My girlfriend was in the bank opening a new account, the customer service girl said that they’d noticed that she’s been saving money and asked what for, we’re renting together and at some point would like to buy, so she said saving a deposit. They offered her a quote just to see, between us as a pair of FTB’s AIB are willing to lend us 650K at 92% that’s over 6 times our combined income, and about 2200 per month, excluding insurance……
If one of us lost our jobs or stopped working for any reason one income won’t pay 2200 and allow us to live. When the EU economy recovers rates will start to go up then neither income would be enough!
So they got us into this mess by over lending inflating prices creating panic buying……
Even the girl in the bank had been stung but she felt it was a good time to by now, house prices are down interest rates are low ……
My take on it is that they are using taxpayers money to lend to FTB’s and don’t care if they over do it.
When will this madness stop, who’s overseeing the lending guide lines? Nobody?
For me I’d be OK borrowing 4 to 5 times one income is that < 300K paying about 270
Good post CJS, one thing Id say to you though is they can tell you how much according to multiples or net income how much they “may” lend you but I think that would change (reduce) with an application in front of home loans.
But you are quite correct it has been madness and they idiots seem hell bent on lending more to people who could be out of a job tomorrow without really assessing their borrowing capability correctly.
I’d love to see some objective figures covering the amount of mortgage lending going on. I suspect the banks are promising much but delivering little otherwise they’ll come under pressure to “get lending going again” by the government.
Thinking about this, it makes sense for the bank to be exposed to the risk of a hundred FTBs rather than one developer who could pay off his loan after selling 100 houses to 100 FTBs - is that what they are playing at?
Over the next 2 years, the banks (backed by the govt) will do everything in their power to transfer the current property headache to an army of FTBs. There is no point having all these loans to developers because they have no hope in most cases of repaying them and have stopped paying interest. These loans will eventually bleed the banks dry.
However, a hard working FTB is much more likely to do keep up the repayments, even if it crushes their lifestyle.
I’ve no personal experience in the area Codifiy but I believe fixed term mortgages for the entire length of the mortgage are fairly rare (although they do exist from what I’m told). Depending on your LTV a fixed-rate for a year or two would be more likely - essentially it’s a teaser rate to encourage people to buy. You can get a fixed rate for longer terms sometimes. And when a fixed-rate term ends you can renegotiate with the bank sometimes to fix it for a further term. But obviously if rates have gone up in the meantime then the new fixed rate will also be higher. But it sounds like they’re more common over there than they are over here.
I think the big problem in Ireland is breaking out of a fixed rate. In the US, this is ok. In Ireland, there are penalties. So a 30yr fix would probably leave you in a fix. The only way to get longer fixed periods is to allow borrowers refi without getting hit.
Hmmmm…so she says now is good time to borrow 650k and buy that house…
That’s funny, coz I’m renting a 650k house for just 1,400 pm.
It’s also falling in value by around 5k per month. The return I would lose on my investments if I converted them into a deposit on a house would be around 500 per month (after tax). On top of that, I would still have to pay around 2k per month on a mortgage.
So let me see…I’m…er…1400 minus 5000 minus 500 minus 2000…I’m 6,100 a month better off renting.