Mortgage cap is ‘bid to make up for past failures’

The Central Bank has been accused of only proposing new mortgage cap rules to make up for its failure to regulate in the past.


The Professional Insurance Brokers Association (PIBA) said the consequences of the Central Bank’s proposals to restrict mortgage lending will be “far more far-reaching than many realise”.

If the regulators go ahead with their mortgage proposal, then the majority of first-time buyers will have to come up with a deposit of at least 20pc of the value of the property they are buying before they get approved for home loan.

Rachel Doyle of PIBA said: “It will impact young people’s ability to make any other contribution towards their financial future, including prudent pension planning, quite apart from using up, at a very early stage, tax-free family inheritances.”

She added: “One would have to wonder if the motivating factor here has more to do with a sense of self-preservation on the part of regulators, deeply sensitive to criticisms of past failures. If so, this is hardly a way for any country to allow its policy to be shaped.”

She said international practice would indicate that high loan-to-value curbs should be used to limit extreme peaks in house prices and housing credit cycles.

“They should not be an ongoing feature of a market but rather used short-term to cool an overheating market. We are very far off that now,” she said.

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Source: The Independent Online

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