Central Bank mortgage measures remain unchanged

Discussion in 'Housing and mortgage arrears - policy issues' started by Brendan Burgess, 28 Nov 2018.

  1. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: 28 Nov 2018
    28 November 2018

    https://www.centralbank.ie/financia...ity/macro-prudential-policy/mortgage-measures


    5 Conclusions

    The mortgage measures as currently calibrated continue to promote a sustainable role for mortgage lending in the wider housing market and are contributing to financial stability.


    The analysis carried out for the 2018 review of the mortgage measures has
    confirmed that the aims of these measures, to increase bank and borrower
    resilience and reduce the risk of bank credit-house price spirals from
    emerging, are being met. The analysis indicates that the mortgage measures
    as currently calibrated, are achieving their objectives and are contributing to
    overall financial stability. As a result, the LTV and LTI limits for the various
    borrower categories and the related lending allowances above those limits
    will remain unchanged in 2019.
     
    Last edited: 28 Nov 2018
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  2. Brendan Burgess

    Brendan Burgess Founder

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    A nice table explaining the existing measures
    upload_2018-11-28_14-0-43.png
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    3 Risk characteristics of new mortgage lending


    While there have been shifts in the distribution of
    LTVs and LTIs indicating the measures are more
    binding, there has been little change in average LTVs
    and LTIs and no sign of a generalised deterioration in
    lending standards at present. The relative prevalence
    of FTB and SSB loans with LTI and LTV allowances,
    respectively, remains broadly similar to that in 2017.
    Portfolio level analysis across the loan books of the
    Irish retail banks does not point to any significant
    weakening of resilience.

    upload_2018-11-28_14-13-57.png
     
  4. Brendan Burgess

    Brendan Burgess Founder

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    This is my summary

    upload_2018-11-28_14-20-19.png
    So it's easy for First Time Buyers to get more than 3.5 times income, but it's impossible to get more than 90% LTV.

    upload_2018-11-28_14-24-12.png

    Brendan
     
  5. Sarenco

    Sarenco Frequent Poster

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    The only real gripe most people have with these rules is that the quota of exemptions that each lender can grant is fixed on a calendar-year basis (as opposed to rolling 12-month periods).

    Unless I missed it, that issue seems to be completely ignored in this review. Which seems odd.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    Very odd indeed. But maybe they are keeping it like this to give people something to gripe about?

    Brendan
     
  7. cremeegg

    cremeegg Frequent Poster

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  8. Brendan Burgess

    Brendan Burgess Founder

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    What are you suggesting?

    That we should have no lending restrictions so that the lenders will end up competing with each other for business by offering 100% mortgages and 5 times loan to income?

    Brendan
     
  9. cremeegg

    cremeegg Frequent Poster

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    Why do I have to be suggesting anything. I am wondering what way or ways the market will find to reassert itself.

    I just think that when regulation restricts the market, pressures build up that will be relieved in some other way. People want somewhere to live, if regulation makes it more difficult to do that through a mortgage financed purchase, that demand will find some other outlet. Maybe rents will rocket !

    I am suggesting (as an analysis, not as a policy prescription) that the existing regulation may be tilting the market away from buyers dependent on a mortgage to cash buyers.
     
  10. Brendan Burgess

    Brendan Burgess Founder

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    Sorry, I thought that you were implying something, but I see now that you are not.

    The market creates its own pressures and problems. Lenders have to be restricted. They naturally will compete with each other to the detriment of all of us. The depositors will lose or the taxpayer will have to bail out the depositors.

    Brendan