Charlie Weston: 'Stretched borrowers just can't catch break in market'
The scramble to buy a home has become like a gladiatorial contest with a high attrition rate and few winners.
Potential first-time buyers are faced with a range of obstacles. Prices have risen by 81.6pc from their trough in early 2013, despite a recent slow-down in the rate of rise.
New buyers are also competing with cash-rich cuckoo funds that snap up whole housing units, and the Central Bank has a strict limit on the amount of money they can borrow relative to their income, and sets out the level of deposit they must accumulate. These Central Bank limits are formally called macro-prudential rules.
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The measures set limits on the size of mortgages that consumers can borrow through the use of a loan-to-income (LTI) ratio. First-time buyers are limited to borrowing three-and-a-half times their income.
But 20pc of the mortgages issued to new buyers by a bank can get an exemption from this LTI limit.
The existence of the exemptions has always meant there was hope for those buyers operating on the edge when it comes to their income and what they can borrow.
Stretched borrowers are known to plead with banks and brokers for an exemption to get their mortgage application over the line.
It now emerges that banks have been undershooting the exemption allowances. Banks argue that the limits are notoriously difficult to manage.
As little as 11pc of the value of mortgages issued to first-timers last year were exempted from the lending limits, just half of what banks could offer.
No wonder new buyers are frustrated. It seems first-time buyers just can't seem to catch a break.