Brendan Burgess
Founder
- Messages
- 52,116
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
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
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