The Central Bank carries out an annual review of the mortgage measures, including the key parameters of the LTV and LTI limits and the allowances allowed above these limits. The 2019 review is currently underway and the results will be announced in early December. The annual review considers whether the measures continue to meet the objectives of strengthening bank and borrower resilience and reducing the likelihood and impact of a credit-house price spiral emerging.
The system of allowances give the banks discretion to lend above the LTV and LTI limits. These are separated based on whether a borrower is a first-time buyer (FTB) or not. For FTBs, 20% of new lending to FTBs can take place above the 3.5 times LTI limit. As the 90% LTV limit is already set higher for FTBs, only 5% of new lending to FTBs can exceed this limit. These allowances are targeted to FTBs in that they can only be used for FTB lending. Separate allowances exist for second-time buyer (SSB) new lending.
Within the FTB allowances, there are no rules in place around which types of FTB borrowers would receive the allowances. This is a matter for individual lenders, based on an evaluation of each specific borrower and the lender’s own credit policies. An important feature of the measures is that the limits are in addition to individual banks' credit policies and are not a substitute for lenders’ responsibilities to assess affordability and lend prudently.
Therefore, subject to the requirement to comply with the provisions of the macro-prudential mortgage lending rules, the Central Bank Consumer Protection Code and other regulatory requirements, it remains the responsibility of an individual lender to assess the credit worthiness of an individual and to decide whether or not to provide a loan in any particular case, or how much credit to provide in any particular case.
The data on new lending under the mortgage measures and the usage of the allowances is published on the Central Bank’s website every six months. This shows that for the first six months of 2019, 16% of new lending to FTBs was at an LTI above 3.5 times.