Are banks side-stepping Central Bank lending rules with offers?

We’re less than a month into the New Year and already two of the major lenders have unveiled new products to help people get a mortgage.

Both Bank of Ireland and Permanent TSB have been thinking outside the box in the last few weeks to release new initiatives encouraged at helping people onto the property ladder.

In both cases there is 2% cashback while in the case of Bank of Ireland there is major incentives for first-time buyers to save there.

Why are the banks being so generous? Because of the Central Bank lending rules, of course.

Introduced last February, the true effects of the Central Bank rules have only been felt in recent months as people, particularly in urban areas, struggle to save enough of a deposit to buy a home. Things haven’t been made easier by the fact that people are now limited to borrowing just 3.5 times their incomes and while the Central Bank would argue this makes economic and financial sense, for some the review promised by new governor Philip Lane in the coming months cannot come quick enough.

Just this week estate agents Douglas Newman Good (DNG) called for an adjustment of the mortgage lending rules.

DNG said it was in favour of the rules, but they should be altered to allow first-time buyers to borrow up to €300,000 without having to put together a larger deposit than 10pc.

At present new borrowers can have a 10pc deposit for amounts up to €220,000. For borrowings over that they need a 20pc deposit.

Brokers claim that up to 12,000 potential first-time buyers are stuck in "rent jail" as the limits mean they are unable to qualify for a mortgage.

DNG also wants a change in the rules to allow new buyers to qualify for a mortgage amount based on four times their income, and not 3.5 times.

At the moment a first-time buyer couple borrowing €300,000 would need a deposit of €38,000 and a combined income of at least €86,000.

• Do you agree with the DNG proposals?


• Are current bank offers bending the rules and will they have to be looked at by the Central Bank?


• Is the impending review of the rules later this year putting you off buying temporarily?

Have your say below…

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