Are banks giving exemptions from Central Bank mortgage limits?

S

Sarenco

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A relative of mine is looking to buy an apartment (as an FTB) but will need an exemption from the Central Bank's 3.5 loan-to-income limit.

Press reports earlier this year suggested that the main lenders had reached their 20% quota of exemptions for 2018 as early as April -

https://www.irishtimes.com/life-and...tions-could-dry-up-as-soon-as-april-1.3432517

Does anybody know if any lenders are giving exemptions from the LTI limit now (October 2018), on condition that the loan is not drawn down until 2019?

I would be very interested to hear of any recent experiences of looking for such exemptions.
 
I had heard that sales of properties were being impacted by the would-be buyers inability to get exemptions.

It seems odd that the quota was full by April. But if many people got three approvals in principle, and did not decline the two unused approvals, I can see how the lenders could get stuck.

Brendan
 
My Brother in law and partner recently (September 2018) got an exemption via Haven through a broker with a combined salary*4.2

I believe the criteria for them is relatively strict and combined salaries in excess of 100k and a good LTV certainly helps.

Could be worth a shot to use a broker.
 
How is the allocation of exemptions calculated by each institution? What criteria must be met to obtain an exemption? What is the maximum exemption as a factor of combined salary that they can offer? Is there a list anywhere that details what, if anything, is required by the ECB in relation to the exemptions.

Surely if all exemptions are used up at the start of a calendar year it will have an impact on house prices.
 
It’s best to talk to a good broker (e.g. Dave Curry who posts here occasionally). They know the status of the different banks at any point in time.

As I understand it, the LTI one tends to be less of an issue.

The system is a shambles though, as banks can have no real way of knowing where they stand as they give Approvals in Principle but then most people don’t buy or go with a different bank who have also given them AIP. You could have 9 spoofers and 1 real applicant but you have no way of knowing.
 
Sarenco,

Do they have a specific property in mind? It would help, as they'll be applying for full approval rather than AIP.
 
Many thanks for the responses so far.
RedOnion said:
Do they have a specific property in mind?
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Yes, I think he has his eye on a particular apartment.

My relative's main concern is that he might get turned down for an exemption if he applied now and that might adversely impact his chances of getting an exemption in the future.

So it would be interesting to know whether banks have already started to fill their 2019 exemption quota or, if not, when would they start doing so.

It seems bizarre to me that the exemption quota is based on a calendar year rather than rolling 12-month periods. But dems da rules.
 
My understanding is the exemptions apply to drawdowns, not approvals. The banks (whom I am defending for once) can’t control when a fully approved mortgage actually gets drawn down. If it’s a new build, there could be delays, and this could potentially impact the individual banks exemption threshold. If they breach they are in trouble with the CBI because they are measured in a calendar year basis, not an annually rolling basis which would be easier for them to manage.

When is your relative hoping to purchase? This year or in 2019? If he is a good credit risk, aside from the exemption, then he should have no problem getting a mortgage, he or she may just need to wait until January when the exemption clock starts to tick again.
 
Sarenco said:
It seems bizarre to me that the exemption quota is based on a calendar year rather than rolling 12-month periods. But dems da rules.
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Agree fully.

As I said two years ago in my submission on the review of the rules

My final submission: No material change should be made to the LTV or LTI limits

Exceptions should not be based on a calendar year

The calendar year basis for exceptions causes some inefficiencies in the market. Many borrowers were told that they could not get approval towards the end of 2015, but that they would get approval in early 2016. And sure enough, they did get approval in early 2016.

This distorts the market.

Last year, permanent tsb used only 11% of its quota for exceptions. They should be allowed to carry over the unused portion.

If a lender wants to be more prudent than the Central Bank allows they should be able to do so without fearing the loss of their allowance exceptions.

There is a risk that a quota of 15% becomes a target to be used up.

Sarenco, it might be worth your while writing to the Central Bank on this issue as I don't know why they stick to this silly system. I don't think that there is an active consultation, but if you write to the Governor, he might think about it.

Brendan
 
Sarenco said:
My relative's main concern is that he might get turned down for an exemption if he applied now and that might adversely impact his chances of getting an exemption in the future.
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My understanding is that what happens in practice is that she will be told that she can't have an exception now, but she can have one in the new year.
 
First time posting here but just wondering if I am alone in the fact that we are finding it incredibly difficult to secure a LTV exemption being a SSB? Mortgage qualification doesn’t seem to be an issue but exemption seems to be a near impossibility with a threshold of €3500 a month disposable income being a requirement by almost all banks? Has anyone experience of this? Thanks
 
The data for the first half of the year are here:

https://www.askaboutmoney.com/threa...-7-loans-exceeded-90-ltv.209857/#post-1585423

The average gross income of all SSBs was €106k

"9% of the value of total SSB lending exceeded the 3.5 limit in H1 2018. 10% of the value of new SSB lending are permitted to exceed the 3.5 LTI limit per institution in any given year."

I suggest that you start a new thread and give all the information including house value, equity, salary , etc to see if anyone can help.

Brendan
 
Quick update -

My relative contacted a broker and was assured that exemptions would become more readily available from the start of November as lenders would know that the loan wouldn’t be drawn down this year and the exemption would therefore fall into their 2019 quota.
 
The limit is 20% of loans given over a 6 month period can be over the limit.

You must have identified the property that you want to buy, your disposable income must be much higher than the normal requirement, ability to repay above normal requirements. In other words, you must prove than having the higher loan won't be an issue for you.


Steven
www.bluewaterfp.ie
 
SBarrett said:
The limit is 20% of loans given over a 6 month period can be over the limit.
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I don't think that's correct Steven.

From the Central Banks's website:-

"... banks and other lenders have the freedom to make a limited amount of exceptions to this rule. From 1 January 2018, in any one calendar year they can give an exception to:

• Up to 20% of the value of mortgages to first-time buyers
• Up to 10% of the value of mortgages to second and subsequent buyers."

Managing quotas of exemptions on a calendar year basis (as opposed to rolling 12-month periods) apparently presents a particular challenge for lenders.

However, it appears that most lenders will start giving more exemptions (for AIPs) again shortly because the loans won't be drawn down until next year (i.e. from their 2019 quota).

It's interesting that Ulster Bank apparently still have some of their 2018 quota to use up judging by that report.
 
It looks like they have changed it. It was certainly in the original document issued on the limits and exemptions. Extending it to a 12 month period is stupid as banks can front load the exemptions and not give any exemptions to those that apply later on in the year.

Maybe Ulster Bank were holding back with the assumption that the other banks would use up their quota early on and they would nab these customers by offering the exemption later on in the year?
 
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