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Banking Sector Regulation

Dáil Éireann Debate, Tuesday - 6 February 2018

Tuesday, 6 February 2018

Ceisteanna (146)

Michael McGrath

Ceist:

146. Deputy Michael McGrath asked the Minister for Finance if the Central Bank has restrictions on the length of mortgages provided to different age cohorts of persons; if similar restrictions exist within the State-supported banks; if so, the details of such restrictions; if there is an upper limit on the age a person can be and still have a mortgage; and if he will make a statement on the matter. [5817/18]

Amharc ar fhreagra

Freagraí scríofa

The legal and regulatory protection framework sets out a number of measures to protect consumers who are taking out a mortgage and it seeks to ensure that lenders are transparent and fair in all their dealings with borrowers. 

For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 provides that mortgage lenders must act honestly, fairly, transparently and professionally, and take into account the rights and interests of the consumer when carrying out a mortgage related activity. It also requires lenders to assess the creditworthiness of consumers before concluding a credit agreement and this assessment (which must be documented and maintained) must be based on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate.  

In addition, the Central Bank Consumer Protection Code 2012 also imposes ‘Knowing the Consumer and Suitability’ requirements on lenders.  Lenders are required to assess the affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower, including the age of the borrower. Regulated entities must gather and record sufficient information from the consumer prior to offering, recommending, arranging or providing a product or service appropriate to that consumer. The level of information gathered should be appropriate to the nature and complexity of the product or service being sought by the consumer, but must be to a level that allows the regulated entity to provide a professional service and must include details of the consumer’s needs and objectives, personal circumstances (including age), and financial situation.  Prior to offering, recommending, arranging or providing a credit product to a personal consumer, a lender must carry out an assessment of affordability to ascertain the personal consumer’s likely ability to repay the debt, over the duration of the agreement.

Outside of this legal and regulatory framework the Central Bank advises that it does not have specific guidelines or requirements regarding a restriction on the length of the term of mortgages for different age categories or limits on the age of borrowers. Of course, subject to compliance with the legal and regulatory framework governing the provision of mortgages to consumer borrowers, it will be a commercial matter for individual lenders to set their own lending policies and to make their own individual mortgage lending decisions. 

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