Tough new rules for mortgage lenders

Tough new rules for mortgage lenders

Tough new rules for mortgage lendersIt is hard to believe but true that Ireland is one of the few countries in Europe where there are no rules limiting the overall debts that a household can accumulate – BUT that’s all about to change. Yesterday the Financial Regulator unveiled a sweep a new measures to put manners on Ireland’s financial institutions as part of a major clampdown on bank lending.

Regulators will now be keeping a very close eye on all lending by banks to households and potential homeowners will now find it even more difficult to get their hands a mortgage as tough new rules will make remove the ease of getting one that was there during the boom times.

Not only that but the idea of imposing a cap on new lending is strongly being considered — especially where consumers borrow to buy a house and the mortgage represents a high proportion of the value of the property.

So in summary, the new rules of the lending game are:

  • Banks will be forced to shut down parts of their operations if they are caught taking excessive risks
  • The regulator will take legal action against banks that breach guidelines on executive pay, which is currently capped at €500,000 per annum
  • Financial institutions will be publicly lambasted if they fall foul of the regulator’s rules
  • Bank staff will be suspended if they’re deemed “unfit” to carry out certain functions

Jonathan McMahon who acts as number two to Financial Regulator Matthew Elderfield, warned that his office would “make life difficult and expensive” for banks who took a lax attitude to risk.

…about time.

There is 1 comment for this article
  1. Jo at 7:26 pm

    This comment may not be revelant to the post but just wondering if anyone knows about breaking out of fixed rates. Basically i am on a fixed rate of 5.65 until end of 2013. I asked the bank to send out the breakage fee documents which is 3100euro. The current variable rate is 3.85.

    Are people out there paying the breakage fee and taking the chance whom are stuck on fixed rates or do people expect the variable rate to jump as high as 5.65 over the next year or two. If i do pay the breakage fee and the variable rate doesn’t rise much i would have basically that 3100 back in my own bank a/c after 18 months…what do ye think?????

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