The Governor of the Central Bank of Ireland, Philip Lane, announced the results of the Central Bank’s review of its 2015 Mortgage Regulations on 23 November 2016. The Central Bank’s view is that the Regulations are appropriate, have been successfully implemented and are leading to a reduced probability of default under mortgages taken out within the framework of the Regulations. A number of changes are being made to the Regulations, with effect from 1 January 2017. These changes are designed to “improve the sustainability and effectiveness of the current framework” and are set out in detail in the “What is changing, and what will remain the same?” table later in this Briefing. The changes can be summarised as follows:
first-time buyers must now provide a minimum deposit of 10% of the property value, with a loan-to-value (LTV) ceiling of 90%;
- 5% of the value of new lending to first-time buyers will be allowed above the 90% LTV limit for those buyers;
- 20% of the value of new lending to second and subsequent buyers will be allowed above the 80% LTV limit for those buyers;
- the valuation period has been extended from 2 months to 4 months; and
- the scope of the Regulations will be linked to the definition of “consumer” in the Consumer Protection Code (and to the definition of “consumer” used by the Financial Services Ombudsman) to confirm that large commercial landlords and developers are out of scope.
While the Central Bank described these changes as “limited refinements”, others have viewed them as significant in practice. The changes are welcome, and it is hoped that they will have a positive impact on the supply of mortgage loans.