The Central Bank is unlikely to water down proposals for tough new restrictions on mortgage lending despite resistance from banks and the Government, Patrick Honohan has said.
The central bank wants to avoid any repeat of the reckless lending and lax regulation that led to the property crash six years ago, and has proposed new limits as prices recover quickly amid a lack of supply in urban areas.
The proposals, which the central bank is due to finalise in the next few days, would require banks to restrict lending above 80% of the value of a home to no more than 15% of the aggregate value of all housing loans.
It would also limit lending in excess of 3.5 times a borrower's gross income.
Patrick Honohan indicated that there was limited room for any easing up after Ann Nolan, head of financial services at the Department of Finance, said that the limits as proposed were not "socially acceptable."
"There's been resistance from different sources. We are trying to see what can we do to achieve the goals of what we set out, are there any elements that need to be re-looked at?" Honohan told reporters.
"The final decision will be taken on this in the coming days and I wouldn't like to anticipate that, I'm not the only decision maker. I'm hoping my views will actually prevail, I'm sure they will probably."
Earlier Ms Nolan said the proposals could cut the property market off from buyers without parents able to provide a large deposit.
"I don't think it should be a position where the only people who get on the property ladder are those who have parents who can give them a big lump sum," Ms Nolan said.
She wrote the Government's response to the proposals last month and made her comments at an IMF conference at Dublin Castle today.
"You can't have a position where people who are earning their own money, renting a long-term property and paying more than a mortgage, have a proven track record can never get on the housing market. I don't think that's socially acceptable," she stated.
The department official also said there is a balance to be found and that she would not like banks to go back to lending above 90% of the value of a home and would not have a problem with reductions below that in certain situations.
Speaking at the same conference, an official from the European Central Bank said the timing of the Central Bank's proposals seemed fairly good and that the ECB would look fairly favourably on the measures.
"We think these kinds of instruments have the potential to play an incredibly important role in crisis prevention in the future," John Fell, deputy director general for macro-prudential policy and financial stability at the ECB, said.
