Brendan Burgess
Founder
- Messages
- 52,197
This relationship breaks down for originating LTVs between 80 and 90 per cent,
Fair enough. But given the current public appetite, I can't see us agreeing to a more "sophisticated" system that isn't also much more "lenient".The LTI limits are a very crude measure.
And the central bank won't force you to. Banks are free to implement more sophisticated/stringent affordability criteria above the minimum limit set by the CB.I would not lend 3.5 times the income to someone on €20,000.
Banks and customers have proven to be unreliable at assessing the risk of the customer's circumstances changing for the worse. If I lose my 100k job at some point in the next 20/30 years, then the balance of a 350k mortgage may be significantly more affordable than a 400k one. If the loan ends in default, then the cost to the bank's shareholders (or the state) for the smaller loan is also that much smaller.I would consider 4 times the income to someone on €100k as they would have far more disposable income.
In cases where LTI and LTV happen to be well aligned, then people will jump through both hoops at the same time, and that's fine. That doesn't mean that both aren't useful. If I make 20k per year, I won't be able to afford a 100k mortgage, regardless of whether I have plowed another 100k of inherited money into equity.In any event, there is a strong correlation between Loan to Income and Loan to Value.
I don't understand this point. Can anyone else explain it?
In my own case, I'd be bunched regardless of whether my mortgage was +/- 20%.
Should it not be the other way around?
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