Saturday 22 October 2016

Review of mortgage rules just a 'box-ticking exercise'

Charlie Weston and Colm Kelpie

Published 28/04/2016 | 02:30

Central Bank Governor Philip Lane. Photo: Collins Photos
Central Bank Governor Philip Lane. Photo: Collins Photos

The Central Bank has been accused of engaging in a "whitewash" after it said it was to seek the public's views on its controversial lending limits, but insisted the rules were here to stay.

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Governor Philip Lane said he had an "open mind" about who should make submissions, but added the rules would be reviewed on the basis of hard data, suggesting the bank would prefer the views of academics and experts rather than opinions of ordinary people trapped in "rent jail".

He said the written submissions would have to provide "evidence-based analyses of the impact of the rules".

The rules have been blamed for creating a mortgage drought and for trapping people in the expensive rental market, at a time when rents are continually rising and there is a shortage of properties to let and to buy.

But mortgage experts questioned if the Central Bank had any real intention of altering the rules.

Karl Deeter of Irish Mortgage Brokers said: "This is a whitewash. They don't intend to engage in any meaningful way."

He claimed that the rules had created a mortgage drought and the Central Bank had been told this prior to the previous consultation process it ran before the limits were introduced, but did not listen.

"This is just a box-ticking exercise by the Central Bank," Mr Deeter said.

The chairman of the mortgage committee of the Irish Brokers' Association, Michael Dowling, said the rules were not reflective of the market and needed to be changed.

He said the average industrial wage was €36,000, but the average house price in Dublin was €300,000.

Most Dublin buyers who could qualify for a mortgage were now coming to banks with a deposit of €51,000, he said.

Broker body PIBA said it supports prudent lending, but the restrictions are too onerous.

The income rules should be four to four-and-a-half times, especially for urban areas, and all borrowers should be able to qualify for a mortgage with a deposit of 10pc, it said.

Mr Lane said he had an open mind on the rules, but the rules were here to stay. He said the "calibration of these rules can be tightened, loosened or left unchanged.

"We don't have a monopoly of expertise on all of those issues and we have a lot of staff working on it.

"But we're open minded, and we're interested to see the analysis developed by other people.

"So that could be institutional analyses, it could be different entities within the financial sector, it could be academic experts, it could be other people."

The controversial rules have come in for heavy criticism, while others have argued they have helped moderate property price growth.

The Central Bank argues that the rules are in place to ensure banks uphold "prudent" credit standards.

But the rules continue to come under increasing criticism for being too restrictive.

Irish Independent

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