Central Bank extends mortgage lending review deadline

The Central Bank has extended the deadline for submissions to its review of controversial mortgage lending restrictions.

In a statement, the bank said the call for submissions, which opened in early June, was being extended to the end of August from an earlier deadline of August 10th to ensure applicants could avail of the most up-to-date information.

The extension comes as the Central Bank published a new economic letter, which looks at the impact of the rules since their introduction on February 9th, 2015 to the end of the year.

The letter, which examines data from all the main mortgage lenders (AIB, Bank of Ireland, Permanent TSB, Ulster Bank and KBC Bank Ireland), shows the average loan drawn down by first-time buyers under the revised rules was €172,872, with an average property price of €234,599 and average income of €64,721.

For other buyers, the average loan drawn down was €203,539, with an average property price of €374,644 and an average income of €104,331.

13% exceeded

The letter also shows that 13 per cent of lending covered by the limits exceeded the loan-to-value (LTV) limit, versus a maximum permitted 15 per cent allocation. In addition, 17 per cent of lending exceeded the loan-to-income (LTI) cap, out of a 20 per cent maximum cap.

The Central Bank’s revised mortgage rules are intended to ensure prudent lending in the mortgage market. The measures restrict the amount those trading up can borrow: up to 20 per cent of the property’s purchase price.

First-time buyers can borrow up to 90 per cent on properties valued at less than €220,000. Income multiples are restricted in both cases to 3.5 times income.

The rules have been widely criticised for slowing market activity and making it more difficult for people to buy a home. However, Central Bank Governor Philip Lane has previously said the restrictions could as easily be further tightened as loosened.

The total value of all loans approved since the rules took effect to the end of the year was approximately €4.6 billion, with 78.1 per cent of lending provided for property purchases, 9.4 per cent for refinancing or switching, 2.7 per cent for equity release, and 9.7 per cent for other lending activities.

Of the loans issued during the period under review, as many as 56 per cent were subject to the new mortgage regulations.