Mortgage rule ‘tweaks’ anticipated
The Central Bank may make “some tweaks” to its existing mortgage lending rules — particularly for first-time buyers in Dublin — but wholesale changes are not expected, one analyst has claimed.
Earlier this week, the Central Bank’s new governor, Gabriel Makhlouf, signalled there will be little or no change to current mortgage lending rules when its latest review is completed early next month.
As part of that review, the Central Bank has published four research papers on mortgage lending trends.
Among its findings are that first-time buyers remain less likely to default than second and subsequent house buyers; the average deposit for buying a home is €87,000; and that the average household drawing down a mortgage is spending almost 25% of its net monthly income on mortgage repayments — although this is down from 40% a decade ago.
“We don’t expect wholesale changes to the rules to be announced, but there may be some tweaks coming down the tracks for first-time buyers in the greater Dublin area,” said Goodbody banking analyst Eamonn Hughes.
“The papers conclude that mortgage holders in the greater Dublin area are the group that is most bound by the rules. While the Central Bank suggests that this may not be affecting overall housebuilding, it may be affecting tenure by forcing people into rental accommodation.
"However, with rents at all-time highs and representing a large share of renters’ income, one can argue that this could be having wider economic effects,” Mr Hughes said.
The current rules — introduced in 2015 — curtail the amount that can be borrowed for house purchase to 3.5 times a buyer’s salary, with a minimum deposit of 10% for first time buyers and 20% from other buyers also necessary.
Industry body Brokers Ireland has said the rules only tell “half the story”, with money not being spent on mortgage repayments going on rental payments instead, which are higher than mortgage repayments.
