Brokers Ireland urge easing of mortgage lending rules
Central Bank mortgage lending rules are too restrictive and need to be relaxed, according to Brokers Ireland.
As data from the Central Statistics Office shows that residential property prices saw the slowest pace of growth in 22 months in August, the umbrella group for insurance and financial brokers said adjustments to the Central Bank lending rules are “needed and justifiable to address some market distortions”.
Rachel McGovern, director of financial services at the organisation which represents 1,250 broker firms, said exemptions allowed under Central Bank mortgage rules have become critically important for many borrowers because the 3.5 times gross salary loan-to- income threshold, along with the 80% loan-to-value that applies to second and subsequent buyers but not first-time buyers, are too restrictive.
We believe the 90% LTV should apply across the board to all borrowers and that the LTI should be amended to 4.5 times gross income, in line with the UK,” said Ms McGovern. “Such changes would obviate the need for exemptions.
The CSO said that residential property prices at a national level increased by 8.6% in August. This compared with an increase of 10% in the year to July and 11.8% the same month last year.
Dublin residential property prices increased by 6.1% with house prices in the city rising by 5.5% and prices for apartments growing by 9.3%. The highest house price growth was seen in Dún Laoghaire-Rathdown at 9%, while the lowest growth was in South Dublin, where house prices rose by 5%.
Dublin residential property prices have risen by 94.5% from their February 2012 low, while residential property prices outside the capital are 76% higher than during the trough, which was in May 2013.
House prices in the rest of Ireland increased by 10.8% while apartment prices were up 16.4%.
The Mid-West showed the greatest price growth, with house prices there increasing by 21.5%. The Border region showed the least price growth, with house prices growing by 6.1%.
Yesterday’s figures show that in the 12 months to August, the median price paid for a home was €240,000.
Dublin had the highest median price at €363,000 in the year to August.
Of the four administrative areas of Dublin, Dún Laoghaire-Rathdown had the highest median price of €525,000, while the lowest median price was found in Fingal at €322,661.
Outside Dublin, the region with the highest median price was the Mid-East with a median price of €265,000.
The Mid-East contained the three counties with the highest median prices outside of Dublin-Wicklow (€310,000), Kildare (€287,250), and Meath (€262,999).
The Border was the region with the lowest median price for a home at €120,000.
The county with the lowest median price for a home nationwide was Longford at €90,800.
