Mortgage rules spark war of words between Central Bank and ESRI

ESRI economist Kieran McQuinn warned that average loan-to-income ratios were now back to levels not seen the peak of the Celtic Tiger era. Photograph: Mark Stedman

He was responding to criticism from the ESRI that looser credit conditions had fuelled further house price growth and that the regulator’s move had been “premature”, particularly with the huge build-up of savings during the pandemic. While the rapid house price growth seen over the last 10 years had, in the main, been driven by “fundamentals”, such as income growth, looser credit conditions were once again playing a role in driving house prices, he said.

Speaking at the launch of the Central Bank’s latest biannual Financial Stability Review on Tuesday, Mr Makhlouf said he did not “believe that the changes we made...have actually added to house prices in a way that’s affected the stability of the system and the stability of the household resilience.”He pointed to a chart in the report which suggested that the median loan-to-income ratio of first-time buyers remained stable at about 3.

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