House buying will become the preserve of the wealthy and those on high incomes if restrictions on mortgages proposed by the Central Bank are introduced, the Department of Finance said in a submission.
The views of the department mean it is on a collision course with the Central Bank.
And a separate survey has found seven out of 10 people believe the requirement to have a 20pc deposit before getting a mortgage for a property will lock them out of the market.
In a submission to the Central Bank on the lending proposals, the Department of Finance said the proposed changes were "unduly restrictive" and would make it very difficult for most people to secure a mortgage.
Second secretary at the department, Ann Nolan, said the proposals would have unintended social impacts.
"If the level of a deposit becomes a central criteria over time in obtaining a mortgage it could lead to a concentration of home ownership in the wealthier and higher income groups in society," she said.
The department noted that there is sound rationale for the introduction of the lending restrictions, but they could have "wider economic and social impacts" which need to be taken into account. The finance chiefs called for a more nuanced approach to limiting the amount that people can borrow to purchase a home, as they called for a more "graduated" move to the introduction of the rules.
They warned that many people would be shut out of the house-buying market, sending rents up further. Meanwhile, a survey commissioned by the Society for Chartered Surveyors has found that most believe the proposed rules are too restrictive. The survey found that 80pc of people believe the new rules will favour the better-off and cash buyers.
And half of the 1,000 people surveyed said they would source a higher deposit through another lender. This was a worrying find, the society, which represents surveyors and auctioneers and valuers, said.
There have been 157 written responses to the Central Bank's plans to restrict mortgage lending, which is regarded as high for a submission process run by the regulator. The deadline for submissions closed yesterday.
There were 47 submissions from banks and other groups in the mortgage market, including brokers and auctioneers.
And 110 individuals also put in a submission.
The Central Bank said this morning it would look at the submission and added: "We would anticipate that the final measures will come into effect early in 2015."
The original plan was to put the new restrictions on how much first-time buyers can borrow in place by early January. But Central Bank governor Patrick Honohan admitted recently the deadline may be missed.