Bank of Ireland ‘will utilise any relaxation of mortgage rules’

Bank of Ireland has told the Oireachtas finance committee that it would utilise any extra lending capacity if the current rules on mortgage lending were relaxed by the Central Bank.

In a document submitted to the committee in advance of Richie Boucher’s appearance on Thursday, the bank said it would make use of any relaxation in the current rule, which allows it to exempt 15 per cent of loans from the loan-to-value limits imposed by the regulator.

“We do believe that, given current economic conditions and mortgage demand levels, we could utilise the extra capacity given our role as a leading provider of residential mortgages in the Irish market,” the bank said.

The Central Bank is currently reviewing the macroprudential rules.

Banks must also apply a 3.5 times loan-to-income (LTI) limit in assessing mortgage applications. Bank of Ireland said its average LTI for new mortgages in 2016 was 2.32 times, and 2.82 for first time buyers.

The average loan-to-value for new mortgages this year was 68 per cent, and 80 per cent for first-time buyers.

The average size of new mortgages from February 9th of last year to September 30th, 2016 was €196,000 for non-first time buyers, and €177,000 for first time buyers.

Since the start of 2014, about half of mortgage approvals were to first-time buyers with 47 per cent of drawdowns being to the same cohort.

The bank said 2,553 owner-occupied mortgage arrears accounts were in some form of legal process. In addition, 108 properties had been repossessed. Some 301 eligible arrears cases had been submitted to the Housing Agency, of which 57 were proceeding.

Separately, about 700 tracker accounts had drawn down a new loan under a “mover” scheme launched in April 2013, whereby the borrowers would only pay an additional 1 per cent on their tracker rate for an initial five years.

Bank of Ireland told the committee that it did not lobby the Government on the new tax rebates for first-time buyers, and, as of October this year, it no longer had any liabilities availing of the Government guarantee scheme.