The Central Bank published their Review of the residential mortgage lending requirements last Wednesday. This was a review of the mortgage lending restrictions that they introduced in January 2015. They were under a lot of pressure from all sides to review these rules and make changes to them. The biggest change is the 10% deposit for first time buyers
This is the biggest change to their review. Previously, first time buyers required 10% for the first €220,000 and 20% for any amount over that. This amount was based on the average cost of a house in Dublin. This average has since increased to €280,000. By picking an average price, the Central Bank felt that this threshold would have to be reviewed on an annual basis. Based on the evidence of their review (Loan to income is more important when is comes to paying your mortgage), they have relaxed the rule and a 10% deposit is required for first time buyers in all cases.
The Central Bank have also allowed for 5% of a bank’s loans to first time buyers to have a deposit amount of less than 10%. At the time of writing, banks haven’t set out their criteria for giving mortgages with less than a 10% deposit. If going by the current exemption criteria, you will need to have a strong income and your proven ability to repay will have to be in excess of what is required.
House movers are feeling hard done by that there was no reduction of LTV for them, especially those who bought during the height of the market and have paid down a lot of debt in a short period of time to get out of negative equity.
The only change for them is that 20% of mortgages given can have a loan to value of less than 20%. To qualify for this, you will need a strong savings record and disposal income after loans are paid off.
These changes take effect from 1 January 2017.
If you have any questions in relation to this, drop me an email at steven@bluewaterfp.ie