Last May, the Government launched 'Construction 2020: A strategy for a renewed construction sector'. The strategy includes the Government's desire for a return to sustainable levels of mortgage lending as part of a healthy market. This involves the consideration of measures to stimulate the development of housing in a sustainable manner. In order for developers to be supported, they need confidence that customers will be capable of accessing finance to purchase new houses. This means mortgage products being available to potential purchasers with an ability to support repayments. As part of this process, an examination of some proposals for additional models of mortgage finance, including the concept of a mortgage insurance scheme, has been undertaken.
As the Deputy will be aware, Budget 2015 contains a number of measures to support a functioning housing market. In particular, in order to support first time buyers to save towards a deposit for their first home, DIRT will be refunded in respect of savings up to a maximum of 20% of the purchase price. This measure will run until the end of 2017.
In addition, and having regard to its role as prudential regulator of financial institutions, the Central Bank of Ireland published a consultation paper on 7 October 2014 which includes proposals for new macro-prudential measures to enhance the resilience of the banking sector and households to housing market developments. The proposals include a number of measures, one of which is to require lenders to restrict new lending for primary dwelling purchase above 80 per cent LTV to no more than 15 per cent of the euro value of all housing loans for principal dwelling home purposes entered into in a six monthly period. The Central Bank has now commenced a consultation process on the proposed measures, and submissions and comments on these can be made to realestate@centralbank.ie.
It is important to note that the Central Bank of Ireland is independent in the exercise of its functions and that it has the power to implement such macro prudential proposals by way of a regulation issued under Section 48 of the Central Bank (Supervision and Enforcement) Act 2013.
