New mortgage rules 'unfair on families trading up'
Fianna Fáil has criticised the new mortgage lending rules issued by the Central Bank last night, saying they are unfair on families who want to trade up.
The rules, which are aimed at preventing another property bubble, were discussed at the Central Bank Commission’s monthly meeting yesterday.
Under the measures, first-time buyers will now be able to borrow 90% of their property’s cost, up to a limit of €220,000. They will have to provide a further 20% deposit on any amount exceeding this.
Other owner-occupier home-buyers are limited to borrowing up to 80% of a property's value and buy-to-let purchasers will have to come up with 30% of the purchase price.
In a crucial limit, all mortgages are limited to three and a half times the buyer's total income.
The IMF has approved the cap and said the limits would increase the resilience of households and banks against any future financial shocks.
Fianna Fáil's finance spokesperson Michael McGrath said the 80% limit will force people to stay in unsuitable homes that they have outgrown.
"It could be a young people with children living in an apartment which is no longer suitable," he said.
"They may be perfectly able to afford a higher mortage for a new property, but if they can’t come up with 20% they now may not get the mortagge. That is a real problem."
The Institute of Professional Auctioneers and Valuers has also expressed concern, saying the move could confine many to renting for long periods, resulting in a rise in rental costs.
The regulations are expected to be introduced under legislation in the coming weeks and will have immediate effect once approved by the Oireachtas.
Additional reporting by Irish Examiner reporter
