Central Bank unlikely to switch loan-to-income restriction

Minutes suggest bank discussed recent IMF to introduce new debt-to-income (DTI) limit

Central Bank governor Philip Lane . Photograph: Alan Betson / The Irish Times

The Central Bank is unlikely to switch its loan-to-income restriction for mortgage lenders into a debt-to-income (DTI) limit, as recomended by International Monetary Fund, in the near term at least.

At its latest macro-prudential meeting in April, Central Bank officials discussed the proposal but decided further work, including the development of a central credit register, was needed before such a measure could be adopted.

“It was agreed, however, further conceptual work be undertaken on whether a DTI is most appropriate in the presence of comprehensive mortgage market measures and the potential for other measures which could more effectively target consumer debt should systemic risks emerge in that segment in the future,” the minutes of the meeting indicated.

Central Bank officials also discussed efforts by Banco de Portugal to prevent excessive risk in the Portuguese financial sector, noting "less restrictive credit standards have been observed and this trend is expected to intensify and Portuguese households show high levels of indebtedness and a low saving rate."


The Central Bank has noted the re-emergence of credit growth here, but does not consider it excessive or consistent with a systemic risk to the economy.