Housing in half of all counties are unaffordable

According to the Irish independent, homes are becoming so expensive that first time buyers cannot afford to purchase a home in half of the counties in Ireland. Not only are the housing prices too high to quantify as affordable, but mortgage requirements do not make buying homes possible for first time buyers. In other words, a buyers average income does not amount to the fund needed to deposit. A buyer’s income on average also does not quantify to high enough earnings to qualify for a mortgage.

The lack of affordable homes have always been an issue in Dublin and Cork, but the trends in the housing market are causing widespread housing unaffordability throughout the state. Recently, a survey conducted by the EY-DKM economic advisory determined Co Roscommon, Co Clare and Co Offlay have been defined as additional counties that are now too expensive for buyers.

The most unaffordable counties of Co Wicklow, Co Kildare, and Co Meath have been defined as the most unaffordable in terms of saving for a deposit. These counties take an average of 15 plus years …

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Central Bank statement on mortgage rules review

23 November 2016

Outcome of Review of Mortgage Measures announced

§  Review confirms that the overall framework is appropriate and the measures have contributed to financial and economic stability.

§  Review based on extensive analytical work and public consultation.

§  Refinements to improve the effectiveness and sustainability of the measures.

*** More detail at press conference today at 14:30***

The Central Bank of Ireland today (23 November) announced the outcome of the review of the mortgage measures, following an extensive consultation and evaluation process. The mortgage measures were introduced in February 2015 to enhance the resilience of both borrowers and the banking sector.

The review affirms that the overall framework is appropriate and the measures are contributing to financial and economic stability, reducing the risk of unsustainable lending and borrowing.

Following the review, the framework is broadly unchanged. The 3.5 times ceiling on the loan to income (LTI) ratio remains. Requirements for buy to let borrowers and the exemptions for negative equity mortgage borrowers from the measures also remain unchanged.

The review identified a number of refinements to improve the …

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Irish Independent: Quote Irish Mortgage Brokers on Central Bank limits

Mark Keenan quoted Irish Mortgage Brokers on the topic of how the Central Bank regulations were affecting prospective property buyers.

Meanwhile, Karl Deeter of Irish Mortgage Brokers described Mr Frisell’s comment as “effectively engaged in social engineering”.

“If they know that shifting people from ownership and into rental is the outcome of their policy, and they keep on doing it, then we have to assume that this is the outcome they have been pursuing,” he said.

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Sunday Independent: Irish Mortgage Brokers mentioned in housing article

We were happy to see that our concern about social engineering was mentioned in an article in the Sunday Independent by Brendan O’Connor, the quote is below.

Or does the Central Bank think it’s desirable? And why has the Central Bank taken it upon itself to decide that Irish people should move to renting property rather than buying their own house? Mortgage broker Karl Deeter has suggested the Central Bank is indulging in social engineering. What other shifts in how we live would the Central Bank like to introduce you wonder. Perhaps a one-child policy?

The issue of social engineering was first raised by us in the consultation process when it began in 2014, specifically we said this was a concern in the following two quotes taken from our submission:

This policy will ensure that many people fall prey to a policy that in protecting banks hurts their future wealth. We are, and will remain, strongly opposed to measures that have societal engineering outcomes such as this.

And later we also said that

For people who don’t have rich parents …

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Two identical first time buyers walk into a bar, one qualifies, the other doesn’t

The Central Bank rules on curtailing mortgage lending have had an interesting effect, first is that we are seeing more loans draw down that might not have because people are bringing forward consumption due to the fact they won’t qualify for the same amount again in the future. This is literally the opposite of the intended effect.

Second is that it’s causing chaos for prospective buyers who may hold an exemption or need an exemption because there are quarterly reporting rules that mean banks can’t offer a new loan until they know if an old one will be drawn or become an NTU (not taken up).

Perhaps the easiest thing to do is explain it, currently you can’t get an exemption from Ulsterbank or AIB/EBS/Haven or BOI, but you can from PTsb and KBC. The banks that can’t give you one (and remember it’s only one of LTV or LTI not both) are hogtied because they have given the limit of exemptions (c. 15%-20% of lending) already in loan offers and they have to estimate both the annual and quarterly …

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RTE Sean O’Rourke Show: Karl Deeter & Ronan Lyons on Central Bank rules

Last week on the Sean O’Rourke Show Karl Deeter and Ronan Lyons (Trinity College & Daft.ie) had a good robust debate about lending rules and whether restrictions were good or bad. This week in light of the actual changes that occurred they had a second conversation on the outcomes.

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