Central Bank Consultation - Policy for mortgage lending


#1271

I think the slight price downturn in Dublin has fired up the base: estate agents, builders, architects, developers etc.
They want FG to do the right thing now, to get more gas into the explosion. We can’t have these new build prices NOT going up by 5-10% each year. And what about the old second-hand market? We still have 10-20% of “recovery” to go yet!
:crazy_face:
Sickening stuff…


#1272

Agreed. This is staggeringly irresponsible from Varadkar. He must be under serious pressure from the vested interests.
Brexit uncertainty should suppress price rises IMO, regardless of any relaxation of lending rules.


#1273

I read this differently. The Taoiseach is admitting the Irish government has no control of the banks so he is reduced to supplication.

In the past, our governments gave the banks free rein - the Central Bank/Patrick Neary was the banks’ poodle, not a watchdog. Now, the ECB and European Single Supervisory Mechanism are firmly in charge and the Irish property market will never again pose a threat to financial stability. The air going out of Dublin’s property bubble and, with supply coming on, the market in Dublin and nationally should stabilise over the next few years.The developers etc. are twisting the government’s arm as hard as they can but the government was always opposed to the mortgage caps which limit the developers’ super-profits.

With 20K.+ new-build apartments coming on to the Dublin market (not counting the Glass Bottle site), the appetite of foreign REITs for BTL in Dublin will be tested and the prices for Irish buyers will be limited by the mortgage rules. Currently, the morgage rules are driving up the price of everything FTBs can afford but in a few years, no-one will pay 300K. for an artisan cottage in “totally broken and crime infested” parts of our capital city or 3-bed semis in the soft and dreary Midlands.

No-deal Brexit is a large pin hovering ever closer to the Dublin commercial real estate market and we could be in for a wild ride if Trump is re-elected (and you thought he has done his worst!!) but the Europeans will allow us to respond to these risks if and when they materialise.


#1274

I can only surmise that he is coming under pressure from VI’s, it would beggar belief that he would push people to get into more debt than needed.


#1275


But, hurry up and borrow more before prices get too high…


#1276

What a load of crap. He’s saying: “that’s where you get back to what you had before, credit-fuelled construction and pretty shoddy construction as well”. But a situation with CB lending limits would not be credit fuelled, it would be demand led. The reasons we can’t build more houses more quickly are:

  • Credit on the developer side – the banks won’t lend for a development without an outrageous profit margin because of past volatility;
  • Developer costs – labour is scarce and expensive, and the government is trousering an iniquitous amount of tax from all aspects of construction;
  • Land hoarding – if the developer can’t make an outrageous profit now, he’ll wait until he can … and the government will let him away with it.

So the solutions are:

  • Announce that the CB limits are in place forever; don’t bother imagining a future without them;
  • Reduce some of the taxes on construction to increase developer margins;
  • Tax the living shit out of land hoarders.

#1277

So the solutions are:

  • Announce that the CB limits are in place forever; don’t bother imagining a future without them;
  • Reduce some of the taxes on construction to increase developer margins;
  • Tax the living shit out of land hoarders.

I agree with a minor tweak.

Reduce tax on construction of shelter.
Where shelter is a home that sells for no more than 4 times average industrial wage.

P.S. iniquitous is a new word to me. Great word.


#1278

In the past, our governments gave the banks free rein - the Central Bank/Patrick Neary was the banks’ poodle, not a watchdog. Now, the ECB and European Single Supervisory Mechanism are firmly in charge and the Irish property market will never again pose a threat to financial stability. The air going out of Dublin’s property bubble and, with supply coming on, the market in Dublin and nationally should stabilise over the next few years

Agree with the stance taken to date by the CBI on mortgage caps, but on the issue of non performing loans and strategic default, we’ve not seem much evidence of independence from the ‘new’ Central Bank/SSM.

They have pushed the banks hard to unwind their bad books, crystallising losses for the Irish and European taxpayer while not doing anything to help encourage and enforce necessary repossessions and recycling of properties to those who can and will afford them. The fact that this approach puts Ireland firmly at odds with Western norms for property rights and lending with recourse from an institution that supposedly lives by hard and fast globalised rulebooks is the dead give away. Part of the problem, and not the solution.


#1279

Looks like the drops now in Dublin are becoming mainstream news…

“But given the fact that they have done exactly what they were supposed to do, which was to put a lid — and a very, very effective lid, on house price inflation — now it is effectively zero and some would say Dublin is falling, which has negative confidence impact by the way. And given the fact that we are coming potentially into a changed economic landscape it would be worth revising them at this point, I think.”

He said any changes should be “gradual and nuanced rather than wholesale”.

AIB Chief calls for relaxation of mortgage rules


#1280

Maybe time to resurrect the “Madness is returning” thread! :wink:


#1281

Oh no, inflation zero in Dublin after prices effectively double again in some areas since the last crash :face_with_raised_eyebrow: - quick, stoke it, stoke it :fire: … can we get some more REITs in to buy up stock en-masse and rent it to the great unwashed at extortionate prices. Maybe Google / LinkedIn / Facebook could help. Heaven forbid people might actually be able to buy a house at a reasonable price without several gouging layers involved in the transaction.


#1282

Exactly. Who’s to say we haven’t overshot the “long term value” by a country mile?


#1283

Irish examiner did a section on new builds in their weekly property supplement on Saturday. I noted 3 different articles giving out about the mortgage rules.


#1284

If it is hitting new builds then it is going to have some momentum building for a rule change…and with a potential snap election if a Brexit deal can be done this week then expect the wailing to increase very quickly


#1285

Squeaky bum time. The noise about relaxing lending rules gets louder and louder. They’ll be screaming for it soon. It’s not going to happen…or is it?
I can’t see it in this climate. If you were a developer with a large phase almost ready for sale, what would you do in the coming months?


#1286

In that instance wouldn’t you need sales for purely cash flow purposes? They should have done their calculations on the existing rules. If they are not shifting it is because they are too expensive…if people are sitting on the sidelines in the expectation of price drops then just changing the rules might not necessarily help them?


#1287

They were put in place to protect us from ourselves and the banks.


#1288

Or to protect the core eurozone from the wild west that operates along the banks of the Liffey.


#1289

Just to reiterate, it would be utter madness to relax the rules. Everyone from Makhlouf, the ECB, and the ESRI etc knows that. However, the chief of AIB, one of the top banks in the country, and the construction lobby think it’s OK. Now why is that?! There are some out there beginning to sweat…