Comment: Rich kids will push ordinary buyers aside
HAVING been caught out badly in the past, the Central Bank is anxious to ensure it does not repeat its mistakes.
But the unintended consequence of the new mortgage lending restrictions will be that a whole generation will be excluded from the opportunity to own their home.
Instead, the sons and daughters of rich people, and investors, with their generous tax breaks, are set to edge out ordinary middle-income earners.
Rich kids will win out.
Property prices in Dublin are rising at an annual rate of 25pc, and by 15pc nationally. But these crazy rises are not credit-driven.
Central Bank deputy governor Stefan Gerlach, inset, admitted as much. He said there was no evidence that the recent rise in property prices had been driven by credit expansion.
The price surge comes down to mostly one factor - there is a chronic shortage of properties to buy.
This means that large numbers of potential first-time buyers are being outbid by cash buyers, usually investors. Families who need to move to accommodate growing children are being forced to stay put.
The new proposals from the Central Bank will do nothing to increase the supply of properties to buy.
The Central Bank's plan will force banks to lend more prudently, but may not even act to dampen property prices.
They may slow down the rapid pace of property price appreciation, but they will also shut a generation of buyers out of the market.
These people are the reluctant renters, in a market where rents are shooting up. This volatility is forcing many to move from one rental to another.
It is all very well for the Central Bank to point to countries where there has been a successful introduction of rules demanding that buyers have deposits of at least 20pc.
On the Continent they have a mature rental market, where it is possible to move into decent accommodation and be fairly sure that the rent won't jump all over the place.
And in countries such as France and Germany it is possible to get a mortgage of for as little as 2.5pc, fixed for 20 years.
Here, people typically end up borrowing for 30 years and at interest rates of more than double that. We have some of the most expensive mortgages for new buyers in the eurozone, and Central Bank governor Patrick Honohan has ruled out doing anything about it.
The big answer now is to make it tougher for new buyers.
Having done too little when we had a property bubble that exploded in 2008, the Central Bank may be about to mess up the market again by doing too much this time.