EBS's Haven further tightens mortgage-lending rules
HAVEN mortgages, the broker-focused division of EBS Building Society, has further tightened its lending criteria for first-time buyers.
The lender has decided that new buyers will no longer be able to use income from renting out a room when calculating how much they can borrow.
In the past, the lender used lodger income even if the applicant had no proof that they were in receipt of such income, Frank Conway of Irish Mortgage Brokers said.
People who rent out a room will still be able to receive up to €10,000 a year tax-free, but Haven will not consider that income for a mortgage application.
The move comes weeks after EBS and Haven altered their lending criteria in a number of ways, including changes to the amount of income to be taken into account when assessing mortgage applicants.
EBS also said it would stop lending money for apartments outside major urban areas or commuter-belt locations.
Mr Conway said the change on rental income was in line with calls by the Financial Regulator and the Central Bank to make risk-avoidance the central philosophy. "This very much includes the assessment of incomes used for mortgage applications," he said.
"The announcement by the lender is a move in the right direction and will add to a growing trend of sustainable underwriting criteria and sound lending."
Last week, the regulator accused some lenders of continuing to give out risky loans to first-time buyers.
They were also accused of being more interested in competing with rival banks than in designing mortgage products to suit consumers.
It is understood that regulators are concerned that some lenders are still lending people high multiples of their salaries.
In a letter to lenders, regulatory staff said standards needed to be raised.
"The Central Bank and the Financial Regulator will intervene where they are not satisfied that adequate safeguards exist within a bank," it said.