Mortgage curbs could affect house building, banking body warns

New measures will bring ‘significant challenges’ for lenders’ systems and processes

Banking & Payments Federation Ireland says the measures may have impact on house building.

Banking & Payments Federation Ireland says the measures may have impact on house building.


The main representative body for Irish banks has welcomed the Central Bank’s decision to ease its proposals on loan-to- value (LTV) mortgage limits for first-time buyers but cautioned it could have an impact on house building.

“While a 90 per cent loan to value for first-time buyers on the first €220,000 value of a property is welcome, the extent to which this will effectively accommodate first-time buyers, particularly in urban areas, is uncertain,” Banking & Payments Federation Ireland said.

“It also remains to be seen how this measure, as well as the 80 per cent LTV for mover purchasers, will affect house building activity,” it added.

Significant challenges

The new measures would bring “significant challenges” for lenders’ systems, policies and processes, the federation said.

Bank of Ireland, which provides a third of new mortgages in Ireland, said it would implement the new rules “once they come into force” in the coming weeks.

“While customers are likely to be concerned about the introduction of these measures we will be encouraging any person thinking of buying a home to come and talk to us,” it said, adding it had a €2.5 billion fund for residential mortgages available.

Welcome concessions

Ulster Bank chief executive Jim Brown said the regulator had “made some welcome concessions” to first-time buyers.

“While there are still some practical details to work through, such as how the exemptions for those in negative equity will actually work, we welcome the broad thrust of the draft regulations,” he said.

KBC Bank welcomed the concession to first-time buyers but said the extent to which the measures affect the market “remains to be seen”.

Permanent TSB said it would apply the exemptions allowed on LTVs and income limits a “case-by-case basis”.

State-owned AIB said it would “naturally work with the regulator on implementing the new rules”.