Finance objects to house buyer lending limits

Restrictions on mortgage lending proposed by the Central Bank could push up rents and frustrate potential homebuyers, making the country less attractive to foreign firms, the Department of Finance said yesterday.

The Central Bank wants to avoid any repeat of the reckless lending and lax regulation that led to a devastating property crash six years ago, and has proposed the limits as prices recover quickly amid a lack of supply in urban areas.

The measures would require banks to restrict lending above 80% of the value of a home to no more than 15% of the aggregate value of all housing loans, while also limiting lending in excess of 3.5 times a borrower’s gross income.