cent of the value of new lending to FTBs and 10 per cent of the value of new lending to SSBs, will be permitted to be above the 3.5 LTI limit”. This “refinement” of the rules “is not expected to have a significant impact on the functioning of the market”.

Super Mario was in Dublin talking about Youth Unemployment in Trinity in September - you can be sure he told Philip Lane to keep a tight grip on the mortgage market here while the ECB is using ZIRP to float the Eurozone off the rocks. (Rents are different and largely a function of reduced supply.)

The Central Bank is legally obliged to do this annual review and the “refinement” announced today sounds like the least they could do short of actually standing pat. House prices will continue to rise until supply comes on stream but the mortgage caps will limit increases above 500K i.e. the gap between the lower and the top end of the market will shrink.