80% Mortgage for Apartments

Yes - my EA told me this yesterday in a general market discussion that their lending division had communicated the same to their offices and that it was going to have a significant impact on apt. sales as an average 350k apt. in Dublin would need a savings fund of 70k+ to buy

Bummer if you are trying to sell an apt. but then the banks are prob. right in that if they lend more on these there is a chance they could get into neg. equity and so they are, as usual, covering their This post will be deleted if not edited to remove bad language which is their business in the end - safe investments and lending on low risk

I asked around too when I heard that. IIB and Bank of Scotland will do a max of 80% for owner occupiers of apartments.
PTSB and Bank of Scotland are not lending for buy-to-lets at all.
I guess the banks are short on cash and want to use it on the best assets only. I can't blame them.

Sorry, above is incorrect. IIB is 80% for new apartments only.

I don't want to break the rules by speculating on future property prices, I readily admit that nobody can predict the future and that there are too many variables for anyone to do so. I will just ask the following question(s):

Assuming most people looking to buy a property have a €30k - €40k deposit saved, does this not mean there will be downward pressure on apartment prices if the banks will only give you 80% of the price?

i.e. Assuming the deposit from savings figure is roughly correct, the max that most people will be able to borrow for an apartment will be in the region of €150K - €160K.

Also by setting it to 80%, are the banks not kind of creating a self-fulfilling prophecy? They have set it to 80% as a contingency against price drops, but by doing so they have increased the likelyhood that the price drops will occur.

reg

It's just two banks. There are plenty of other ones who will fund at higher levels.

The banks are just being smart (finally!!!!) with the limited funds they have available. They are placing the money in the less risky asset classes. Apartments and buy-to-lets are a far higher risk. Liquidity issues and regulations dictate that they have to take such actions.