# Irish Times on Mortgage Measures



## Brendan Burgess (10 Dec 2019)

The Irish Times published this as their lead story on Thursday after the mortgage measures were announced.









						Central Bank’s unchanged mortgage rules ‘fuelling rental trap’
					

Calls from politicians and bankers to loosen contentious lending caps resisted by governor




					www.irishtimes.com
				






_The Central Bank’s decision to maintain mortgage lending limits will keep people in a “rental trap” at a time when those home-lease costs are running at a record high, according to consumer activists and financial advisers._

The only quote from a consumer activist was

_Dermott Jewell of the Consumers’ Association of Ireland said many young people paying “exorbitant” rents will “never get on the property ladder unless they have significant input from their parents”.

As far as I know, the Consumers Association has never commented on mortgage matters - interest rates, arrears or trackers. They have done a "rent a quote" like this one, but they have not commented on the issue._

I sent this letter to the Irish Times but they did not print it.

Sir,

Your lead article in Thursday’s paper gave the impression that consumer activists were opposed to the Central Bank’s mortgage rules. Nothing could be further from the truth.

Any consumer activist who has worked with borrowers in mortgage distress over the last ten years fully supports the Central Bank’s efforts.  No one should be borrowing more than 3 ½ times their income.  In a country where the courts allow people to stay in their home for 8 years without making any mortgage repayments, no lender should lend more than 80% of the value of a property.

Runaway lending would only increase house prices and have little or no effect on the supply of housing. It is not the role of the Central Bank to solve the dysfunctional housing market.  If the Government wants to increase the supply of housing, it should address how its own policies are adding to the price burden of new houses  -  13.5% VAT, social housing levies and development levies.

As Cantillon said in the same edition, the Central Bank is right to protect borrowers and banks from themselves.

Brendan Burgess

Askaboutmoney.com


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## Brendan Burgess (10 Dec 2019)

I think that this is very interesting. 

The Irish Times is  using its front page to deliberately give the impression that there is no support for the mortgage rules.  

The opposition to these rules comes from the property industry - brokers and estate agents who would benefit from a repeat of the runaway house price inflation. 

When this is corrected, they don't print the correction. 

Brendan


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## Leo (10 Dec 2019)

Brendan Burgess said:


> brokers and estate agents who would benefit from a repeat of the runaway house price inflation.



In difficult times for the print media, someone is still paying handsomely for those glossy property supplements every week!


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## galway_blow_in (10 Dec 2019)

What's to be done ( other than move to roscommon) about a situation where many who struggle with rent could easily cover a mortgage?

Solve that riddle


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## Sarenco (10 Dec 2019)

Brendan Burgess said:


> Runaway lending would only increase house prices and have little or no effect on the supply of housing.


I think our experience from 2003-2007 would suggest otherwise.

Personally, I think the Central Bank’s mortgage rules need to be relaxed slightly or they will start to unduly restrict the supply of new builds.

I would move from a maximum of 3.5 times (individual) loan-to-income to 4 times (total) debt-to-income.

I would also move to a minimum 10% deposit requirement for both FTBs and SSBs.

With those two changes, it may make sense to ditch the permitted exceptions.


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## NoRegretsCoyote (10 Dec 2019)

Sarenco said:


> I think our experience from 2003-2007 would suggest otherwise.



Exactly, mortgage lending was out of control but at least houses got built. The houses are still here, and people are happily living in them.


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## Brendan Burgess (11 Dec 2019)

Hi Sarenco 

There is a balance to be struck here and maybe the statement that it had little or no impact was too dogmatic. 

If we banned mortgage lending completely, very few houses would be built. 
If the banks engage in reckless lending then house prices would soar and more houses would be built. 

But I am not sure that reckless lending will get many more houses built than the current very generous lending limits .
90% LTV and 3.5 times both incomes are very high limits. And exceptions are allowed as well. 

There are better ways to increase supply than to fuel house prices through reckless lending. 

It would be much better to bring down the prices of houses through removing the VAT and levies than to fuel house prices through reckless lending.

And those better ways don't have the terrible downside of 150,000 people in mortgage distress. 

Brendan


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## Brendan Burgess (11 Dec 2019)

And of course, there is the small matter of the fact that many Irish borrowers see repayment of mortgages as optional and the politicians, courts and media support them in this view. 

If house prices fall, at 90% LTV, many will go into negative equity and just stop paying their mortgages. 

Lending at 90% LTV only makes sense because the banks are able to charge the highest mortgage rates in the eurozone, so there is enough fat there to handle the defaults. 

Brendan


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