Taoiseach Enda Kenny has warned that setting mortgage restrictions too high would price many first-time buyers out of the market and only benefit “wealthy people and the children of wealthy people”.
During an interview in Davos, Mr Kenny was asked if he supported the ECB’s objective of limiting mortgages through higher deposit requirements, so as to avoid a repeat of the housing crisis.
Mr Kenny said there is a serious demand for housing “and you don’t want the situation that applied before”.
“The Department of Finance, on behalf of the Government, has made a very clear submission to the Central Bank, because you don’t want a situation that might evolve, depending on the decision they make, where the result would be beneficial to wealthy people and the children of wealthy people,” Mr Kenny said.
“In Ireland, it’s very important that people have an aspiration and a hope to own their own homes. And therefore for younger couples and for people coming into the labour market and the property market, they need to have a demonstration that they can actually achieve their aspiration of buying their own home.”
He told the Bloomberg news agency he strongly supported the department’s position that people could get on the property market and own their own homes “without undue difficulty”.
It was suggested earlier this week that the Central Bank might phase in a 15% deposit but that threshold would rise over the course of the following three years to 20%.
However, it has since emerged that Mr Honohan is insisting that the new rules are implemented once agreed and will not be staged as that would distort the market.
The Central Bank Commission is due to meet on Tuesday to discuss a number of proposals aimed at preventing a repeat of the property bubble. A final decision is expected to be made on the deposit rule at that point and, once it is, the rules will be introduced in full immediately.
Meanwhile, the Government has welcomed the ECB’s decision to embark on what Tánaiste Joan Burton described as a “very significant” programme of quantitative easing.
Ms Burton said the programme will serve as a major stimulus, helping businesses to expand and create jobs.
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