New mortgage rules mean most buyers in Ireland need a 20% deposit?
NEW CENTRAL BANK RULES SET FOR JANUARY EXPECTED TO SLOW HOUSE PRICE INFLATION
The Central Bank’s deputy Governor Stefan Gerlach said these measures should help to avoid another property crash in Ireland and dampen the rate of price rise currently being experienced in the market.
New mortgage rules published today by the Central Bank mean that most house buyers will have to have a 20% deposit when applying for a home loan. The regulations come into force on January 1st.
The bank is proposing that no more than 15% of all new mortgages for private dwelling homes should have a loan to value (LTV) ratio above 80%. This means that most first-time buyers are now going to be expected to have at least a 20% deposit when buying a home.
In addition, it has also decided that just one-fifth of new mortgages should be issued above a level of three and a half times income (LTI).
In the case of buy-to-let properties, no more than 10 per cent of the value of all new loans should have an LTV above 80%.
The Central Bank’s deputy Governor Stefan Gerlach said these measures should help to avoid another property crash in Ireland and dampen the rate of price rise currently being experienced in the market.
“Our research has shown there is strong evidence that mortgage losses are much higher where borrowers have a high LTV or LTI rate,” he said. “We believe that measures such as these are a standard part of a well regulated financial system and introducing these precautionary measures should contribute to a stable and well-functioning mortgage lending market.”
The regulator said the income caps would be “more binding” than the LTV ratios in a period of boom as pay levels could never keep pace with soaring property prices.
The LTV caps are not “completely counter-cyclical” as loan values will rise in line with property prices.
Figures for 2013, show that of the €2.4 billion in home loans issued, 44% re breached the new 80% LTV limit while 23% were above the new income ratio.
In spite of this, the bank’s paper said there is little indication at present that bank credit has been an “important driver of the recent increase in property prices in Dublin, with the volume of new lending still very low”.
Figures for the first half of this year show that €1.3 billion was issued in new mortgages by lenders.
These new rules are proposed in a paper that is being issued to the banking industry as part of a two-month consultation process. The Central Bank hopes to introduce the new rules on January 1st.
Lenders will be required to submit regular data to the Central Bank to verify that they are operating within the new limits.
The regulator said it would use existing sanctions to punish lenders that breach its new rules.
The Central Bank said it does not wish to “regulate or directly control” housing prices in Ireland, which have begun to shoot up again this year, with a 25% year-on-year rise in Dublin recorded in August.
The regulator said it believes the new rules to be “proportionate” and it expects regulated lenders to “take account of the likely introduction” of this new regime when issuing mortgages for the remainder of this year.
Certain exemptions are proposed to the new rules. These cover residual debt from home loans in negative equity, switcher mortgages, and home loans in arrears. Buy-to-let borrowers will also be exempt from the income restrictions.
Lending at high LTVs was a feature of the last crisis. Figures from the Central Bank show that the proportion of new loans issued at more than 90 per cent LTV grew from 14 per cent of loans in 2000 to 29 per cent in 2006, when mortgage lending peaked at €26 billion.
This led to large numbers of borrowers slipping into negative equity once housing prices turned and subsequently into mortgage default.
ESRI upbeat on domestic demand and urges a neutral Irish budget
As our economy recovers, the body predicts 5.3% GDP growth next year
With Budget 2015 less than a week away, the Government has received the blessing of the Economic and Social Research Institute for a “neutral” fiscal plan in which there would be no net rise in taxation and no further cutbacks.
The ESRI diverges with the Government on the policy front. It would prefer a big social housing investment to income tax cuts. But the institute still says the eventual economic out-turn will not be dramatically different if the Government does not change course.
Whereas the budget will be predicated on a forecast of 3.6% gross domestic product growth next year, the ESRI is a good deal more optimistic. It forecasts that GDP will expand by 5.3% in 2015 and says gross national product, which it believes to be a superior measure, would advance by 5.2%.
All told, the institute’s assessment is upbeat. “The recovery in Ireland is broad-based and is stronger than previously thought,” said David Duffy, report co-author.
The early phase of recovery was export-based. Like the Central Statistics Office and the Government, the ESRI believes the ongoing growth spurt is now backed by a recovery in domestic demand. Although the institute is concerned about increasing weakness in the euro zone economy, Ireland remains a big beneficiary of the turnaround in Britain and the US.
And other voices
Bodies such as the Fiscal Advisory Council and the European Commission have called on Minister for Finance Michael Noonan to proceed with the €2 billion retrenchment foreseen in the original plan.
However, the ESRI believes a neutral plan would deliver a 2.1% budget deficit in 2015. That would be well below the preordained 3% required to meet European obligations. The ESRI says this would be sufficient to demonstrate an appropriate level of fiscal vigilance to the world.
After years of grinding cuts, the “optimal” course is to avoid taking more money out of the economy.
“Our policy recommendation is that the budget should be fiscally neutral in stance and that essentially has been brought about by the improved exchequer receipts and the pick-up in economic activity,” said Kieran McQuinn, ESRI associate research professor.
The institute believes the Government should pursue a similar strategy in the following two years, arguing this would be enough to deliver a small budget surplus in 2016 and a slightly larger surplus in 2017.
This assumes no shocks or accidents. Yet if the Government’s current masterplan was always to balance the budget in 2018, the ESRI’s outlook indicates this could come within grasp fully two years earlier.
McQuinn would not say whether the Government was wrong or unwise to plan tax cuts. But he did point out that the exchequer would still run a deficit next year and made the case a big social housing project would stimulate growth in its own right, and tackle the shortage in social housing and the requirement to build up the housing stock more generally.
“We clearly recognise there are certain taxation measures or issues which need to be addressed but, at this point in time, our assessment would be to follow an investment route rather than taxation,” he said.
A Focus on growth
“I think any policy that is taken at this point in time should have as its central concern the need to keep the growth rates moving along. The recovery is still somewhat early and nascent in nature so, therefore, any measures which are undertaken should focus on growth.”
He further argued investment has been shown to deliver a larger multiplier effect than measures which simply boost consumption. He also made the point that sustained growth would reduce the proportion of the national debt vis-à-vis economic output, thereby improving prospects of bringing Ireland’s debt dynamics into a sustainable position.
HSE unveils new structure for local services
NINETY PRIMARY CARE NETWORKS TO BE CREATED IN EVERY TOWN AND DISTRICT ACROSS THE STATE
Map showing the nine new Community Healthcare Organisations across the State.
Patients can expect easier access to more responsive and uniform health services across the State, the Health Service Executive has promised in relation to major structural changes unveiled today.
The Executive plans to establish nine Community Healthcare Organisations across the State, to replace the 17 Integrated Service Areas under which non-hospital services are currently grouped.
Each Community Healthcare Organisation will comprise 10 Primary Care Networks, each one with a population of about 50,000, to provide access to services such as social care, mental health and health promotion.
“In effect, every large town and hinterland and every large district of a city will be supported through a Primary Care Network,” according to the review group which has drawn up the report recommending the changes.
For the first time, “an identified, accountable person” will be responsible for delivering services to local populations within the network. Greater involvement of family doctors in primary care will be encouraged through the employment of part-time GP Leads within each network.
The move is a natural sequel to the decision last year to create regional groups for all hospital services. Progress on forming hospital groups has so far been slow, largely because of difficulties recruiting qualified staff to take up chief executive roles.
The report acknowledges many people have difficulty “navigating” the health system because of its complexity and scale. “What must be improved is how these parts fit together so that the services are integrated and people can move smoothly through the system. Staff must be organised in a way that enables joined-up teamwork, responsive to the assessed needs of the local people.”
It stresses the importance of developing “a new integrated model of care, which is responsive to the needs of local communities”.
HSE chief executive Tony O’Brien said the new arrangements would facilitate a further move to treating patients locally at the lowest level of complexity possible. “For the first time, we have clarity on the management and leadership required in the collection of services we call primary care. In addition, we have clarity on how specialist community services in disability, older persons, mental health and health and wellbeing interface with primary care.”
The HSE says the new structure will make it easier for people in local communities to access services, navigate from community care to hospital service and discharge back to the community. Links between the health service and local authorities, Garda Siochana and the Child and Family Agency will also be improved.
Patients with complex care needs will have a named “key worker” from their local primary care team assigned to them, whose job it will be to ensure they get access to day care, meals on wheels, respite, hospitals and other services.
The HSE plans to have the new structures in place early next year, after consultation with unions in line with the Haddington Road Agreement. It says the move from 17 local bodies to nine will see a reduction in management structures at senior level. The creation of 90 networks will be achieved through the reorganisation and re-assignment of existing resources and staff.
Workers stage sit-in protest in crane cabin 200 feet above the ground
Workers stage sit-in protest in crane cabin 200 feet above the ground:
Workers at a school building project in Dublin are occupying a crane in protest over what they say is under payment of workers.
The bricklayers are staging the sit-in protest, 200 feet above the ground, equipped with enough food for eight days.
The workers, who are members of the UNITE trade union said the system of subcontracting on the JJ Rhatigan site in Lucan meant they were earning just €4.90 per hour.
Father-of-three Gary Gleeson told RTE’s Liveline that his bank statements prove he hasn’t been paid the approved rates.
“We’re not coming down until we’re paid. We don’t want to be up here but we’ve been made do it. We had to do it.”
“We have bank statements to say we haven’t been paid the going rates.”
“The only thing we want is our jobs back, our rates… This my first job for the past two years. I couldn’t get work,” he said.
“We’ll stay up here until we have to go on hunger strike.”
Developers JJ Rhatigan said the allegations are completely untrue.
“The 70 workers in Kishoge are all paid the going rate which is in full compliance with legislation,” the firm said in a statement.
The company rejected the claim that workers are paid less than the minimum wage as “completely false”.
“70 other people are being deprived of the right to work, as a result of the actions of yourself, who refuse to adhere to accepted industrial relations procedures,” the statement to Live-line said.
It said that independent auditors failed to substantiate the claims made by the workers.
Kishoge Community College is one of 70 new schools that are under construction this year.
Luke Fizpatrick, another protestor, claims €95,000 worth of work had been built on the site but the subcontractor was only paid €35,000.
“I only got paid once by cheque and that was from the subcontractor.”
“We’re going to stay up on the crane until the money is paid.”
“We’re being paid €4.90 an hour which is well below the minimum wage. This is a government job. It’s tax payers money that’s paying for this job.”
“I’ve recently come back from Australia. I’ve lived abroad for the past few years because I couldn’t get work.”
“We took this job and there was agreed rates, and the rates were never paid. That’s the only issue here.”
The building company later went to the High Court seeking various injunctions against Unite following a number of incidents at the building site, including the deliberating blocking of vehicles entering the site.
Workers voted last month to take industrial action, up to and including strike action and placing pickets, at all locations where JJ Rhatigan & Co carried out its business.
Mr Justice Paul Gilligan granted Rhatigans permission to serve injunction proceedings at short notice against Unite as well as against Patrick Molloy, Stephen Gleeson and their company Gleeson & Molloy Bricklaying Services which had been subcontracted by Rhatigans to lay bricks for the new school, and several other members of the union.
JJ Rhatigan & Co Ltd, and related companies, are seeking injunctions against the defendants restraining them from interfering with access and egress from several building sites.
As well as the site at Kishoge, Lucan, the builder seeks orders relating to sites at Griffeen Valley, also in Lucan, St Patrick’s College Drumcondra, the Radisson Blu Hotel, Golden Lane, Dublin and any other property or premises belonging to Rhatigans.
They further seek injunctions restraining the defendants from trespassing or occupying the sites.
They also want an order directing those parties allegedly trespassing at Kishoge to vacate the site. The injunctions are also to apply to any party who has knowledge of the orders.
The application was made ex-parte, where only one side was represented in court.
Mysterious new prehistoric beast finally fits into the mammal family tree
Anthracobunidae. It’s the name of a group of large prehistoric mammals and no, we’d never heard of them either.
But palaeontologists have been scratching their heads over these 48 million year old beasts since the 1980s.
Anthracobunidae were originally thought to be related to sea cows, like this dugong
For a long time scientists believed the creatures were the ancestors of modern elephants and sea cows. But this made no sense because elephants originated in Africa, and these old bones were found in India and Pakistan.
However, some more recent finds have finally cleared up this prehistoric conundrum. Anthracobunidae were in fact more closely related to horses, rhinos and especially the tiny tapirs that originated in the same area.
Co-author of the new study Erik Seiffert, of Stony Brook University, said: “The evidence that has been accumulating from fossils and genes strongly suggests that the ancestor of elephants and sea cows lived in Africa, and at a time when that continent was totally isolated, so anthracobunids’ Asian distribution was hard to explain.”
A TAPIR STANDS IN A LAKE
Researchers also had a good look at the new specimens’ bones, observing stable isotopes and bone shape. This told them the animals probably fed on land but then retreated into the water like hippos and tapirs today.
BABY TAPIR GOES FOR A SWIM
Dr Lisa Noelle Cooper, of Northeast Ohio Medical University in the US, who led the study, said: “Anthracobunids are just one of many lineages of vertebrates that evolved from terrestrial animals, but then left to live in a shallow water habitat and had thick bones.
“These thick bones probably acted like ballast to counteract body buoyancy. You can see that kind of bone structure in modern hippos, otters, penguins, and cormorants.”
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