I have so much I want to write about lately that I just can’t get stuck in. However, saw something today that worried me a lot. It’s this report from the Irish Independent.
I’d like to inform the Irish Independent that just because AN Mortgagebroker says something doesn’t somehow magically make it news, but since Charlie Weston saw fit to write a piece on it, I’ll summarise. Karl Deeter reckons the big Irish banks (you know, the ones that you’re paying tax to bail out while enduring cuts in every single public service paltry though they are) are not lending enough to first time buyers.
I quote.
He added that a couple earning a salary of €25,000 each a year would only be able to get approval for a mortgage of €225,000 from BoI, and just €234,000 from AIB. This was because of tough lending criteria applied by the two big banks.
I need to put some stuff into context for you here. 225KE is oh, 4.5 times the joint salary here. Okay? Assuming a bog standard couple of one male and one female. In the event that we are talking about a couple where someone god forbid might want to have a kid or two, we are talking about a family unit which cannot afford to take time off to do so because otherwise, the mortgage becomes 9 times the salary of the primary income earner.
In the 1980s and as recently as the late 1990s, no bank would countenance giving a single income earlier more than about 3 times their salary. If you managed to get them to take a second salary into consideration – not guaranteed – they topped it out at 1.5-2 times the secondary salary.
But the same couple would qualify for a home loan of €400,000 from Haven, which is part of EBS Building Society.
I hope Karl Deeter is not suggesting that this is a good thing. This is 8 times the joint salary.
“On one hand, you could say AIB and BoI are engaged in more prudent lending but this isn’t the case The other banks are now lending prudently. It isn’t as if Permanent TSB and KBC Home- loans are doing reckless loans in 2010.
The other banks are not – in my opinion – lending prudently. They are lending far, far too much on a couple both of whom are on below average incomes.
I absolutely abhor the short sightedness of this. No couple should be looking at a loan that is 9 times a single income in this economic climate between the risk of job loss, reducing salaries. K
I am horrified by this. We have major economic problems in this country caused by excess credit and one of the media friendly mortgage brokers is complaining about the lack of credit, credit which is still far in excess of what was considered prudent in the days before banks HAD TO BE BAILED OUT. Does he want us to have to bail the bastards out again or something?
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