Implications of New Mortgage lending rules

27 January 2015
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It is not easy to bring in changes in a market with so many interested parties. The Central Bank are playing their part in ensuring that we don's lose the plot again - something that we are more than capable of doing!

Waiting for these new mortgage lending rules was a bit like waiting for the results of a difficult exam. You know that the result wont be great and you just might just pull through but the important issue is to get the results and move forward - one way or another. Not a fail - not a pass - maybe a repeat because none of us know the answers and that is probably where we are.

Will prices fall.?

I would say yes.

If Johnny could borrow 4.25 times €40,000 yesterday €170,000 and can only borrow €130,000 today( 3.5 times salary) then inevitably prices will fall. This is good news for buyers provided there are houses to buy,

Will builders be attracted to this market- not as many as yesterday. Building land prices will fall.

The losers

Some people will be bitterly disappointed- the trader up group who have out grown their home who have to a save a 10% deposit and know its tight on the sale price and the mortgage,,,, The price of their home may well go down and their deposit requirement has gone up- They won't be selling because they can't buy. If they are not selling, does this mean that the additional shortage of supply of existing homes will drive prices up further as buyers( well heeled because they are higher income) will scramble to take up what is available - the result we don't want!

So rents go up and this is inevitable.

First time buyers will be relieved but will there be a sufficient supply given that many sellers are cut off from buying again,and there are so few house available,

The winners

First time buyers outside Dublin. Prices will reduce because of income multiples reductions and they will buy cheaper with 10% deposits.

First time buyers in Dublin in the longer term as prices will be limited by income multiples but will pay in the short term through higher rents

to be continued,,,,