Builders press case for easing deposit rule

Construction Industry Federation tells Central Bank ‘restrictions are not helping the housing market’

The CIF says the Central Bank rules “give no credit to a couple seeking a mortgage for the fact that they might be paying €20,000 a year for rent”

The CIF says the Central Bank rules “give no credit to a couple seeking a mortgage for the fact that they might be paying €20,000 a year for rent”

 

The Construction Industry Federation urged the governor of the Central Bank of Ireland to ease its mortgage lending rules for first-time buyers at a face-to-face meeting this week.

The CIF delegation, led by director general Tom Parlon and president Mick Stone, met Philip Lane for about 90 minutes at his Dame Street offices on Tuesday.

They pressed the CIF’s case for a loosening of macroprudential rules at a time when data shows the number of first-time buyer approvals were down 27 per cent year-on-year in the three months to the end of February.

Under the Central Bank’s current rules, the deposit requirement for a first-time buyer is 10 per cent up to €220,000 and 20 per cent of any balance. A limit of three and a half times income must also be applied by banks when considering mortgage applications.

“We made the case that the Central Bank restrictions are not helping the housing market,” Mr Parlon told The Irish Times. “They give no credit to a couple seeking a mortgage for the fact that they might be paying €20,000 a year for rent.”

The federation wants the ceiling on the 10 per cent deposit lifted to €300,000 and the income limit extended to four and a half times earnings.

It argues that if customers can can demonstrate a track record in paying rent equivalent to a mortgage payment, then banks should be satisfied that their ability to repay is not compromised.

“We agree that there should be prudence” in mortgage lending, Mr Parlon said, “but we suggested that the rules should be refined to avoid some of the unintended consequences that are there in the current system.”

Mr Parlon said the CIF also appraised the governor of the wider difficulties faced by developers and builders in accessing working capital and the high interest rates being charged on loans, in spite of the main ECB rate being zero.