# Irish central bank eases strict mortgage-lending limits
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-19
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Ireland Central Bank to Ease Mortgage-Lending Limits
Meta Description: Ireland's central bank to allow first-time buyers to borrow up to four times income, aiming to manage financial stability whilst potentially increasing
URL: https://financedigest.com/irish-central-bank-eases-strict-mortgage-lending-limitshtml

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By Conor Humphries

DUBLIN (Reuters) -Ireland’s central [bank](https://www.financedigest.com/britains-co-op-bank-confirms-tsb-approach.html) is to ease mortgage-lending limits to allow first-time property buyers to borrow up to four times their income, in a move it said could help meet growing building costs but could also modestly push up prices.

The central bank introduced limits in 2015 capping how much banks can lend for the purchase of a home relative to its value and the borrower’s income in a bid to prevent a repeat of excessive lending that devastated the economy over a decade ago.

[Central Bank Governor Gabriel Makhlouf said an increase in financial](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") stability in Ireland since then had given the bank the space for a “targeted recalibration.

Lenders can now offer [loans only up to 3.5 times](https://www.financedigest.com/georgias-tbc-bank-slashes-loan-decision-time-with-fico-solution.html "Georgia’s TBC Bank Slashes Loan Decision Time with FICO Solution") the income of first-time buyers. That is [set to rise to four times](https://www.financedigest.com/oneweb-eutelsat-set-for-secondary-london-listing-the-times.html "OneWeb-Eutelsat set for secondary London listing – The Times") from January, the bank said. The 3.5 [times limit will remain for other buyers](https://www.financedigest.com/first-time-buyer-bags-a-dream-home-in-south-west-london.html "First time buyer bags a dream home in south west London") in what are among the strictest such limits in the European Union.

The [bank also raised the loan-to-value limit](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks") for those buying for the second time to 90% from 80%, putting them in line with current [limits](https://www.financedigest.com/replacement-coverage-for-u-s-organizations-with-flood-related-claims.html) for first-time buyers.

Makhlouf told journalists the changes would make it a little bit easier for first-time [buyers to buy a property](https://www.financedigest.com/a-year-in-property-google-searches-reveal-what-buyers-were-looking-for-this-year.html "A year in property: Google searches reveal what buyers were looking for this year").

He said, however, that the changes were designed to manage [financial stability and not to increase supply](https://www.financedigest.com/g7-finance-leaders-pledge-financial-stability-supply-chain-diversity.html "G7 finance leaders pledge financial stability, supply chain diversity").

Rising interest rates, which increase the cost of mortgages, were not a factor, he said, adding that the changes could lead to a “modest increase” in [house prices](https://www.financedigest.com/uk-house-prices-stabilise-after-four-month-fall-halifax-says.html "UK house prices stabilise after four-month fall, Halifax says").

The [central bank](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") has been criticised by some politicians for leaving many young people trapped spending far more of their income on rent than the rules deem as sustainable for a mortgage application.

The [central bank’s](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") director of economics and statistics Mark Cassidy said the impact of the changes on housing supply were likely to be “marginal to negligible.

(Reporting by Conor Humphries and Padraic HalpinEditing by Nick Macfie and Peter Graff)


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