The central bank can be expected to ease its mortgage lending rules slightly when it publishes the results of its review of mortgage lending rules tomorrow. No changes are expected in the rules regarding loan-to-value caps. Any changes to the measures are not expected to take effect until next year.
Currently most home buyers can only borrow up to 3.5 times their income from lenders. However, after a year-long review of the situation, it is expected that the regulator will announce that it intends to ease that to four times income.
First-time buyers must have a deposit of at least 10% of the property value, while second-time and subsequent buyers must have 20%. Buyers of buy-to-let properties are required to have a 30% deposit.
The central bank introduced rules in 2015 to prevent a repeat of the credit property bubble that led to the financial collapse here ten years ago. These measures are aimed at ensuring that borrowers can meet their repayments and prevent the property market from over-inflating.
But since last year, there has been a more in-depth review of the overall mortgage measures framework to ensure they are fit for purpose. As part of it, a consultation was held with various stakeholders including borrowers, banks and others. Brokers, lenders and some builders argue that measures are too restrictive as property prices rise.
These changes come at a time when rising interest rates are forcing up the cost of borrowing for home loans. However, the rules are reviewed annually by the Central Bank. A central bank spokesman declined to comment on the expected recommendations of the review, which will be made public tomorrow.
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