I propose to take Questions Nos. 73 and 74 together.
The Central Bank of Ireland, as part of its independent mandate to preserve and protect financial stability in Ireland, has statutory responsibility for the regulation of mortgage lending by banks and other regulated entities. In line with this mandate, the Central Bank introduced macroprudential measures for residential mortgage lending in February 2015. The objective of these mortgage measures is to increase the resilience of the banking sector and households to reduce the risk of credit-house price spirals from developing.
The mortgage measures are now in place as a permanent feature of the market and are operating in line with their stated objectives of enhancing the resilience of banks and borrowers to future shocks and reducing the risk of credit-house price spirals from developing. Subject to certain allowances and exemptions, the mortgage measures set particular loan to value and loan to income limits on residential mortgage lending by regulated entities and, as the Deputy will be aware, the loan to value limit for first time buyers is 90 per cent compared to 80 per cent for second and subsequent buyers (and 70 per cent for buy to let mortgages).
The mortgage measures are not intended to regulate or directly control the level of house prices per se. However, the 2019 review of the mortgage measures by the Central Bank found that if the measures had not been introduced in 2015, both the level of house prices and the proportion of highly indebted mortgage borrowers would likely have been significantly higher in 2019 than their observed levels, all else being equal. Therefore, as indicated while the objective of the mortgage measures is not to target house prices, this suggests that – in the absence of the mortgage measures – affordability pressures for mortgage borrowers would have been even more acute. Furthermore, the Central Bank indicated that the latest review of the mortgage measures conducted late last year found that they have continued to meet their objectives over the course of 2020.