CIF Comment On Central Bank Rule Changes
Following the review of mortgage measures announced by the Central Bank, CIF Director General, Tom Parlon, stated:
“The CIF recognises that the Central Bank’s macro-prudential rules are part of a necessary regulatory framework within the Irish banking system.
Today’s changes to the deposit rules may assist first-time buyers in securing mortgages. Providing mortgages to this cohort of first-time buyers creates a viable market, meaning banks can now provide finance to house-builders again to deliver appropriate housing.
The changes in new lending by banks over the loan to value ratio should allow banks to lend to more people who can afford to service mortgages; those with a strong record of paying rent for example. Strict qualification criteria for this lending are still in place to ensure that any increase in mortgage lending is sustainable for the individual and within the context of the wider economy.
The CIF believes that the failure to increase the loan to income ratio from 3.5 to 4 is a missed opportunity to increase housing supply in a sustainable controlled manner. The LTI will continue to militate against the first-time buyer couple where house prices are above average. Our research indicates that an ‘average’ couple (Garda, Nurse, Civil Servant with five years’ experience) will still not be able to secure a mortgage on the average starter home in urban areas in across the country.
The CIF welcomes the fact that the Central Bank will continue to review annually the impact of these rules on the banking system and wider society. The CIF will continue to work with Government to identify other ways to increase supply in a sustainable and controlled manner including the establishment of a local infrastructure fund and a Housing Delivery Unit to speed up the planning process and the delivery of quality housing.”