ERSI: 20% deposit rule is harmful

The ESRI is the latest body to come out against the Central Bank’s proposed 20% deposit requirement for mortgage lending, saying it had the potential to do more harm than good.

In a submission to the Central Bank, research professor Kieran McQuinn welcomed the decision to introduce macro-prudential policy measures to ensure there was no repeat of the property crash. “However, it is about having a debate about how these measures are going to be implemented,” said Mr McQuinn.

In October, the Central Bank announced that from January banks would be bound by an 80% loan-to-value (LTV) cap for 85% of their annual lending, and a loan-to-income (LTI) cap of three-and-a-half times’ salary for 80% of lending.