It has been nine months since the new Central Bank lending rules have come into force but in recent weeks there have been calls for them to be removed.
Critics of the mortgage lending rules, introduced last February, say that the housing market is being stifled by the requirement of a 10% deposit for first-time buyers up to €220,000 and, in particular, the necessity for a 20% deposit on the total amount of a property for non-first-time buyers.
Home buyers can now also only borrow 3.5 times their income, leading many househunters unable to find appropriate accommodation particularly in urban areas where prices are higher.
Some members of the building trade have also bemoaned the fact they cannot afford to build homes and sell them for prices that most people can now afford.
Despite the various criticisms, it appears the new rules are here to stay though with Central Bank deputy governor Stefan Gerlach saying this week that they were essential to protecting the bank system in Ireland.
“The Central Bank of Ireland has a financial stability mandate and introduced macro-prudential policy measures in January of this year to enhance the resilience of the financial system and to reduce the risk of bank credit and house price spirals from developing.
“The very limited evidence we have so far indicates that the measures are functioning as intended.”
Mr Gerlach said one of the major problems with the house market was in relation to supply constraints and said “macro-prudential policy cannot solve these problems and they certainly cannot be resolved by risky lending.”
Speaking in London on Tuesday night, outgoing governor of the Central Bank Patrick Honohan said the rules were important in helping to avoid another property bubble.
“I don’t know where Dublin house prices will be in five years but I know there won’t be another bubble because we have the tools to prevent it,” he told The Irish Times.
What are your opinion on the rules nine months on?
- Have they affected you in terms of buying a home?
- Will they help prevent future bubbles emerging?
- Do the pros outweight the cons or vice versa?
Have your say below…