IT: First-time mortgages typically capped at 80%

I don’t have a subscription for the rest of the article…

here we go:

This is big news , this will just accelerate the crash as not many FTBs are able to raise 20 percent the value of the house. I was of the opinion that up to very recently a FTB could get a 92 or 95 percent mortgage.

Which neatly explains the problem . Thats pure sub prime lending that is !

“Good Days” my arse, the system blew itself up more like :frowning:

This will remove huge numbers of the least financially literate from the FTB market, and should normalise house prices more quickly.

I would concur. We’ve been saving hard for a few years and have nowhere near that kind of deposit (difficult to pay rent and save, ye know yerselves) so I believe these kind of deposit requirements will speed up the price drops.

that’ll be me renting for another few years then.

Lets say you’ve saved 30,000.

Using the example they’ve given
20% of 250,000 = 50,000. Current market.

Market drops another 20% (highly likely) =>

20% of 200,000 = 40,000 so as you save the price and the deposit required are comming down…

Am I making sense?

To an extent you are correct, but if prices really do drop further then the banks are going to start taking loan losses and this could prompt them to reign in lending further.

The way some of the press is describing this situation is not how I look at things. If you are an FTB in Ireland now, the credit crunch could be your saviour. By removing your ability to borrow silly amounts you will be prevented from buying an overvalued property.

The article is very misleading and incorrect.

Completely Incorrect
FIRST-TIME BUYERS are being asked to provide 20 per cent of the price of a house when applying for new mortgages, according to IFG, which owns the State’s largest network of mortgage brokers.

Theres over 15 lenders that are giving mortgages to fist-time buyers ranging from 95% to 92%.
Not one of them has said they are going to reduce this to 80%.

The loan-to-values have come down - in the good days they were well above 100 per cent," said Mr Owens.

Mortgages were never above 100 per cent.

In the future if the banks were to reduce the LTV to 80% for first time buyers, It would have to apply to all buyers.

If this is the way forward for the banks,they know the game is up .And they are pricing there products accordingly to cover themselves in the downturn.Wonder which one will be the first to publicly say the real reason they are doing this!!!

I know off two people who got mortgages above the value of there home. With car/college loans being incorporated in on top of a 100% mortgage.

Definitely! This would be healthy. Just not good for developers, speculators or LLs health. But don’t really think its true. It would be seem to be possible to still get a 92% mortgage.

Don’t bold at us then, write a letter to IFG.

Perhaps the headline distorts an underlying truth - the most the banks will lend to a FTB is Y x salary, so given the average cost of a property, the average first time buyer has to find 20% of the price themselves.

Mortgages were indeed available above 100% until recently, either as a refi, with payment holidays in the first few months (with the interest added onto the mortgage), or with moving/arrangement fees added to mortgage 100% mortgage.

You’ll be telling us next there’s no subprime in Ireland.

This article is saying something different to me. I reckon this article is effectively saying that IFG (not being a bank) does not have access to finance and is effectively withdrawing from the market without actually saying so by making themselves uncompetitive. The other option is they do not want to take on FTB’s whom they know will be in NE in a couple of year’s with the escalation in costs, defaults, repossessions that flow. I suspect the former.

KN, as far as I can see, they don’t provide any of the financing themselves:


Aren’t IFG just a broker? What does it matter to them if FTB’s go into default?

Edit: missed ym’s comment.

IFG are just there to sell product to mortgage owners

Not convinced this article is the truth.
If/When buyers have to pay 20% up front then this will be the most profound thing to happen to the market since the start of the crazyness. It will absolutley signal the begining of a cliff top fall for the property market.
I hope it is true, or at least there is some truth to it.

If this article is accurate then it’s enormously significant.

It suggests that the average FTB can only achieve a LTV of 80%.

Only 6 months ago, 2/3 of FTBs needed LTVs of > 90%.
This means that probably 80%* of FTBs would be excluded from the property market under these new criteria.

*** 80% is an estimate, it’s probably more. That 66% of FTBs had an LTV >= 90% can be deduced from the Amarch FTB survey, Oct’ 2007.**