Tweaks to controversial lending limits would make life easier for all concerned
Published 01/09/2016 | 02:30
Survey findings that four out of 10 buyers will need funds from their families to secure a mortgage are set to raise the temperature in the heated debate on the impact of Central Bank mortgage restrictions.
The regulator has been accused of everything from social engineering to restricting mortgage lending to those with rich parents.
The social engineering charge relates to leaving younger people with little option but to rent.
The survey by Behaviour and Attitudes, commissioned by a range of bodies involved in the property/mortgage industry, found seven out of 10 buyers and intending buyers are being affected by the lending limits.
Millennials - those who became adults since 2000 - are particularly peeved by the limits. The survey found many will have to save for six years, and will then end up living far from where they want to be. This imposes a high social cost on potential new buyers and those who want to move to a different home.
Findings from the survey came as the deadline has passed for submissions as part of a review of the rules being carried out by the Central Bank.
Governor Philip Lane is on record as saying he will need strong evidence to change the rules, while he may not make any adjustments to them.
Many argue that the rules are prudent, as they stop banks over-lending at a time when a shortage of houses for sale is pushing up prices.
But the rules are also blamed for causing many potential home buyers to be refused a mortgage.
This is having a knock-on impact on the rental market, leaving would-be buyers locked in rental jail.
Ironically, the rules do not apply to lending by Irish banks in the likes of the UK.
The fact banks can lend mortgages to their customers there without being bound by our home-loan restrictions negates attempts by the regulators to save the banks from sinking themselves, as they nearly did in the past.
Prudent the rules may be, but they are also proving damaging to families desperate to get their foot in the door of their own home.
It would make sense for the Central Bank to tweak them. Allowing borrowing of four times your income, and making greater allowance for those trying to trade up from a starter home, or an apartment, would be sensible moves.