• What loan-to-income (LTI) restrictions on residential mortgage lending is the Central Bank introducing?

A LTI limit of 3.5 times gross annual income applies to all new lending for principal-dwelling homes (PDH) purposes. This limit should be exceeded by no more than 20 per cent of the euro value of all housing loans for PDH purposes. The LTI limits do apply to borrowers in negative equity applying for a mortgage for a new property. The LTI limit does not apply to buy to let mortgages.

  • What loan-to-value (LTV) restrictions on residential mortgage lending is the Central Bank introducing?

There are different limits for different categories of buyers, as follows: Principal Dwelling Homes 

For non-first time buyers of PDHs: A limit of 80 per cent LTV applies on new mortgage lending.

For first time buyers (FTBs) of PDHs: A limit of 90 per cent LTV applies on the first €220,000 of the value of a residential property and a limit of 80 per cent LTV applies on any value of the property thereafter. In this way, FTBs purchasing more expensive properties will be required to provide a higher deposit than those purchasing cheaper properties.

  • Why is the Central Bank introducing these measures?

The key objective of these regulations is to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. It is expected that the regulation will be introduced under legislation in the coming weeks. The Central Bank does not wish to regulate or directly control housing prices.

  • When will the measures be introduced?

We expect the legislation to be laid before the Oireachtas in the coming days.

  • How will this impact FTBs?

The LTV limit for FTBs depends on the value of the property being purchased. Properties valued at less than or equal to €220,000 will be subject to a maximum LTV of 90 per cent. For properties valued above this level, there is a maximum LTV ratio for each property value, which decreases as the property value increases. So for a FTB buying a property worth €300,000, the maximum loan allowed under the Regulations (subject, of course, to the proportionate limit) would be 90 per cent of €220,000 and 80 per cent of the remaining €80,000. This would result in a deposit requirement on this property of approximately 12.7 per cent. This table shows the percentage deposit required by FTBs for property with a range of values:

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