Cantillon: Don’t expect quick mortgage move

Change to mortgage caps for first-time buyers unlikely to be very soon

Don’t expect anything from the Central Bank on mortgage caps for first-time buyers until Patrick Honohan’s successor is well-ensconced in the governor’s chair.

With Prof Honohan soon to depart Dame Street and the race to replace him still under way, the institution is in interregnum mode.

After years of non-stop fire-fighting, the caps are seen as a key element of Honohan’s legacy for the future.

This raises another question: How likely is it that one of the first acts of the new governor would be to ease the mortgage valve?

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The answer to that may be that it depends on who that governor is.

Thus the intervention of Minister for Finance Michael Noonan prompted a certain arching of the eyebrows in certain quarters.

For one thing, the Central Bank’s move to calm the property market flows from its mandate to promote financial stability and nothing else.

It’s not really the bank’s job to tackle the affordability of homes. For another, a good deal more time would be required to assess the true impact of the rules on the starter home market.

Still, Noonan’s call for a review of the rules suggest that signals of distress are coming through. The Minister has acknowledged as much, saying construction industry figures complain of an inhibited starter market in Dublin particularly. Neither is it beyond the bounds of possibility to imagine pressure from people who want to buy homes but can’t because they can’t raise the money.

We might recall here that the Department of Finance called for special measures for first-timers when Honohan first floated the plan.

The Central Bank went some way to doing that but not all of the way. With an election on the way and rents spiralling, none of this comes as any great surprise.