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Central Bank may tighten up rules
28 Jan 2015 20:08
The Central Bank will tighten new mortgage restrictions if they prove not to be tough enough or if there is evidence of a property bubble emerging, Governor Patrick Honohan has said.
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The Central Bank offered some relief to first-time house buyers when it finalised new regulations yesterday.
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This will see the introduction of curbs on mortgage lending aimed at avoiding a repeat of the 2008 property crash.
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The new borrowing rules will be in force when regulation is laid before the Oireachtas.
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Professor Honohan yesterday said this may happen in a matter of days.
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Under the plan, banks will only be able to lend up to a maximum of 80% of a property's value.
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However, there will be an exception for first-time buyers, who will be allowed to borrow up to 90%, up to a limit of €220,000.
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Any loan over €220,000 will require a 20% deposit for that portion of the mortgage.
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A 70% limit will apply for banks lending to investors purchasing buy-to-let properties.
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Minister for Finance Michael Noonan said the new rules would provide certainty to borrowers and ensure that banks continued to engage in prudent lending practices.
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