Major mortgage changes ‘unlikely’ say property and mortgage firms
Ken Murray, of the Association of Expert Mortgage Advisors, said: “Our hope would be that any review would be focused on slight alterations, in particular when you look at the implications of the rules towards Dublin.
“It’s requiring a first-time buyer in Dublin to have over €45,000 saved. Set against a backdrop of rising rents, that’s becoming extremely difficult to do,” he said.
He said the rule capping mortgages at three-and-a-half times income, except in 20% of cases at the banks’ discretion, was also “punitive”. “If there was a slight tweak to increase the 20% exemption, that would give the banks a little more room to manoeuvre.”
He said the 20% deposit requirement on buyers trading up was too harsh on couples who had outgrown small properties bought during the boom and who were just breaking even after surviving negative equity.
“The logic is right. They have a property, they should have equity but the reality is they’ve come through a very tough time and having got to break-even stage, they’re now expected to save a 20% deposit to move on.”
Ronan Lyons, economist with Daft.ie, said: “I’d relax the loan-to-income rule but keep the loan-to-value one. Loan-to-value is really important because it’s what went wrong. Once we moved from a building society-funded model into universal banks giving out mortgages, that’s where the damage was done.”
He also said the governor has to be extremely cautious about signalling changes: “Even announcing a review can have an impact on the market because people might say, ‘we’ll wait for the review and put off applying for a mortgage until then’.”
John McCartney, director of research at Savills, said a review was needed because the restrictions had not curtailed house price growth, but had merely displaced the inflation from the cities to the commuter belts, and from the owner occupier sector to the rental sector.
“In the long run, you’re going to get a bigger cohort of people renting, and renting for longer. But our current pension system assumes people own their houses when they retire so they are rent-free and have equity to dip into for medical expenses etc. I wouldn’t be against the Central Bank rules. I just think we have to have a debate about the type of market that they’re going to leave us with, and the type of society that they’re going to leave us with.”
The Irish Banking and Payments Federation said it would welcome a review and would participate fully in any consultation.
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