Dáil Éireann Debate, Tuesday - 30 May 2023
218. Deputy Robert Troy asked the Minister for Finance if he will consider 100% mortgages based on a person’s proven track record of rental payments and the usual earning multiplier conditions, similar to the new offering approved in other countries (details supplied). [25929/23]
View answerThe 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 Central Bank regulated mortgage lending institutions operating in Ireland. In line with this mandate it has introduced certain macroprudential measures for residential mortgage lending. These macro-prudential measures apply certain loan-to-value (LTV) and loan-to-income (LTI) restrictions to residential mortgage lending by financial institutions regulated by the Central Bank.
Following a comprehensive review, the Central Bank last October announced a number of targeted changes to the lending measures which came into effect from the start of 2023. For first time buyers (FTBs), the LTI limit was increased to 4 times the borrower’s income and the LTV limit was retained at 90% of the value of the residential property.
For second and subsequent buyers (SSBs) the maximum mortgage limits are 3.5 times the borrower’s income and 90% of the value of the residential property.
However, banks and other regulated lenders have, at their own discretion, a certain flexibility to provide a mortgage loan in excess of the specified regulatory limits and up to 15% of FTB lending can take place above these specified limits.
In addition, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 require lenders to assess the creditworthiness of the borrower and provide that mortgage credit should only be made available where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement.
This assessment generally takes into consideration rental payments being made by mortgage applicants when lenders are making their affordability assessment as part of regular underwriting process to assess borrowers’ ability to repay a mortgage.
Within this general regulatory framework, it is then a commercial matter for individual lenders to decide whether or not to provide a loan in any particular case, or how much credit to provide in any particular case, having regard to their own lending policies and underwriting criteria. Neither the Central Bank nor I have any function or role in such decision-making matters by credit institutions.
