Auctioneers say easing of lending rules will help home buyers but impact will vary

Under Central Bank rule changes, first-time buyers will now be able to borrow up to 4 times their annual income

Auctioneers have broadly welcomed changes by the Central Bank to lending rules which will make it easier for people to borrow more money though they suggest the impact may vary from area to area in a housing market that is beginning to stabilise.

The Central Bank confirmed that under the changed rules, effective from January, first-time buyers will be able to take on mortgages of up to four times their annual income, compared with 3½ times currently while second home buyers will still be limited to mortgages at 3½ times their income.

However, the Central Bank has eased deposit requirements for second and subsequent buyers, reducing the deposit they must have to obtain a mortgage on a property from 20 per cent of the value of the property to 10 per cent, effectively allowing borrowers to get loans for 90 per cent of the value.

Cork-based auctioneer Michael Downey of ERA Downey McCarthy welcomed the move, saying it will bring more people in the property purchase market, but he didn’t expect it to make “a massive difference” and it is more likely to result in supporting rather than inflating house prices.


“It will allow people who might have felt they were locked out of the market that they were restricted with their budget to be able to buy a house; it’s going to be first-time buyers going for starter homes mainly that it’s going to help them get over that hump.

“It’s not going to come into effect until January but what you are going to find though is that it’s going to be cancelled out a bit by the interest rate rises that have come in now and the ones that are forecast to come in the next quarter – effectively it will help to negate those interest rate rises.

“The cut in deposit requirements from 20 per cent to 10 per cent will help people moving home – a lot of people trying to trade up were limited by the 20 per cent deposit rule so this will put them in line now with first-time buyers; it levels the playing field between first-time buyers and those wanting to trade up.”

In east Cork, Adrianna Hegarty of Hegarty Properties in Midleton also welcomed the move but she does not believe it will have as big an impact as the introduction by the Government in July of the €30,000 first-time buyer grant to help people renovate vacant homes.

“A lot depends on the property. If you have a lovely house by the beach, people will go mad for it, but this will help people at the harder end of the market, the four-bed semi going for €400,000 or €420,000 where people are counting their mortgages,” she said.

“At the same time, I can’t see the easing of lending rules pushing these prices up that much because they are high enough as it is – the major thing for new homeowners is the €30,000 first-time buyer grant. The Government is always talking about taking it away but that’s vital for people.”

The belief that easing borrowing requirements will have less of an impact among some sections of the market is echoed by Pat Maguire of Pat Maguire Properties in Skibbereen who said that, on average, about 75 per cent of his sales were to cash buyers moving into the area from Cork, Dublin or abroad.

“I think it’s a welcome move but its impact down here in the west will be small enough because so much of our business is cash, non-mortgage, customers – since Covid we have had people moving down here out of the cities for a better quality of life and broadband is allowing them work remotely.

“That business has been strong though it’s beginning to level off but the problem here for mortgage buyers is that there is very little product available. If you Google west Cork properties on, you will get 540 compared with over 1,000 three or four years ago so there’s a shortage of product.

“The easing of lending rules won’t have a huge impact, given it will affect only 25 per cent of our market but for those, it could help a lot because they are trapped with high rents, €1,200-€1,400 a month for a nice house and that would go a long way towards a mortgage if they could get a mortgage.”

Barry Roche

Barry Roche

Barry Roche is Southern Correspondent of The Irish Times