We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Ian Muttoo
application denied

The Central Bank's new mortgage rules are slowing lending to house-buyers in a MAJOR way

Year on year growth in mortgage lending has slowed to 12%, its lowest in two years.

THE CENTRAL BANK’S new rules on mortgage lending are finally taking effect, and house sales in Ireland are slowing to a trickle as a result.

Mortgage approval to borrowers was up 12% in April year on year at €391 million according to new figures from the Banking and Payments Federation of Ireland (BPFI).

However this growth receded to a great extent from the 60% seen in the first three months of 2015.

Conall Mac Coille, analyst with Davy Stockbrokers, suggests that the slowdown is a result of the “impact of the Central Bank’s mortgage lending rules on credit availability now being felt” in a briefing note this morning.


Under the new rules introduced in January borrowers are expected to arrive to market with at least a 20% deposit saved for the value of the house they hope to buy. For first-time buyers the rules are slightly more lax, with just 10% of the first €220,000 required, and 20% thereafter.

What may prove more problematic, particularly in Dublin where prices are at their highest, is a requirement that borrowers can only be lent a maximum of 3.5 times their salary, automatically putting higher priced houses out of reach for many aspiring owners.

Speaking to Peter Stafford, director with Ibec group Property Industry Ireland, said that the lull in sales is something of a “hiatus” until the new rules are properly understood.

“In all likelihood, the spurt seen at the start of the year was people buying under the old rules who decided to take the plunge before the new regime kicked in,” said Stafford.

We most likely have the same stock of buyers now, but now they’re all saving for a deposit.

Stafford thinks the real issue at hand won’t be the 20% deposit (“difficult, but not impossible), but rather the salary limitations on borrowing.

“The abstract of this issue will be the salary multiplier, especially in Dublin. People will struggle to save but they’ll do it,” he said.

But for first-time buyers on the average industrial wage, they may be paying high rent which they can obviously afford, but they will be denied a similarly-priced monthly repayment because their salaries exclude them from being eligible. Certainly for any house they might want at any rate.

The new rules were officially introduced in February as a preventative measure to stop another housing bubble developing. 

Despite all this, house prices are continuing to rise across the country according to the latest figures from the CSO, with the average value up 0.6% in May nationally leading to an annual increase of 15.8%.


Read: We asked this expert if people were paying over the odds for property again

Read: What happens to you if your landlord doesn’t pay their mortgage?

Readers like you are keeping these stories free for everyone...
A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

Your Voice
Readers Comments
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.