New mortgage rules ‘will confine house purchases to the rich’
Siptu president calls on Central Bank to abandon 20% plan
Siptu president Jack O Connor. File photograph: Cyril Byrne / THE IRISH TIMES
Central Bank governor Patrick Honohan said decision on whether or not homebuyers will be required to have a 20 per cent deposit in place before being approved for a mortgage will be made in the “coming days” but The Irish Times has learned the regulator plans to make an announcement next week.
The new rules are designed to cool a recovering housing market.
But Siptu General President, Jack O’Connor said, if implemented as currently envisaged, “would put home ownership beyond the reach of thousands of individuals and couples.
“They would in fact make it the exclusive preserve of the better-off, those able to access inherited wealth and of serial investors,” he said in a statement this morning.
“ Many of our members have expressed concern about the impact of this proposal on them, or their children, and their chances of getting on to the property ladder.”
He said the plans would “exacerbate an already severe housing crisis.
“They would suppress domestic demand and risk undermining the fragile economic recovery that is currently under way. 2014 saw personal consumption making its first positive contribution to growth in Ireland for seven years. Retail sales have been rising since Autumn 2013 but this could quite easily fall away on the back of these measures,” Mr O’Connor added.
Speaking on the fringes of a conference in Dublin organised by the International Monetary Fund on Monday in relation to Ireland’s troika bailout programme and economic recovery, Mr Honohan conceded there has been “resistance from different sources” to his plans to change loan-to-value (LTV) ratios banks apply for home loans.
Traditionally, Irish house buyers have been able to get a 90 per cent loan, which rose to up to 100 per cent in the bubble years. The Central Bank plans to reduce this to 80 per cent and to require lenders to impose an income threshold of 3.5 times earnings when considering mortgage applications.