Here have too much money

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

2200 has to be the repayments for the 1-year special teaser rate for FTBs. Ask them what the repayments will be after the first year

I hope the media hear about this. It’s shocking.

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. :open_mouth:

How long was the fixed rate period?

In America where 30 year fixes are the norm, it is making sense to buy property now, especially as inflation and interest rates are likely to surge in the medium term.

Good for you!

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.

Funny that. Why would it be a good time to buy at the dip of the interest rate cycle ie they can only really go up and then you are stung.

IMO, next thing to happen is higher interest rates and even lower house prices.

Its a wonder she didnt offer you an Offshore Account… being as the banks have resumed just about all other bad banking practices.

Still I must go talk to them myself this week regarding bostonorberlin Inc., youd never tell me the branch and what she looks like :wink:

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.

Cypress,
The banks don’t care about the loans going bad anymore,they have got the govt to take them off their hands,its a win/win for them:

thepropertypin.com/viewtopic.php?f=19&t=20362

sbpost.ie/post/pages/p/wholestory.aspx-qqqt=DAVID%20MACWILLAMS-qqqs=commentandanalysis-qqqsectionid=3-qqqc=5.2.0.0-qqqn=1-qqqx=1.asp

30 yr fixed is the standard - 4.8% now is the gring rate…

Do you mean in Ireland or in the US?

US

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.

Good post cjs.

This highlights the nasty engine of the property bubble. Or as I prefer to call it a credit bubble. What do you think would happen if the maximum mortgage allowed was €150k?

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.

This crash has a long way to go.

+1

And I will say it will be easy to get the mortgage over the line only if the developer is with the bank you are borrowing from.

I dont doubt this for a second but isnt the other problem here that the all the developers are with all of the banks. :neutral_face: