Fed up with the mortgage rules? Let the Central Bank know

Putative property buyers unhappy with mortgage rules which may restrict their ability to buy a home will get the chance to voice their concerns in a new consultation process which the Central Bank will open on Wednesday.

The Central Bank said the aim of consultation is to review the “impact and effectiveness” of its macroprudential mortgage market measures and the submissions received will help inform the regulator’s own annual review of the measures, with the outcome of its first review due in November 2016.

The measures, which were introduced in February 2015, restrict the amount those trading up can borrow to 20 per cent of the property’s purchase price, while first-time buyers can borrow up to 90 per cent on properties valued at less than €220,000. Income multiples are restricted in both cases to 3.5 times income.

The rules have been frequently criticised in many quarters for slowing market activity and making it too difficult for people to buy, thereby putting extra pressure on the rental market.

However, although she acknowledged that the measures impact individuals' ability to access credit and purchase houses, Deputy Governor Sharon Donnery said that the measures are designed to protect the system as a whole and limit the risk of a house price – credit cycle emerging once again.

“The measures were introduced as a permanent and structural feature of the Irish mortgage market and the evidence threshold to justify adjustments to these rules is significant. While the housing shortage is widely acknowledged, housing shortfall issues must primarily be addressed by other targeted policies,” she said.

Falling house prices

Launching the consultation, the Central Bank published an analysis which pointed to a “marked slowing in house price inflation, and a decline in house price inflation expectations” since introduction of the measures.

Ms Donnery said the analysis should help those wishing to make submissions.

“We look forward to receiving data-based and other analytical submissions which will help inform our assessment,” she said.

The consultation process will run from June 15th to August 10th and submissions can be made via www.centralbank.ie.