Homeownership is blocked by mortgage regulations, industry group claims

The central bank’s mortgage loan rules “effectively exclude those with median incomes from the home market,” said the Institute of Professional Auctioneers and Valuers (IPAV).

A preliminary draft budget said the rules should be “adjusted” so that those earning up to 60,000 euros can borrow 4.5 times their income instead of 3.5 times.

This would bring more fairness to the market and “give hope to a large cohort of the younger generation,” it said.

“It is now clear that the regulations in their current form are effectively excluding those with median incomes from the home market,” said Jim Power, chief economist at IPAV.


“In an environment of historically low mortgage rates, potential average-income buyers, and in some parts of the country even relatively high-income buyers, may not seek home ownership and will be forced into an expensive and non-functioning rental market,” correct, “he said.

The central bank’s mortgage measures limit lending to 3.5 times income for most borrowers or, in the case of second buyers, prevent them from taking out more than 80 percent of the property’s value.

This limits purchasing power in cities like Dublin, where average prices are a large multiple of average income.

Several industry bodies have complained that the rules are too restrictive, but the regulator insists that they have protected society from another credit bubble and have limited the scope of house price increases since it was launched in 2015.

IPAV’s opinion argues that mortgage rules are sensible and prudent, but adjustments are needed if the rules have negative unintended consequences.

“From the point of view of justice and fairness, the restriction of home ownership in many parts of the country to people with high incomes is neither acceptable nor sustainable,” it said.

“Making home ownership easier for younger people looking to own would take the pressure off the rental market by freeing up rental properties, lowering rents and relieving growing pressure on housing aid payments (HAP),” she suggested.


In its statement, the industry panel also said long-term fixed rate mortgages should become the norm to protect borrowers from short-term interest rate volatility.

“For some time now it has been cheaper to service a mortgage than to pay the rent for a similar property,” said IPAV managing director Pat Davitt.

“This is the case in every area of ​​the country, according to Daft.ie, and essentially so in many areas, with the only two exceptions the affluent districts of two Dublin locations, Dublin 4 and 6,” he said, noting that even in In In these atypical areas, it is only marginally more expensive to service a mortgage than to pay rent.

“The increased competition in the mortgage market in recent months means that a mortgage can be secured for up to 30 years at a relatively low fixed rate for the life of the mortgage,” he said.

“Those with average incomes are missing out and their future financial security is at risk,” he said.

In its motion, IPAV also advocates a new reduced VAT rate for new buildings of 5 percent; a strategy to bring vacant homes to market; the creation of an annual inventory of vacant apartments; and a mandatory building energy assessment (BER) for every private home.

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