Lending rules could be made tougher

The Central Bank has warned it will tighten new mortgage restrictions further if they prove not to be robust enough or if there is evidence of a new property bubble emerging.

“We reserve the right to tighten them and ramp them up,” Governor Patrick Honohan said while acknowledging that first-time buyers were not to blame for the property crash.

Under the new rules, which are expected to be in force within days, banks will be able to lend first-time buyers 90% of the cost of a property up to a value of €220,000. Above that, the 80% loan-to-value limit will apply. The regulations are aimed at avoiding a repeat of the 2008 property crash. Mr Honohan said the decision to allow first-time buyers some relief was taken, as those looking to get on the property ladder should not be unfairly punished.