Some of Central Bank's mortgage lending rules 'crude and unfair'  

Brokers Ireland wants the Central Bank to switch the loan-to-income limit for borrowers from a calculation based on a multiple of gross income to one based on net disposable income
Some of Central Bank's mortgage lending rules 'crude and unfair'  

Using the new calculation 'would be a fairer mechanism and would help single applicants in particular borrow more while still being affordable'.

Part of the Central Bank's mortgage lending rules that control the amount of credit flowing into the housing market is "crude and unfair", the largest brokers' industry group has said, urging the regulator to tweak the cap. 

Brokers Ireland said it wanted the Central Bank to switch the loan-to-income limit for borrowers from a calculation based on a multiple of gross income to one based on net disposable income.

Using the new calculation "would be a fairer mechanism and would help single applicants in particular borrow more while still being affordable", said Rachel McGovern, who is head of financial services at the industry group. 

She said mortgage rates fixed for up to 30 years have made paying for mortgages over a long period more affordable. The group also called for the loan-to-value cap to be removed for second and subsequent buyers.  

Public submissions

The Central Bank formally called for public submissions last month on its periodic review of its mortgage lending rules. It said then it was seeking views on on the caps it places on property loans based on income and loan size, but insisting the controls overall will remain in place.

The rules came into place in 2015 as the Central Bank pledged to stop any repeat of the cycle of overlending that led to Ireland's disastrous property crash over a decade ago.   

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