Central Bank mortgage rules review result due in November

The Central Bank will publish the findings of the first review of its controversial new mortgage lending rules in November, new governor Philip Lane said yesterday.

Professor Lane, who succeeded Patrick Honohan as head of the Central Bank, said earlier this month the rules would be reviewed this summer.

However, it was only yesterday in his first public speech — addressing the Institute of Directors spring lunch at Dublin’s Shelbourne Hotel — he offered more clarity around when the results of the review would be known.

“I expect the first review of the mortgage rules to be published by November this year.

"This review will be based on an analysis of the evidence provided by data on the first year of the operation of the rules, while taking into account other factors that may have influenced the mortgage market during this period,” he said.

The lending rules, introduced last year, call for first-time buyers to hold a deposit of 10% of the first €220,000 cost of a home and 20% of the remainder of its value.

The timescale of the review means that mortgage applications will continue to be measured against the new rules for much of this year.

Again, yesterday, Prof Lane said the review could result in an altering of the rules, but they could either end up being tightened or loosened.

“The Central Bank is open to tightening or loosening the calibration of these rules in response to the evidence; still, the value of stability in a rules-based framework means that the evidence threshold to justify adjustments to these rules is significant,” he said.

He said earlier adoption of such tools as the new mortgage rules would have mitigated Ireland’s boom/bust economic cycle of the last decade.

He said the bank is “firmly committed” to deploying such tools on an ongoing basis, with periodic reviews.

Ahead of the publicaton of the Central Bank’s first quarterly bulletin of the new year, on Tuesday, Prof Lane said that Irish GDP likely grew by 6.5%-7% in 2015 and should grow by 5% in 2016.

He also stressed a need for more transparency at the bank; saying it will shortly begin publishing minutes from its monthly management/Commission meetings.

The minutes will be published six weeks after each meeting, with those relating to Prof Lane’s first meeting, in December, due to be made public early next month.

The bank will also start publishing staff salary structures and pay scales on an annual basis and is promising more, as yet unannounced, transparency issues.

“I am conscious more needs to be done to build the level of trust among the public that the Central Bank will take the correct actions to safeguard financial stability and protect consumers.

"At a basic level, we believe that people will be more confident that we act independently and in the public interest if they have greater insights and understanding about what is going on inside the bank,” Prof Lane said in his speech.

He said the regulator also plans to carry out reviews of the health insurance sector and strengthen the consumer protection code relating to variable rate mortgage holders.

“We will also increase our firm-specific engagement with low-impact firms, including intermediaries and debt management firms,” Prof Lane said yesterday.

The Central Bank is also set to hire 150 new staff this year, taking its total workforce to around 1,650.


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