No Change to Mortgage Rules Very Disappointing

Thu Nov 26 2020

Press Release – 26th November 2020

Commenting on today’s announcement by the Central Bank that it does not intend to amend the macroprudential mortgage rules for 2021, Brokers Ireland said it was “deeply disappointing, if not unsurprising”.

Rachel McGovern, Director of Financial Services at Brokers Ireland which represents 1,225 Broker firms said the fact of the matter is that the rules, “while good in principle are far too severe.”

“We believe it would be reasonable to extend the 3.5 times income limit to 4.5 times with the loan-to-value requirement set at 90pc for all, including second and subsequent buyers.

“Home ownership acquired at an affordable price is absolutely the best way to grow personal wealth over the longer term.

“Many aspiring buyers are locked out since the last financial crash a decade ago.  They are now a decade older and still cannot achieve the target of home ownership.

“The paucity of any policy response to the fact that young people are forced to pay substantially more in rental payments that it would cost for the same property in mortgage repayments is truly shocking,” she said.

She said the issues of affordability and supply of homes require urgent action by policymakers.

“Policymakers are simply not doing enough to build affordable homes. To achieve that objective something drastically different is needed to what has been done to date, because it’s not working,” she said.

With a median house price of €375,000 in Dublin in September, a first-time buyer (FTB) would need a household income of €96,428, based on the Central Bank income limit of 3.5 times income to be able to afford such a home, along with savings of €37,500  for a deposit.

“Acquiring a home, particularly in the most populous urban regions, is not affordable for many, and that is not good for society as a whole. For individuals and families it is likely to have devastating consequences over the longer term,” she said.


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