What about allowing up to 90% mortgages for newly built houses only?

[Brendan Burgess]

I don't think that this is a good idea, but it's worth teasing out the implications.

We do need to encourage the building of new houses.

It doesn't matter whether they are sold to first time buyers, second time buyers or investors. Improving the supply of housing is the key issue.

It is argued that the lack of finance has stopped building. I am not sure that this is true. The high cost of building has stopped building.

If people were allowed to borrow up to 90% for new houses and only 80% for second hand houses, how might it work out?

It would create an artificial price difference between new and second hand houses, which is never a good idea. But we could live with that.

From the Central Bank's point of view, it wouldn't achieve its objective of more responsible lending.

If a buyer buys a new house for €400k with a 90% mortgage, it would fall in value immediately as it's a second hand house. So the LTV would be higher than 90%.

Maybe allow 90% mortgages for houses built within the last three years?


Brendan

 

[Brendan Burgess]

Responses to this thread went way off topic so the original proposal got lost. Probably my own fault as people were responding to an off-topic comment in my post, which I have now removed.

If, and it's a big If, the Central Bank's limits are resulting in fewer houses being built, could an exemption be made for allowing 90% mortgages to second time buyers for new houses?

This would increase the riskiness of the banking system, but would it be a risk worth taking to get more houses built?

Brendan

 

[AlbacoreA]

No it's not worth the risk.