Green party candidate: Bring back 100% mortgages for people earning < €70k

An article in the Sindo

Vincent P Martin: 'Owning a home is now an impossible dream for ordinary working people'

If this family could borrow 100pc of the €250,000 payable over 35 years on a fixed interest rate of 3.5pc, their monthly mortgage payments would be €1,033 per month - almost half the monthly rent



I was on Newstalk Breakfast this morning with Vincent.

I do agree that if people could get 100% mortgages, their repayments would be about half what they are paying on rent, so from their point of view, it makes sense.

However giving 100% mortgages is not the solution. The Central Bank rules allow lenders to offer 5% of First Time Buyers over 90% LTV mortgages. But the banks won't do it. The big defaults on home loans were by people who borrowed over 90% and got a big multiple of their incomes.

A couple on low to middle incomes who work in Dublin who pay for their own accommodation, will only be able to afford to rent or buy in somewhere like Drogheda, Portlaoise or Gorey. They will commute for a couple of hours a day. They can't reject an offer of a house in these areas because it's too far from work.

But someone who is not working will demand social housing in their community. They should be offered the housing in Drogheda, Portlaoise or Gorey and the social housing in Dublin should be made available to those working in Dublin.

Brendan

Have to love the first line of the article:

The scars of the financial crash are real life-experiences for thousands of ordinary people shouldering giant debt.

To avoid repeating sins of the past ...

Click to expand...

We should repeat the sins of the past?

You'd think that from having set up New Beginnings he'd have seen the damage close up of mortgage difficulties. But it's hard to teach an old FF-er new tricks!

As an aside, is he related to the Green party TD Catherine Martin?

Karl Deeter and Cliff Taylor on Radio1 now discussing the CB limits on mortgages

Brendan Burgess said:

I do agree that if people could get 100% mortgages, their repayments would be about half what they are paying on rent, so from their point of view, it makes sense.

Click to expand...

I am not against 100% mortgages in certain scenarios, but
(a) they would have to be limited in the amount that could be issued
(b) could only be issued until the person is 65 - not any higher
(c) would have to have strong LTI limits - so 3.5 times average income for the last 3 years would need to be fixed with no flex possible (i.e. no exceptions)
(d) would be required to take out an additional insurance policy covering say 25% of the loan amount in the event of going into arrears in the first say 5 years
(e) you can only avail of the scheme once and for PPR only

This insurance policy would effectively guarantee the bank that they can recover some of the capital if things go south.

I can understand how someone paying high rents can struggle to get onto the property ladder, as they simply cannot save the deposit. But they can afford the repayments on the mortgage. Its logical that they would much prefer to be paying their own mortgage so they have an asset at the end of it, than pay someone else's.

The cost of the additional insurance policy would offset some of this benefit initially, but should encourage them to be able to get to a position where their LTV is <80% and they can switch to a standard mortgage product, without the mandatory insurance policy.

I do think we need to be creative on how we look at our national obsession with housing and how we deal with it. Currently its an absolute shambles

Regardless of 100% mortgages, no one seeking residential mortgage can get 35 years on a fixed interest rate of 3.5pc from any financial institution in this state.
Is this offer only to be made available to people looking for 100% mortgages?

Just because you can afford the rent doesn't mean you can afford the additional expenses that comes with owning and running your own home.
Granted if the gap between rent and mortgage is double, then I'm sure you can! But lots of little things, starting with such essentials as as mortgage protection \ life insurance add up. A mortgage is not the only expense of purchasing and owning your own home.

And inevitably, if you put more money into the limited supply of housing available for people to purchase their own homes, house prices will go up.
Does the Green Party have any ideas on how to increase supply?

In other countries there is stability and security in tenancy e.g. multiple year tenancy agreements that landlords can't dodge cos they invent a cousin who needs the property to live in. Aligning our rental laws along those lines would help move people away from the need to own their own property. But at the end of the day, people are commuting from Drogheda because there just aren't enough properties in Dublin.
It has nothing to do with the obsession of owning your own home, there just aren't enough seats at the table and our public transport isn't good enough to feed Dublin from further than that.

odyssey06 said:

Regardless of 100% mortgages, no one seeking residential mortgage can get 35 years on a fixed interest rate of 3.5pc from any financial institution in this state.

Click to expand...

Correct, but it wouldn't be the first time a politician came out with something detached from reality. By the way, the Rebuilding Ireland loan rates come close - 2.25% fixed for 30 years.
That scheme attempted to address those that had the deposit, but low incomes. This proposal is essentially to extend that scheme to remove the deposit requirement. I'm saying extend that scheme, because the banks won't lend on that basis.