Dáil Éireann Debate, Tuesday - 20 March 2018
70. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank has directed all banks to apply a 20% discount on foreign currency earnings for the purposes of calculating qualifying income for a mortgage; if each bank is free to set its own policy in this regard; and if he will make a statement on the matter. [11928/18]
Amharc ar fhreagraThe Central Bank has advised the Minister that the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (the Regulations), which came into force on 21 March 2016, transposed the Mortgage Credit Directive into Irish law. Part 9 of the Regulations relates to foreign currency loans and provides for certain measures in relation to foreign currency loans.
A foreign currency loan in the Regulations means a credit agreement where the credit is in a currency other than that in which the consumer receives the income or holds the asset from which the credit is to be repaid, or is in a currency other than that of the EEA Member State in which the consumer is resident. While the Regulations provide a framework within which creditors must operate, including such matters related to exchange rate risk, the extension of credit via foreign currency by creditors to potential customers remains a commercial decision and is not precluded by the Regulations.
The Central Bank of Ireland’s Mortgage Measures do not specify any requirements in relation to foreign exchange earnings. Income is defined in the regulations (as gross annual income, before tax or other deductions, of the borrower), however they are not prescriptive in terms of how banks should arrive at this figure which would be determined by individual banks’ credit policies.
