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Irish Independent
Irish Independent
Charlie Weston Twitter Email

Mortgage rule changes: first-time buyers can borrow four times salary and 20pc deposit dropped for movers

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The Central Bank has made a number of changes to its mortgage lending rules that are set to impact first-time buyers and movers.

The changes will see first-time buyers able to borrowing up to four times their income for a mortgage, from January.

This is up from three-and-a-half times up to now.

Second-time buyers will no longer need to have a 20pc deposit when moving to a new home. From next year they will be able to secure a mortgage if they have a 10pc deposit.

Second and subsequent buyers will continue to be restricted to borrowing three-and-a-half times their income for a mortgage.

And the percentage of exemptions to the income and loan-to-values, known as the macroprudential policy, will be restricted to 15pc of mortgages.

Currently up to 20pc of mortgages can get an exemption from the lending limits.

The alterations to the rules come after a review of the lending limits that began in May last year.

A public consultation process run by the Central Bank received 4,000 responses.

A wider definition of a first-time buyer is also being introduced.

Borrowers who are divorced or separated or have undergone bankruptcy or insolvency may be considered first-time buyers for the mortgage measures, where they no longer have an interest in the previous property.

And a first-time buyer who is getting a top-up loan or re-mortgage with an increase in the principal may be considered “first time”, provided the property remains their primary home.

Governor of the Central Bank of Ireland Gabriel Makhlouf said: “The mortgage measures are essential in our mission to serve the public by maintaining the financial stability of the economy and households as a whole, so it is good policy practice to review these given the broader changes in the economy.

“While not always immediately visible to people in their daily lives, the benefits of the measures are long-term.

Mr Makhlouf said the Central Bank’s public engagement showed strong support for mortgage measures, with more than 70pc of people who responded to its online survey believed that these types of measures have a permanent role to play in mortgage market.

“At the same time, it is clear that affordability and access to housing are key challenges facing many people in Ireland. At the core of these challenges is the need to increase the supply of housing.”

He said the review of the mortgage measures shows the measures have increased the resilience of borrowers, lenders and the broader economy.

“However, we are acutely aware that like all policy interventions, the mortgage measures have both benefits and costs to society. A lot has changed since the measures were first introduced. The changes we are announcing are both targeted and proportionate, and recognise the resilience built up over the last decade and the structural changes across the economy.”

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