Mortgage rules ‘will not affect prices’

The Central Bank’s new deposit and loan-to-income rules will not affect house prices or supply when demand is based on fundamentals, but they will have a significant impact on speculative demand, according to Central Bank economist Lars Frisell.

“If the housing market has become speculative, where credit and house prices grow partly based on expectations of further house price increases, the rules will have a significant effect.

“The reason is that, at that stage, buyers’ incomes will neither pass the loan-to-income rule, nor will they support sufficient savings to accumulate future deposits,” said Mr Frisell, speaking at the Irish Economy conference in Dublin yesterday.