Govt's New Affordable Mortgage Scheme


#1

Government sets floor for house prices. Déjà vu :angry:
through the Affordable Mortgage Scheme
Provides state mortgages @2.25% for 30years.
**Did Eoghan watch that NZ documentary on the Pin? :slight_smile: **

In Greater Dublin, Cork and Galway, the maximum market value floor is €320k.
In the rest of the country, it is €250k.


#2

Income limits of €50k for individual, €75k per couple will disqualify quite a few in Dublin, not much help in South Dublin anyway.

So Fine Gael are in the Mortgage market now. Won’t help with privitising the Mortgage lenders we already have.


#3

Mortgage shop opens on 1 February
rebuildingirelandhomeloan.ie/

It looks like an extension of the homechoiceloan scheme, except with higher income limits (HCL €35k, €45k joint), lower cost of borrowing (HCL 3.30%)

I can see estate agents nationwide opening frothing bottles of bubbly.


#4

“House hunters looking to avail of the deal must also have had two insufficient offers or refusals for a mortgage from two lending institutions.”

So basically you have people who are bad risks being offered lower rates of interest than good risks. XX

I would love to hear a finance/economics take on this one.


#5

so a fixed term 2.25% mortgage over 30 years is now the reward for the cohort who enjoy a very low effective tax rate. A couple on a joint income of less than 75k. Effective rate of tax on a couple earning 74k is 19% v 35% paid by a couple earning double that.

perfect XX


#6

While the higher interest rate on poor credit holders is logical. It’s also logical that it increases likelihood of default. Bit of a vicious circle.

I am more aggrieved with a 25yr fixed at 2% at just under 4 times earnings. So, the government have managed to goose the low end of the market up to 250K & 320K around the country. And goose the middle up to 500K with FTB. Can you qualify for both FTB grant and this new scheme? I see nowhere saying you can’t.

If you think about government interventions and their impacts (over decades), it’s easy to feel physically sick.

Needs its own thread really.

I’m off to think about how I can get a 250K mansion in Cavan on one earning while one of us gets the dole. It’s probably not that hard.


#7

Karl Deeter (I think) ripping into in on Pat Kenny’s Newstalk programme.


#8

Cavan here I come!

daft.ie/cavan/houses-for-sal … n-1053987/


#9

Actually, I’m off to Leitrim. Needs a bit of TLC but reckon there are enough rooms there to rent out and get €14,000 per annum back to cover mortgage.

€225K morgage @ 2% = 953pm v 1,166pm rent a room. Government be actually paying me 200pm. Plus I’ll try and get onthe social. This could work nicely.

daft.ie/leitrim/houses-for-s … m-1598785/


#10

Is it seriously fixed rate for 25 years?
What happens if inflation takes of and the ecb raises rates (aggresively)?
The average hard worker will get nailed with higher taxes to offset the losses being made on low fixed rates (unless government borrows long term fixed), also the more borrowing the more expensive it is anyway. It’s socialised either way.
And the commercial banks should be administrating the process if it goes ahead.


#11

Well, if the govt is directly financing it then the maturities could be matched with govt bonds.

But then who needs capitalism, right? Just have the govt. issue mortgages for everyone and hope they repay. Be grand.


#12

This is f-n insanity. Pushing house prices higher …more carrots for builders. Never the stick for them boys.


#13

For comparison- The Income threshold for eligibility for a 2 adult/2 child household for Social Housing Support from a GDA local authority is €38K net. ‘Trickle down’ housing initiative for sure.


#14

Can we not all just get govt backed Mortgage Protection Insurance bringing rates down to 2% for 25yr mortgages?

Government (the people) are effectively taking 40/50% of the underlying risk (60% LTV with UB is 2.95% best rate), 25yr interest rate risk and givng at least a 1% spread on rates with banks. Who will be issuing the mortgages? Banks, pensions, ntma?

Is this preempting banks lowering rates?


#15

That would require the govt to immediately start paying the mortgages of all the current defaulters, removing any requirement of the banks to chase them for payment.

There’s a lot of guff talked about moral hazard but in this case it’s ringing off the hook.


#16

Fine Gael just need to merge with Fianna Fail at this stage. There is no difference, it’s just a total con job to pretend that there is.


#17

If maturities are matched with government bonds, who is lending to Irish government?
It means the lender is expecting rates to stay low (or go lower - which is my expectation) and inflation stays under control.
Or the ECB is buying government bonds, (expanding it’s balance sheet?) and the holders of Euro credit are taking an inflationary loss.

But yes, Ireland continues its march towards full blown socialism.
Government creating wealthy home owners at the expense of the FTBs and tax payers - happy days.


#18

Indeed.


#19

Austria got 3.5 bln 100yr bond at 2.112% back in Sept.
Ireland did 100million 100yr at 2.35% back in 2016.

Control over anything, especially inflation is an illusion. Sure, if any Central Bank had control, they would have achieved their targets with all the stimulus they have pumped. Control does not exist.


#20

Wow. It’s almost as if cheap finding CAN be made available for housing (but only if it is used to ratchet up the private market). How about taking 2% 25 year debt and making it available for Housing Associations to provide social and affordable housing? How about tackling the largest component in housing costs (site costs) and stopping the ‘help to hoard’ schemes?

One positive aspect to this scheme is that it can be availed of by self builders, but a negative aspect would appear to be that the mortgage can’t be rolled over if the asset needs to be disposed of. I also suspect that nobody will actually qualify for the scheme. If you have been correctly turned down by two banks for a mortgage then I just can’t imagine that you could qualify for a scheme such as this. Perhaps David Hall could provide a service to assist with the paperwork for applicants so that it ensures refusal from the banks but guarantees acceptance in this scheme? cha-ching.