New lending rules enforced from today!

rte.ie/news/business/2015/02 … tral-bank/

So can we expect more carnage over the few months before the aul approval expires?

Might be a good time to sell though?

The approval was worthless anyway, as the banks will have to comply with the overall lending statistics over the year. I think a lot of people have been fooled into complacency by getting an approval letter that breaches the guidelines; not realizing that when they go back to the bank, the bank is far from guaranteed to lend what was approved before.

So despite the approval getting a green light from the underwriters a person may not actually have approval to the value or ratio they think now?

I know approval in principal was never worth much either way.

So we could be in a perverse situation where all the AIPs are honoured in H1 forcing the banks to radically reduce lending in H2 to meet the annual criteria?

Housing loans where the financial institution has assessed a borrower’s ability to repay and written approval issued in advance of the regulations are excluded. The banks do not have to include such loans in their statistics to meet the new restrictions. It is far from worthless if you wish to pay 5x your salary.

Also worth noting that the new restrictions apply in the aggregate, so a minority of people with no approval may end up being able to fill their boots if the bank deems them a good risk/well-connected (delete as appropriate).

Given that the banks sought a 6 month lead in time for systems changes and staff briefing, for any mortgage approval covered by the regs over the next 3/4 montha the rules will be strictly applied so that they don’t get to a stage in q4 where they suddenly realise they’ve let too great a number of exceptions through. Say it will take serious connections before June but expect business as usual thereafter when the xcel sheets are set to be automatically updated.

I was speaking to a broker last week who said that banks have not yet updated their software and processes. It’s hardly seems reasonable to expect overnight enforcement? And before anyone says they have had days/weeks/months (delete as appropriate) to prepare, I’d venture this is a non-trivial task.

(Speedfight’s contribution crossed with mine)

My reading of it is that approvals backed up by verified financial data are excluded from the legislation, therefore, they won’t be counted when ratios are calculated, of course, bank compliance officers may read it differently, but I think they’ve certainly got scope and a solid argument foe excluding them.

@Three Quarks
Seriously? I’ll give them my homemade spreadsheet I put together in 2 minutes. It’s not rocket science

Agreed, was just going to say something similar. I’ve seen at least one of these spreadsheets that I can remember, and they’re not that sophisticated.

I love the smell of regulation in the morning. 8)

8DD

Out of curiosity I rang AIB to see what they would be willing to lend us now that the CBI rules have been implemented and they wouldn’t deal with my query. Apparently there’s some conference call being held at 11am which will detail how they are going to deal with these new rules.

I stressed to the advisor that I’m ok with the new rules and he was insistent that he could not advise me either way until they had more information from the Central Bank. Interesting.

That *is *interesting! Ring 'em back after lunch :slight_smile: (please)

I’m heading into PTSB at twelve. I’ll see what we can get!

AIB “Approval in Principle” mortgage calculator still non-compliant with the regulations.

For context, this broker formerly worked with one of the “Pillar Banks” (aside: as in, the Pillars of the Temple of Dagon).
My sister-in-law works in training for one of the “Pillar Banks” (aside: the other pillar; the one Samson completely pulverised).

Their observations, if I may blend them, would have a large number of those people charged with gathering data and enforcing lending decisions as barely adeqaute in numeracy terms, prone to violating rules and policies whether through ignorance, wlfullness, or whatever-you’re-having-yourself (where such violations have serious kickback potential against the banks, as in the UK), and manifestly unable to implement these changes wholesale in a compressed timeframe.

Hell, the broker doesn’t even know what way the banks are treating applications from today (and he has his claws into 7 of them).

Spreadsheets aren’t the half of it. Who gets the 15% preference? How are re-mortgages treated? Is this being front-ended, or allowed to slide in gradually? What are the other banks doing? What are the penalties for delinquency - does Honohan have the power to enforce this?

Ulster Bank On-Line Calculator

Gross 50k
Single Applicant

No option to select fits/second time buyer.
When I went to school 50 x 3.5 = 175!


Based on the information you have supplied us and assuming you have a minimum 10% deposit, you could borrow approx: €225,000.00

This will be dependant on your financial situation, property value and the size of your deposit or equity.

All figures provided are for illustrative purposes only.

To get more information on how much you could borrow, please contact us on 1800 303004 to make an appointment with one of our Mortgage Advisers at your nearest branch.

Please note, this is not a formal quotation or commitment to lend.


Another calculation from Ulster Bank**
Repayments calculator

Married Couple
Non-First Time Buyer

300k house
255k mortgage
45k Deposit

Results for €255,000.00 over 20 years (Loan to Value : 85%)

Product type APR Fixed monthly repayment

Flexible Variable
Rate LTV<90% 4.6% - €1,613.26

So I am given a quote online for a mortgage of 250k for a 300k house with 15% deposit. I know this is inside t 15% rule but should I really be able to see it online? I mean how do they know my circumstances?


Haven’t the banks had about four months to prepare for this? IIRC it was mooted in September, a detailed proposal published in early October (with a paragraph saying banks should act as though the rules are already in force), and then a somewhat watered-down version announced late Jan with formal implementation this week.