Date 23 June 2015

Page 15

Mortgage rules
are choking off
housing supply
By Christian McCashin
TOUGH new mortgage deposit
rules are making the housing
crisis worse, according to property industry experts.
They say the lack of lending as a
result of higher deposit demands
means developers wont build new
homes as they are worried no-one
will be able to afford to buy them.
Under the new Central Bank plans,
the majority of mortgages will require
10 per cent deposits for loans up to
220,000 and 20 per cent for any additional mortgage finance that exceeds
that sum.
It was hoped the new rules would
cool the sharp rise in prices but it is
not solving the chronic lack of supply.
A survey of mortgage brokers said
the income rules will prove a killer
blow for first-time buyers.
The 200 broker firms polled recommended increasing the lending
limits to four or even 4.5 times
income above the 3.5 times cap
recently introduced.
Mortgage Brain Ireland chairman Michael Dowling said: We
have a dysfunctional mortgage
market in that theres a lot of borrowers who cannot get mortgages
they qualified for six months ago.
And managing director of the
firm, Michael Quinn, said the loanto-income limits of 3.5 times joint
salary will be the real killer blow
for first-time buyers trying to get
on the housing ladder.
Nearly half 48 per cent of brok
f l th i
l
ill h

kers feel the income rules will have

a high impact on the first-time
buyers ability to secure a mortgage while 40 per cent of brokers
believe there is a medium impact.
David Hall, of the Irish Mortgage
Holders Organisation, said: Its
come to a massive standstill. If
you asked auctioneers theyd give
you a very stark message. They
told me for the first time ever on a
Saturday they had no viewings.
The campaigner for those struggling to pay their mortgages also
pointed out that houses priced
below the 220,000 deposit threshold are being pushed over that
line due to bidding wars.
The prices of houses below
220,000 are going to rise above it
because there are people who are
going to outbid each other on
those houses, he said.
Whereas the more expensive
houses nearer to 300,000 where
the higher 20 per cent deposit is
required are not going to get
many takers. So its not about
destroying the market, I just think
theyve gone a step too far.
I think theres need for a level of
control and safety but 20 per cent
is too much. There has to be a balance and I think they need to take
a combination. Interest rates

could go up and they have to

protect against them going up.
And they will go up. When they
do, mortgage holders will be crippled because theres many people
on the borderline with paying
money at the moment.
My prediction is, not only has

GRAEME
the market
slowedKEYES
down IS
butAWAY
its
collapsed for sales of properties
above 220,000 because big deposits are required. I think the deposit
requirement should be 10 per cent
and up to four times income.
The Construction Industry Federation said the Central Banks
new mortgage rules will slow down
recovery in housing supply and
have a strong impact on the building of new homes in urban areas.
The CIF added the measures will
have a knock-on impact on rent
prices in cities such as Dublin.
CIF director general Tom Parlon
said: We are disappointed that
the Central Bank felt the need to
take these measures. The increase
in house prices is solely linked to
the lack of supply at present.
christian.mccashin@dailymail.ie

Its come to a
massive standstill

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