Michael Noonan: Mortgage Insurance is a "good idea"

irishtimes.com/business/pers … -1.1988910

All this is pointing to the 20% deposit rule being imposed undiluted (which surprises me).
The insurance malarkey is Noonan throwing the proverbial bone. A meaningless act.

I recently asked 3 EA’s about the consequences they see the new guidelines as having.
Their responses were as follows …
EA 1) ‘‘That’s gonna fuck up the market’’.
EA 2) ‘‘That’s gonna really fuck up the market’’.
EA 3) ‘‘Game over’’.

FTB’s are the lifeblood of the property market.
This will dramatically reduce their presence.
The only straightforward way around the guidelines that I can see is if banks allows parental ‘gifts’ to make up the 20%.

Due to political pressure, I believe The Central Bank will ease their restrictions in late 2015 or sometime in 2016, once they see the impact this will have.
Ironically, had they brought this in three years ago, it would not have had much of an impact, as most buyers had 20% deposit at a minimum.
But the cash buyer element has dwindled at this stage.
The transition has occurred whereby the market needs mortgages to keep itself on track.

Methinks a derailment is coming shortly.

Well if they work with current defaults levels as their benchmark, the premiums are going to be astronomical.

FIRE economy keeps faces red.

I think you’re completely wrong on this.

The only reason this is being brought in is that Ireland has to be seen as acting like other countries. Ireland will not be able to step out of line, particularly in the context of stories in the International press about a bubble in Dublin house prices.

As a potential FTB I’d just like to say, Fuck off Noonan we don’t want your damn help.

Edit: Feic it. If I get the chance I might pop a letter off to his office.

Yeah agree with this.

Mr_A… you mean a repeat of the Bacon Report recommendations!!!.. not an implausible thought if the guys in the Ireland are in charge… hopefully saner heads in Europe will be making the decisions and there will be no flip-flop changes in policy/direction.

Comments that I am hearing from EAs are the same in terms of the negative effect this will have on the market… but EAs still seem to think that the Central banks somehow “won’t be allowed to do it”… interesting times!

I wonder how hard the VIs will try, will they try to smear someone like Roux if his past isn’t squeaky clean.

we have suggestions of a 20% deposit rule and that could change market dynamics in the long run, then not long later a new announcement that “ah sure we might modify the rule” and bring in mortgage insurance to allow more borrowing. Lads all this tying up in red tape is stupid, set the boundaries give the market time to adapt and leave it in place long enough to see how it really fares. I am not against 20% mortgage rule, I for one think it makes sense. We just have a madness for property in this country and we haven’t learnt from our behaviour and mistakes of the crash.

Back in the boom, South Africa was also in a high property boom, I have no references but we and SA were supposedly the fastest growing property markets in the world. Theirs dipped but the country didn’t crash like we did ( I know we are not a like for like comparison) but they had laws in place and controls on lending limits to counter the new middle class going nuts and getting themselves into huge and unsustainable debt.

breakingnews.ie/ireland/mabs … 50293.html

Ffs - this really is unbelievable! What the hell is going on!

We really need our euro masters to get in here and run the show without the input of VI’s.

This yearning for some mythical european saviors on their white . I see it a lot lately. It’s the mark of desperation and a misunderstanding of the balances of responsibilities to my mind. We’ve been with our euro saviour-overlords for some time now. Some many decades. Beyond many of our own lifetimes.

So I’m not sure what you might expect to happen that is any different to what is happening.

I cannot believe that the head of MABS has welcomed a row back on this.

My first issue with this is the use of the term “property ladder”, implying that house prices only ever go up. My second issue is “and also affect the property market” which is probably his main concern XX

Lucinda’s against it. Is that why the Indo tried to obfuscate with this photo caption blooper? :open_mouth:

Its like the whole country is entwined in some bizarre property cult. XX

No commentator seems capable of making the connection between the imposition of this rule, the subsequent drop in prices and the fact that the 20% of the new price might not prove any more difficult to achieve than the 12% odd currently required of existing prices. It’s absolutely bizarre, it’s as though 2007 - 2012 didn’t happen and sure everyone knows that prices can only go one way (they’re not making any more of it you know…).

It’s more about being incredulous that you possess a working crystal ball. :smiley:

I’d be fairly happy hearing a commentator on a radio/TV show being incredulous at the idea that prices might fall.

The idea is mostly not even mentioned.

Maybe I’ve missed some important detail, but I don’t understand what the fuss over private mortgage insurance is all about, so long as you can opt out once you’ve hit your 20% equity. In the US, if your down payment is between 3 and 19.99% you pay PMI. It’s not legally mandated, but lenders condition it. The borrower pays the premium for the benefit of the lender, until they reach 20% equity. Then the contract ends.
Here’s a brief analysis of the concept.

westga.edu/~bquest/1997/costof.html

Interesting. The big fuss being made over it here is due to a perception in the media that it somehow waters down the LTI/LTV CBI guidelines.

A rational understanding of the situation is that the CBI rules will still stand – and, for that minority (always envisaged in the rules) who will be allowed to borrow >80%, they will be required to take out the insurance. There is a fiction being spread now that the insurance is going to lead to a watering down of the rules but there is no evidence (aside from cynicism borne out of the fact that we all live in Ireland and know how it works) to suggest this.