Mortgage rule changes: First-time buyers can borrow four times salary and drop 20 percent down payment for movers

The central bank has made a number of changes to its mortgage lending rules that will impact first-time buyers and movers.

The changes mean first-time buyers can borrow four times their income on a mortgage from January.

This is an increase from three and a half times so far.

Second-time buyers no longer have to pay a 20 percent security deposit when moving into a new home. Starting next year, they can secure a mortgage if they have a 10 percent deposit.

Second and subsequent buyers are still limited to borrowing three and a half times their income on a mortgage.

And the percentage of income and loan-to-value exemptions, known as macroprudential policy, will be capped at 15% of mortgages.

Up to 20 percent of mortgages can currently be exempted from credit limits.

The rule changes come after a review of credit limits that began in May last year.

A public consultation process conducted by the central bank received 4,000 responses.

A broader definition of a first-time buyer is also introduced.

Borrowers who are divorced, separated, bankrupt or insolvent and no longer interested in the previous property are eligible as first-time buyers for the mortgage measures.

And a first-time buyer who obtains a top-up loan or re-mortgage with an increase in principal may be considered a “first-time buyer” provided the property remains their primary residence.

Central Bank of Ireland Governor Gabriel Makhlouf said: “The mortgage measures are essential to our mission to serve the public by maintaining the financial stability of the economy and households as a whole, so it is good policy practice to do this given the width review changes in the economy.

“The benefits of the measures are not always immediately visible to people in their daily lives, but they are long-term.

Mr Makhlouf said the central bank’s public engagement shows strong support for mortgage measures, with more than 70 per cent of people who responded to its online survey believing these types of measures have an enduring role in the mortgage market.

“At the same time, it is clear that affordability and access to housing are key challenges faced by many people in Ireland. At the heart of these challenges is the need to increase the supply of housing.”

He said the review of the mortgage measures shows the measures have increased the resilience of borrowers, lenders and the economy at large.

“However, we are very aware that the mortgage measures, like all political interventions, have both benefits and costs to society. Much has changed since the measures were introduced. The changes we are announcing are both purposeful and proportionate, recognizing the resilience and structural changes across the economy that have been built over the past decade.”

https://www.independent.ie/business/personal-finance/property-mortgages/mortgage-rule-changes-first-time-buyers-can-borrow-four-times-salary-and-20pc-deposit-dropped-for-movers-42078804.html Mortgage rule changes: First-time buyers can borrow four times salary and drop 20 percent down payment for movers

Fry Electronics Team

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