The Central Bank of Ireland has an overall and independent responsibility to promote and protect financial stability and the mortgage lending measures introduced in 2015 are an important tool available to the Bank for that purpose.
In that context, the Central Bank carries out an annual review of the mortgage measures, including the key parameters of the LTV and LTI limits and the allowances allowed above these limits. The 2019 review is currently underway and the Central Bank has informed me that the results will be announced in early December. The annual review considers whether the measures continue to meet the objectives of strengthening bank and borrower resilience and reducing the likelihood and impact of a credit-house price spiral emerging.
The system of allowances give the banks discretion to lend above the LTV and LTI limits. The allowances vary by limit and by borrower type. For the LTV limit for second-time buyers (SSBs) and for the LTI limit for first-time buyers (FTBs), banks can lend up to 20% of the value of new lending in any given year above those limits. For the LTI limit for second-time buyers, up to 10% of new lending can take place above the limit. For the higher LTV limit for first-time buyers of 90%, only 5% of new lending is allowed above this level.
The data on new lending under the mortgage measures and the usage of the allowances is published on the Central Bank’s website every six months. This shows that for the first six months of 2019, 16% of new lending to FTBs was at an LTI above 3.5 times and 16% of new lending to SSBs took place above the 80% LTV limit.