There may be hope for renters wanting to buy a house

There may be hope for renters wanting to buy a house
Philip Lane

By Juno McEnroe, Political Correspondent

The new Central Bank governor has said he will review whether rents will form part of a credit system when homebuyers apply for mortgages to counter concern about stricter borrowing rules.

Governor Philip Lane also said that political parties needed to propose "risk plans" in the election campaign in case the global economy falls into recession again.

Appearing before the Oireachtas Finance Committee, the governor was told by Fianna Fáil’s Michael McGrath that people paying high rents were at a "serious disadvantage" when it came to saving for deposits for mortgages.

New rules for borrowers require them to have between 10% and 20% of a purchase price for a deposit and have been blamed for an inability of young purchasers and first time buyers getting their own home.

Mr Lane said that, when he reviews the new mortgage rules later this November, and what is a sustainable level of debt for borrowers, that he would “definitely look at that part of it”.

“A track record of paying rent has to be relevant when paying a mortgage,” he told TDs and senators.

Mr McGrath said hopeful borrowers would find it “next to impossible” to raise deposits when renting, compared to those staying at home and saving.

“We’re meeting them on the doorsteps and they’re feeling trapped,” said the Cork South central TD.

Mr Lane said the Central Bank had to have a system that limits borrowing risks. The new deposit rules would help moderate home prices on the property market, he said.

“Bidding wars on houses will be less intense,” he told the committee.

Mr Lane was also asked by People Before Profits Richard Boyd Barrett about “fanciful” election promises by the outgoing government being made by parties amid warnings about storm clouds gathering over the global economy.

The governor replied that there were "emerging risks" for big countries such as Brazil and China, adding that parties should also consider what if "bad events" happen when campaigning.

“If the world goes back into recession, what are the strategies then…you need to have a risk plan as well.”

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