He made no actual proposals.
A First Time Buyer can borrow 90% of the price of a house. That is way too risky for the lender. They should not lend more than 80% to anyone.
When house prices fall, many Irish borrowers will stop paying their mortgage. And why wouldn't they, when the system does not allow repossessions.
So should the lenders lend more than 3.5 times income? Again, I think that this is the absolute maximum.
It might, actually, if it triggers the development of more new homes and takes pressure off the rental market.This would just push up prices and not make it any easier for people to buy houses.
It might, actually, if it triggers the development of more new homes and takes pressure off the rental market.
I am not sure about "conflating" - the two are intertwined.
Many Irish people who went into negative equity stopped paying their mortgage when they could have well afforded to.
Of course, in financial terms, the LTV should not matter. But in practice it did. The incentive to pay your mortgage remains strong when you have equity. It weakens a lot when you are in negative equity.
I actually have some sympathy for the view that the Central Bank's mortgage rules could be relaxed somewhat and this may possibly be a good time to do so.
Property prices (certainly in Dublin) seem to have levelled off considerably over the last 12 months, whereas rental inflation is still galloping ahead. I suspect this is partly due to the Central Bank's rules (i.e. would be buyers find themselves renting for longer which is adding to the demand for a static/diminishing stock of rental properties).
Personally, I wouldn't like to see any changes being made to the LTV limits.
However, now that the consumer credit register is up and running, I think it would make sense to replace the LTI limit with a broader debt-to-income (DTI) limit of 4 or even 4.5 (the DTI ceiling in the UK).
Increasing the access to credit will simply push prices up (look at the help to buy scheme). T
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