In an article published in the online version of Irish Times on 19 December 2016, the latest updates on Central Bank’s examination of tracker mortgages are discussed. The new moves will create changes to the bank’s current mortgage rules and aims at providing easier loan requirements for borrowers.
Changes to the Mortgage Lending Rules to be considered by the Central Bank’s Decision-Making Board
It is expected that some important modifications to the existing system will be announced after the bank’s decision-making board considers the changes it will make on its mortgage lending rules on Wednesday. Proposals which are designed to allow greater lending opportunity especially for first-time home buyers is to be presented to the Central Bank Commission for consideration. On the other hand, Central Bank’s senior executives argued that because it is essential for the strengthening of the market’s sustainability, the majority of the rules must remain unchanged.
Old Mortgage rules requires 20 percent deposit for properties above €220,000
Mortage borrowers are usually required to deposit at least 20 percent of the property’s price except for properties valued at less than €220,000, in which case they are only required a 10 percent deposit. This is all in accordance to the rules which was released in February 2015.
More Exceptions for Loan Borrowers
According to the sources in the Banking industry it is possible that the commision will consider allowing lenders to give more exceptions in the process of granting loans. There is also a possiblity of a of 20 per cent increase to the loan-to-value lending caps as compared to the 15 per cent currently offered by the banks.
Adjustments on the Required Deposit Limit
Sources from the banking industry also predict a possible adjutment on the €220,000 limit where first-time home buyers are required a 20 percent deposit for properties valued above the said amount. Proposals has been submitted to the bank’s commission arguing that the amount is no longer applicable to the current CSO market where the average property price is at €253,000 . There is a high possibility that the commision will make the suggested adjustment to the €220,000 limit which will result to more borrowers requiring a 10 per cent deposit.
No possible changes seen for the buy-to-rent scheme
The Central Bank has not released any statement apart from confirming that it will publish the result of the lending rules review next week. Although the bank had been subject to much pressure to take into consideration rental payments as a basis for payment capability, there are no foreseen changes to the buy-to-rent-scheme based on the introduced budget.
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