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    "Central Bank urged to row back on proposed mortgage rules "

    I have always been suspicious that the CB was merely kite-flying or carrying out a PR exercise when it came up with these proposals, and when push comes to shove it will dilute or postpone them. This would be a bad mistake. It is only pushing the day of readjustment down the road when it will...
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    My views on the proposals

    This is the same Central Bank that frantically lobbied the Government behind the scenes against legislating to amend the Statute of Limitations where the Supreme Court interpretation of the 6 year limitation for taking action against the banks that miss-sold financial products was resulting in...
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    Key Post Summary of the proposed Central Bank Mortgage Restrictions

    We should have known better! I have just heard that house-price inflation is now exceeding the rate of increase at the height of the boom. On this same day we hear that the Central Bank is postponing the introduction of the announced credit controls to some unspecified date down the road. We now...
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    Watch out for the law of unintended and unforseen consequences

    Like any paradigm change, there will be some unintended or unforeseen consequences as well as the intended one of encouraging an orderly housing market into the future. In the long term, and once the forces seeking to profit from house-price inflation realise the Central Bank isn't for turning...
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    My submission

    In fact, I'd be tempted to impose a 20 year limit on 80% of mortgages! with a further 15% limited to 25 yrs, and only 5% allowed run to 27yrs.
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    Key Post Summary of the proposed Central Bank Mortgage Restrictions

    Can someone please tell me why LTV should be used, rather than LTPP (Loan to purchase price)? After all, I understand that LTPP is good enough for the Revenue in calculating stamp duty. (Or am I wrong?)
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    My submission

    Hi Brendan, 1. Extending the mortgage term is no different in its inflationary effect from increasing the LTV. The 27 and 65 are admittedly arbitrary limits - but given that some limit should be imposed, and almost all first time mortgages are taken out before the borrower is 37, and extending...
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    Make non compliant mortgages non-recourse

    Just to make it perfectly clear to everyone: By making non compliant loans 'non-recourse', I should have specified that I meant only that part of the loan exceeding the 80% LTV. It would also probably be wise to limit the loans made in excess of that limit to 15% as originally proposed.
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    A first draft of my submission

    Crime egg: I agree. Experience shows that any wriggle-room allowed by to the banks would be used to drive a coach and four through the restrictions. The restrictions need to be set in stone, and the cudgel of non-recourse used to beat them over the head so they, and not the borrower, will have...
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    My submission

    Here was mine: 1. The recourse limit on all home mortgages should be 80% LTV 2. 3.5 times salary should be the normal limit on the loan. 3. There should be an onus on lenders to show all due diligence in verifying documentation produced by lenders and agents as to claimed income, and to the...
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    Make non compliant mortgages non-recourse

    Gerry, I never advocated full recourse. However, I still maintain that non-recourse for any amount of a mortgage in excess of the 80% would be excellent idea. It would allow the banks extend loans greater than 80% LTV where it accepts the risk. It would not undermine the effect and purpose of...
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    Who agrees and who disagrees with the proposals...

    As I have posted elsewhere - a howl of special pleading by people with a vested interest in house-price inflation. Noun has it exactly right. And the indignation of the 'specially interested' is proof of the pudding. The latter aren't really interested in the plight of the first time buyer...
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    Closing date for submissions: This Monday, 8th December

    Or, from the point of view of the lenders/agents/developers: "introduce prudent lending restrictions - but not until my land has doubled in value and I have offloaded it", or "Not until asset values have increased sufficiently to restore the balance-sheets of my bank", or "Not until my income...
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    What is the Central Bank trying to achieve?

    You will see in the coming weeks a storm of special pleading by every group with a vested interest in property-price inflation - and the sense of insecurity and panic it induces in potential home-buyers. They will of course, and without a hint of irony, be pleading, not their own self-interest...
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    Make non compliant mortgages non-recourse

    Perhaps. But as a mechanism for "encouraging" the banks to ensure the income and other information submitted by or on behalf of loan applicants is true, the sanction of non-recourse would be very effective. The 80% rule has been proven to have been effective in maintaining an orderly and stable...
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    What is the Central Bank trying to achieve?

    Similar restrictions were indeed very effective in preventing the sort of melt-down which affected. France which went unscathed while we imploded is a prime example. France also has a very stable residential property market, with property- price inflation generally mirroring inflation in the...
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    Make non compliant mortgages non-recourse

    Making non-compliant loans non-recourse would have a further desired effect: it would discourage banks and advisors from the practice (endemic in the years leading up to the crash) of inflating the income of clients/prospective borrowers on loan-applications. In the event of mortgage default the...
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    Provision should be made for guarantors

    Making provision for guarantors will completely undermine the restrictions. It would merely widen the blast zone in the event of another default-crisis caused by a collapse in property-values (and make such a collapse more likely, to boot) It makes me wonder as to whether the Central Bank should...
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    Closing date for submissions: This Monday, 8th December

    St Augustine's famous injunction comes to mind: "Make me virtuous, Lord, but not until tomorrow" Or, in this context: "Introduce prudent lending restrictions, but not until I have first secured my 100%, 35 year mortgage at 5 times my earnings"
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    Closing date for submissions: This Monday, 8th December

    I have taken your suggestion and posted my submission today. I have pointed out how, at the probable price of some short-term inconvenience to a small number of house-buyers, similar restrictions in countries such as France have resulted in a stable market which has particularly profited...
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