What will loosening of mortgage rules mean for homebuyers?

There is no plan to change the other limit on mortgage lending — the amount a person or couple can borrow as a percentage of the purchase price of the property. First-time buyers will still be limited to borrowing 90 per cent of the value of the home regardless of their income, and people trading up will require a deposit of 20 per cent as they can borrow only 80 per cent of the property value.

First-time buyers form the single largest part of the Irish mortgage market but with rising costs of labour and building materials and more uncertainty over whether customers will have access to funds to buy the homes at the end of the day, there was concern that developers are reluctant to increase the supply of property by the sort of figures the Government is targeting.That remains to be seen.

But banks are increasingly wary of higher loan multiples in an environment where interest rates are rising fast and to levels not seen in a generation while wider cost of living pressures across the economy are putting pressure on people’s discretionary income. Regardless of the Central Bank rules, some lenders are already cutting back on the maximum loan to income they are prepared to lend.

Why did the Central Bank wait until now then, if their new looser rules will be offset by interest rates and the slowing economy?

This is akin to administering Oxycodone for a headache. It’s a disgrace and an abdication of responsibility on the part of the ecb & centralbank_ie. Consequence will not be good.

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