Friday 28 July 2017

Renters and young get left behind as the insiders win

THOUSANDS of young people who want to buy their own home are being locked out of the property market because of new Central Bank rules on mortgage deposits.
THOUSANDS of young people who want to buy their own home are being locked out of the property market because of new Central Bank rules on mortgage deposits.
Charlie Weston

Charlie Weston

THOUSANDS of young people who want to buy their own home are being locked out of the property market because of new Central Bank rules on mortgage deposits.

As many as 12,000 people will end up as reluctant renters, according to research carried out on 1,000 people by Coyne Research, and commissioned for mortgage software provider Mortgage Brain Ireland.

In February, the Central Bank ordered lenders to ensure that borrowers had a deposit of 20pc of the property price for amounts being borrowed over €220,000.

Borrowers are also limited to three-and-a-half times their income when calculating how much they can borrow.

These renters, who would prefer to be buyers, are also being hit by annual rises of 9pc in the cost of accommodation as a chronic lack of supply in many areas has pushed up the cost of renting.

According to a report on the rental sector from a respected think tank, the National Economic and Social Council (NESC), up to a third of the population will find it increasingly difficult to achieve home-ownership.

But it is not just Generation Rent that is being left behind and badly treated.

Those on variable mortgage rates have been disgracefully mistreated by the banks, the Central Bank and the Government.

A family with a variable-rate mortgage of €200,000 is paying on average 4.2pc interest.

In the rest of the eurozone, the average interest rate is 2.09pc.

This means around 300,000 Irish borrowers are paying around €350 a month more in interest than they would be paying if their mortgage were in another country.

Banks have also shown a callous disregard for their customers who are in arrears - by being slow to deal with an issue, they were major contributors to, and reluctant to face up to the need for debt write-downs.

Younger workers in general, if they are lucky enough to get employment rather than suffer the ignominy of being on a JobBridge scheme, tend to earn a lot less than older workers.

New entrants to the public service, if they can get a job, are paid 10pc less than those already employed.

Much more lucky have been staff in the public service. They are generally paid more than those in the private sector, have job-protection, and pensions that are the envy of those in the private sector. Giving them a pay rise seems most unfair. But when did fairness matter?

Other insiders who have prospered through the downturn include big-firm lawyers, auditors and other assorted consultants.

And the Troika has abandoned plans to force some reform on the legal profession.

What a great little country - as long as you are not young, renting, or have a variable-rate mortgage.

Twitter: @CWeston_Indo

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