Dáil Éireann Debate, Thursday - 16 July 2015
193. Deputy Terence Flanagan asked the Minister for Finance his plans to review the Central Bank of Ireland's new lending limits on financial institutions; and if he will make a statement on the matter. [29954/15]
View answerI assume the Deputy is referring to the new macro prudential rules for residential mortgage lending put in place earlier this year by the Central Bank of Ireland. These measures provide that, in respect of a mortgage for a principal dwelling home, first time buyers will be subject to a maximum mortgage loan to value (LTV) of 90% for a property valued up to €220,000 and subject to an 80% LTV on any excess value above that amount. For non-first time buyers, a mortgage will be limited to 80% of the value of the principal dwelling home. In addition, there is a loan to income limit of 3.5 times gross annual income. However, these macro prudential measures also allow a certain flexibility to lenders to exceed these thresholds when assessing individual cases.
The primary objective of these regulations is to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. While the Central Bank is independent in setting such macro prudential measures for regulated financial service providers, it has indicated that it will monitor the impact and effectiveness of the measures in achieving its stated objectives. It will also maintain a continuing research effort to evaluate macro prudential policy to help ensure its optimum deployment.
