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BLOOMBERG
The rules dictating the amount of money that people can borrow for a home and the size of the required deposits must remain unchanged, the Central Bank said after a review.
This is despite pressure from real estate agents and mortgage brokers to ease lending limits.
Central bank governor Philip Lane acknowledged that high house prices and rents posed serious affordability problems, but housing construction was the answer.
"A fully functioning and sustainable housing market can not be achieved by tolerating reckless lending standards on the part of banks or excessive borrowing by households," he said.
The rules define the amount of credit that customers can borrow for a home loan and are in place to put an end to the over-indebtedness of banks and consumers.
Irish brokers have been among those who have criticized the restrictions, which are particularly severe for those hoping to buy in urban areas. This announcement was "very disappointing and will continue to force people to enter the rental market where there is a gaping gap between the repayment of a mortgage on a house and the payment of rent for a similar home".
Rachel McGovern, of the organization, said that in some areas, renting was almost double the cost of running a mortgage.
Ms. McGovern said her organization felt the Income Lifecycle (LTI) threshold should be 4.5 times the income, as in the UK. Buyers a second time should only need a deposit of 10%, she said.
However, a statement from the Central Bank said that the rules helped achieve financial stability and protect consumers.
Introduced in 2015, the rules were credited with a slower pace of real estate price growth.
The Central Bank's badysis has shown that real estate price inflation is expected to continue to soften as a result of an increase in the number of homes built and higher sales of existing properties.
Mr. Lane said, "Our review shows that, while the pace of growth of new mortgages is high, there have been few changes in average LTVs (value loans) and LTIs (Income Loans). Generalized deterioration of loan standards On the basis of these conclusions, no change is necessary in the current framework. "
The Central Bank introduced the restrictions on mortgages for homebuyers in 2015 to avoid a repeat of the property crash.
They limit the borrowing of most clients to three and a half times their income. Some exceptions are allowed, with 20% of the value of new mortgages issued by each bank to those who buy for the first time beyond this limit.
But in the case of second-time buyers, only 10% can exceed this threshold.
There are also restrictions on the proportion of loans that can contravene specified loan / value ratios.
First time buyers also need a deposit of at least 10%, and 20% required for other buyers.
Again, some exemptions are allowed.
The Central Bank's review of the impact of the loan limits revealed that they did not appear to be the single most important factor behind the evolution of lending prices. l & # 39; real estate. Increases in housing supply and turnover are expected to contribute to further moderation in price growth, he said.
"Mortgage measures support sustainable mortgages in the broader housing market, thereby contributing to financial stability and protecting borrowers from excessive debt," said Central Bank Governor Lane. a statement.
Irish independent
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