Last Friday on Newstalk we were on the Pat Kenny Show where Dearbhail McDonald was hosting. We discussed mortgage caps, how they don’t work, certainly not in isolation and some of the downsides to a market when they are utilised as well as the negative impacts they can have on people.
We have designed a simple calculator that lets you put in your property price, what rents you are currently paying, how you think prices will change and how many years it would take you to save a 20% deposit if you only have 10% now.
Just download the excel file, fill in the bright yellow boxes on the first sheet, and then scroll down to the green area to find out if you win or got shafted. (download here)
You can play around with different scenarios, but suffice to say that a regular couple who have €25,000 saved up and are looking to buy a property for €250,000 today will be worse off if rents and property prices went up by 2% a year (and it took them 4 years to save the additional deposit required) to the tune of €15,500.
We don’t believe it is in the remit of the Central Bank to damage the balance sheets of financially healthy individuals, but you can test your own hypothesis and see how it …
Robert Shortt from RTE’s Primetime show spoke to us about the Central Bank idea of putting caps on lending in terms of the loan to value and the loan to income ratios. There is a sense in this, but we don’t believe such a crude instrument is nuanced enough to negate the downsides that such a policy brings with it. There are better ways to do this and they should be explored.