Irish central bank eases mortgage lending rules

Bloomberg

Ireland will make it easier for would-be borrowers to qualify for mortgages next year as it relaxes its income-to-loan requirements in an effort to widen accessibility in the face of a shortage of supply and record prices.
Prospective first-time homeowners will be able to borrow as much as four times their gross income, up from a limit of 3.5 times previously, from January 1, 2023, the central bank said on Wednesday. Second-time and subsequent buyers will continue to be able to borrow up to 3.5 times their income.
First-time buyers will still be required to provide a 10% deposit, though second-time and subsequent buyers will have their maximum loan to value raised to 90% from 80%. Lenders will have allowances to permit 15% of their lending above these limits. A 30% deposit will still be needed for buy-to-let properties.
The move comes as rising interest rates put further pressure on borrowers. AIB group Plc was the first major lender to raise its fixed-rate
mortgages last week.
The central bank introduced the current mortgage lending restrictions in 2015 to help prevent a rerun of the credit-fueled house-price bubble and devastating property crash in Ireland. It launched a consultation on the rules last December, though proposed to retain loan-to-income limits.
“It is clear that affordability and access to housing are key challenges facing many people in Ireland,” Ireland’s central bank Governor Gabriel Makhlouf said in a statement.
While the review shows the measures introduced in 2015 have increased the resilience of borrowers, lenders and the broader economy, “a lot has changed since the measures were first introduced,” he said.