IT: First-time mortgages typically capped at 80%

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.**

kerrynorth said

I would say this is closer to the truth than 80% mortgages accross the board because as a broker I have not heard any such thing as yet. It may also mean something like IFG may have been on a larger commission from certain lenders i.e. 1%+ and to maintain that level the banks may want them to reduce the risk to them by encouraging borrowers to come up with a deposit. It could also mean they dont want s**** business to cross their doors and feel if you can save 20% you’re a fair risk.

With the banks lengthening times for commissions to be paid (didn’t PTSB put it up to 5 years?) that’s a fair point.

Then again, we may be making a full house out of two pairs again!

Yup me too!

Unless we go in together now and buy a house on a joint mortgage? I bet we could get more money if we rent out the spare rooms. I read some article that said there’s never been a better time to buy…

Then we could sell up in a year or two and have massive deposits for giant houses each…

:smiley:

Seriously though… I don’t mind my ability to buy being curtailed, so long as everyone else’s is too.

It stops people driving up the prices with reckless borrowing, and that’s a good thing for everyone.

It’s very hard to pay rent and save though… I don’t have much left to put away after I’ve shelled out my 900 yoyo’s/month rent.

Still I’d be paying about 1200 a month in interest for the same place, so I don’t feel too bad :slight_smile:

I know of at least one family who borrowed enough to build their house, pay for their wedding and furnish their house…

Only thing I can say in their defence is that the husbands father was a farmer who gave them the plot of land to build on as a wedding present

Really confusing article.

This week, my housemate was able to get approval on a 95% mortgage. While the 100% mortgages are practically gone, there are plenty of lenders out there who’ll give 95% mortgages over 35+ year terms.

I think Kerrynorth is probably on the money here. It sounds like it’s simply a case of one broker who doesn’t want to deal with FTB’ers. My only question to that is, wouldn’t a mortgage broker be insulated to a FTB’s defaulting, so there’s no reason not to offer mortgages to FTB’s?

You’re seeing this from the wrong angle,its not your ability to buy but their ability to sell that matters more.
It may take a couple of years more renting but only for prices to come down to meet your deposit ,not for your deposit to meet market demands.
If the average FTB’s deposit is €20,000= 20% then the average FTB property will cost €100,000.

Article in tomorrow’s SBP restating that FTB’s now qualifying for just 80%. With a general 90% max. Also those with previous mortgage approval are being told to stump up 10%. No doubt this is leading to a lot sales falling through.
You can only imagine what this going to do to the housing market.

Time to send Donie Cassidy round… :wink:

Has he a magic rug, er, I mean carpet? :slight_smile:

:smiley:

I would agree that if this article is correct, it will have a significant effect.

When I got a mortgage back in 2001, although some banks had a 90% limit, I had no great difficulty getting 92%.

Assuming average value of property is €250k, for a twentysomething FTB, €50 grand is a huge amount to stump up. And even for those potential FTB’s that do have the funds, would they be prepared to spend all their savings on property in a declining market?

Incidentally if the regulator was doing its job properly, we would never have had 100% or 35/40 year loans in the first place.

Why didn’t the regulator enforce strict LTV limits back in 2005/2006, when every major respected international economic commentator was saying that the Irish property market was in a bubble?

What a mess.

John Hurley, governor of the central bank was quoted on the radio back in 2005 when he allowed 100% mortgages “If people want to be foolish there is nothing I can do about it.” He could have stopped this back in 2002, by imposing higher reserve requirements on the banks to counteract the drop in interest rates, If you look at the central bank reports since he took over they constantly warn about the construction bubble, but nothing was ever done by the central bank to curb it, nothing!

Agreed 100%, and what an absolutely idiot and moronic thing for a governor a central bank to say!

Such move would be against general public and could cause loss of many voters at that time. Public would think of it as banning of poorest from the market. Credit union deposits were clear indicators of fact that if people wanted to go around any kind of restrictions just to get access to credit.

In US market many sub-prime borrowers were simply cheated to make them get a loan, looking at some my Irish friends of years 05/06 it seems that they were cheating banks to get bigger loans. Many believed that they could repay more than banks thought they could repay, good mortage broker was one who could get bigger mortage instead of lower rate. However as a foreigner I could have wrong view at this, so please correct me.

Spot on, that’s exactly what was happening, and it was done with a nod & wink from the banks. I know the loan officers in at least two institutions were told to just write the cheque, so for the last two years of the boom that’s what happened.

Is consumer protection not one of the main reasons for market regulation? Anyone offering a customer 100% mortgages is most certainly not acting in the customer’s best interests and ensuring the customer makes the decision that benefits the customer and not the agent of the customer

PS must dust off the ol’ finance and investment actuarial notes to look up what other ‘Principles of Regulation’ this is violation of :smiley:

It could be time to break out the Johnny Logan if this article is true…

“What’s another year…”

:laughing:

Not our Central bank…

i haven’t seen any blanket approach on first time buyers being asked to put down 20%… I’m a bit uncertain about the accuracy of those figures.