Mixed reaction as mortgage rules to remain as they are

STRICT mortgage lending rules will remain unchanged, the Central Bank announced yesterday.

Homebuyers are currently allowed to borrow up to 3.5 times their income, and must have at least a 20% deposit, or 10% for first-time buyers.

The Central Bank said, following its review of the regulations: ‘The measures continue to meet the objectives of strengthening bank and borrower resilience and reducing the likelihood and impact of a credit house price spiral emerging.’

The ‘ steady- as- she- goes’ approach was welcomed by housing campaigner David Hall, of the Irish Mortgage Holders Organisation, who said: ‘It’s safe and sensible at the moment because there’s an element of uncertainty in the market.

‘On employment, it’s unclear where people are in relation to their employment. It’s not a good time to encourage people to take on more debt.’

But Pat Davitt, head of the Institute of Professional Auctioneers and Valuers said the rules are ‘far too severe on the lower paid’.

He pointed to the recent Daft.ie rental report which shows rents in areas such as Car low, Co. Galway, Roscommon and Donegal are almost double the cost of servicing a mortgage for the same properties.

He added: ‘The mortgage rules maybe satisfying regulators but they are not working for aspiring homebuyers on average wages.

‘The loan-to-income threshold for mortgages should be increased to 4.5 times income, at the very least, for those on incomes up to €50,000 a year.’