Central Bank 20pc mortgage deposit rules here to stay - Gerlach
The Central Bank’s mortgage deposit rules are here to stay, although they will need to be assessed from time to time, outgoing deputy governor Stefan Gerlach has suggested.
Mr Gerlach said the rules introduced last January requiring house buyers to have a deposit of up to 20pc are “functioning as intended”.
But they have prompted opposition in some political circles, with Environment Minister Alan Kelly stating they have led to people being squeezed out of the market.
But Mr Gerlach said macro prudential tools need to be permanent.
“Episodes of financial instability are very difficult to predict. Macro-prudential tools therefore need to be permanent features of the financial landscape and will need to be assessed from time to time.” Mr Gerlach said. “ Research is important and indeed necessary to allow us to conduct a careful assessment of the broader effects the rules have on the economy. As yet, it is still too early to do so since we do not expect to have sufficient data until mid-2016.”
Mr Gerlach said the limited evidence the bank has so far suggests the rules are "functioning as intended."
And he said the rules will not deal with the housing supply issue.
"The public discussion of the measures has highlighted a number of problems which exist in the Irish housing market, in particular in relation to supply constraints," Mr Gerlach said.
"Macro-prudential policy cannot solve these problems and they certainly cannot be resolved by risky lending: they can only be resolved by housing policy. "