Central Bank governor Gabriel Makhlouf has defended banks that are withdrawing mortgage offers to people whose incomes are hit by the fall-out from the pandemic.
He admitted there was a risk that some people would find themselves unable to complete house purchases.
But he insisted: "It's in everyone's interest that banks make prudent lending decisions... unlike the reckless lending of the past".
The governor was asked on the 'Today with Sean O'Rourke' show, on RTÉ, about reports in the Irish Independent that banks and other lenders were putting the house deposits of home buyers at risk because they had tightened lending criteria due to the Covid-19 outbreak.
Banks were looking carefully at creditworthiness and making decisions accordingly, he said.
Borrowers and lenders needed to maintain open communications "to make sure everyone in the system understands the situation they're in".
Brokers report banks are asking people whether they are receiving the pandemic unemployment payment or the temporary wage subsidy.
Some lenders who are told people have temporarily lost their jobs are withdrawing loan offers and approvals in principal.
This has meant that prospective home buyers are being put at risk of losing their deposits due to problems which have arisen since Covid-19 lending checks were introduced by banks.
The Law Society has reported clients committed to buying property are encountering difficulties drawing down loans already approved by lenders.
The issue has arisen after the Banking and Payments Federation Ireland (BPFI) issued new guidance about mortgage approvals and the drawdown process in April.
Conveyancing solicitors have reported problems for clients getting funds released by lenders on some approved loans, even though all the usual pre-drawdown requirements are in place.
Mortgage broker Michael Dowling said banks were seeking proof that people had not been laid off by demanding to see April payslips.
He said the approach of lenders was inconsistent, with some banks withdrawing loan offers, while others are being flexible.
It comes as a number of banks, including Bank of Ireland, KBC, Ulster Bank and Dilosk/ICS, have temporarily suspended offering exemptions from Central Bank lending rules on the size of deposits and the amount that can be borrowed relative to income.
Goodbody Stockbrokers economist Dermot O'Leary expects mortgage lending to crash by 40pc this year.
He said measures limiting the spread of the virus were restricting physical viewings of property for most of April, May and June.
"While we previously expected a mortgage market of around €10.7bn this year, the lack of activity in Q2 [the second quarter], the unprecedented shock to demand and supply, and a tightening of lending standards will instead result in a large fall in new lending, possibly of the order of 40pc for the year overall."
This would imply lending would fall to €6.42bn.
Figures this week showed a sharp fall-off in the numbers of people approved for a mortgage in March.
There were just 3,733 mortgages approved in March, down 400 from the same month last year.