Who agrees and who disagrees with the proposals...

Brendan Burgess

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Those in favour...

AIB chief Duffy says proposed limitations by Central Bank on mortgage lending are right


The head of the country’s second-largest lender has thrown his weight behind the Central Bank’s proposed mortgage restrictions, saying that he agrees with the principles on which they are based.
AIB chief executive, David Duffy said that the proposals with regard to loan-to-income (LTI) restrictions of 3.5 times a lender’s annual income are “not really that different” from those the bank currently applies, while he also gave his broad support to the loan-to-value (LTV) restrictions the Central Bank has proposed.
Mr Duffy indicated that he felt that the 20% rate is a little higher than he expected, in comparison with other countries, but said that, across the bank’s mortgage portfolio, the average LTV is already below the proposed 80% limit.
 
Those against

Ulster Bank boss slams the new rules for mortgages

"A rebound in property prices following a crisis is not unusual, however, we recognise the need for the Central Bank to take steps to avoid overheating the credit and property markets."
"The measures though, could have unintended consequences around home ownership which go to the heart of Irish society. The proposals as they stand, will impact the ability of many first time buyers to acquire their home, in addition to this, other hopeful first time buyers will struggle to save a higher deposit while paying increasing rents," Ulster Bank chief executive Jim Brown told the Sunday Independent.


Same link for



David Guinane, chief executive of Permanent TSB from 2007 to 2012, also spoke out against the deposit aspect of the rules.
They could force buyers into taking out dangerous unsecured loans to cover their deposits, he said.

Greg Kavanagh - New home builder

Greg Kavanagh, whose New Generation Homes has invested up to €300m in buying land for house building, had warned that the new rules were "madness".Mr Kavanagh added that the restrictions on lending were far more excessive than similar OECD guidelines or UK rules. House buyers can borrow up to 4.5 times earnings under those rules compared with just 3.5 times earnings under the new Irish Central bank dictat.

Mortgage brokers

Dublin-based mortgage broker Joe Leddin, of Leddin Finance, said developers would find it even more difficult to get finance for projects with restrictions on lending.
"This action will restrict severely the market for new buyers and accordingly funding will be much more difficult to achieve for developers," he said.
 
but said that, across the bank’s mortgage portfolio, the average LTV is already below the proposed 80% limit.
I would have thought that this comment is totally irrelevant in the context of the new rules which are loan specific rather than portfolio limitations.
 
I would have thought that this comment is totally irrelevant in the context of the new rules which are loan specific rather than portfolio limitations.

Also is that now after a price surge or was that the case back in 2012 when prices were at their lowest.
 
Looks like Europe are behind this as suspected.... Frenchwoman Danièle Nouy moves into the role as the head of the Single Supervisory Mechanism (SSM), the body in charge of banking regulation, bringing together the European Central Bank and national supervisors, including the Central Bank of Ireland.
http://www.irishtimes.com/business/...onfidence-the-key-for-new-regulator-1.1982265
In France mortgage lending is controlled using a formula that also takes into account repayment on other debts and generally involves low loan-to-value ratios. This tough approach may well have influenced the senior Irish banking regulator, Frenchman Cyril Roux, who previously worked with Nouy in the Bank of France.
What does Nouy think?
“I strongly welcome such measures. They have been in place in France for some time and they have been very effective. They have a real impact on stopping asset bubbles in their tracks. So I think those are good measures,” she said.
Criticisms of the new rules are understandable, she says, as they can have a disproportionate impact on those who cannot get cash to fund the deposit to buy a new house.
“However, on balance, I believe that the most important thing is to avoid destabilising the banking system . . . In my view it is irresponsible to give loans to people who possibly will not be able to repay them. It is so much worse for people to find that they cannot afford their commitments than to be declined credit because they do not fall within the loan-to-income or loan-to-value caps.”
Asked specifically about the proposed requirement that most borrowers have deposit of a 20 per cent, she said: “Maybe I am not the right person to ask the question because in my country this is the case and I have always known that to be the case. It does no good for people to be placed in a situation where they cannot meet their commitments. This is something which has been shown by the subprime crisis.”
 
As I have posted elsewhere - a howl of special pleading by people with a vested interest in house-price inflation.
Noun has it exactly right. And the indignation of the 'specially interested' is proof of the pudding. The latter aren't really interested in the plight of the first time buyer. Rather, they have a clear vested interested in house-price inflation and the insecurity and panic it induces in prospective buyers.
The cooling effect of these restrictions will in the long term ensure that first time buyers aren't leapfrogged by house-price inflation while they save enough to borrow prudently.
 
David Guinane PTSB {force buyers to take unsecured loans to cover deposits}.
This is exactly what happened in the fluffy times.People got deposits from Credit Unions/family etc. People like PTSB did NOT then dig into where these deposits suddenly came from.
Maybe Mr Guinane still wonders why PTSB went bust !
Such a stupid comment tells me these boyos do not know how to learn !

Jim Brown of Ulster Bank.
If I could trust any Bank to lend responsibly I could support most of what he says.

Greg Kavanagh;
To compare us to Uk is waffle . Commentators in Uk with their 4.5 ratio are very worried by house bubble.

Comment;
If you slow the 1st time ,normally cheaper house purchaser you prevent oxygen being given to a house bubble.
I cannot think of a better thing government could do than to build ,build and build houses.
In that way we force the (market) to be people friendly.
Surely it is better to have mortgages and house prices as low as possible?
If mortgage is k100 higher than it need be, that family has to find a lot of ongoing income to service mortgage for years rather than having these funds to spend.

Both here and in Uk , Governments took their eye off social housing.
If there had been ongoing Government building we would not have a major issue.

In answer to post;
I agree with proposals.
 
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