Right call by Central Bank on mortgage rules

The decision by the Central Bank of Ireland to leave mortgage lending guidelines unchanged is the right call.

Presently, under the macro-prudential framework, the twin objectives of maintaining financial stability and protecting consumers will continue and in doing so, borrowers can continue to align their saving and buying plans to the lending rules set down by the Central Bank a number of years ago.

Changing the rules, in either a minor or major way would have sent the wrong message to borrowers. In deciding to maintain the status quo, the Central Bank has signalled that stability is the central focus of the measures. And not just stability of the mortgage and property market but also stability in the approach of Central Bank authorities. .

The measures including the loan to income (LTI) and loan to value (LTV) limits remain unchanged.

While the pace of growth in new mortgage lending remains stable, overall mortgage lending in Ireland for 2018 is likely to be in the 36,000 – 39,000 unit range, up from 11,000 at the bottom of the market in 2011. This level of lending is on par with unit activity in 1988 so there is still some scope for more lending, perhaps in the region of  50,000.

Prospective borrowers should ensure they have a good credit rating, sufficient evidence of savings before they apply for a mortgage. In respect to their credit rating, they can avail of a free copy (one per year) from the Central Credit Register (www.centralcreditregister.ie) or from the Irish Credit Bureau (www.icb.ie). A report copy from the ICB costs €6. 

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