| -1.3°C Dublin

First-time buyers may escape 20pc deposit rule

THE Central Bank is considering an easing off on mortgage cap rules for first-time buyers as it introduces mechanisms to avoid another bubble.

It is understood that this could include a lower loan-to-value (LTV) limit than the 20pc already flagged by the bank for those buying homes for the first time.

The higher rate could then be phased in over the course of a number of years with a 15pc deposit required for house-buyers initially. However, nothing has been finalised in relation to the easing off of rules, sources said today.

It is also unclear whether a bigger deposit would be required for more expensive homes and apartments with details of the plan expected in the next couple of weeks.


Under current plans, Central Bank Governor Patrick Honohan wants the majority of house buyers to have a 20pc deposit to get a mortgage.

In other words, banks will not be able to lend more than 80pc of the LTV in most cases. The loan amount will also be restricted to three-and-a half times the salaries of buyers.

However, last week Ann Nolan, second secretary at the Department of Finance, told a conference that a 20pc LTV was too restrictive, especially in the case of first-time buyers. She added that if that rate was to be applied, only those who had access to large amounts of cash could afford to buy and that would be socially unacceptable.

Earlier this week, Mr Honohan indicated he is standing firm on the plan.

"I hope my view will eventually prevail and I'm sure it probably will," he said at a conference attended by the IMF and the European Commission.