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. 

The Central Bank offered some relief to first-time house buyers when it finalised new regulations yesterday.

This will see the introduction of curbs on mortgage lending aimed at avoiding a repeat of the 2008 property crash. 

The new borrowing rules will be in force when regulation is laid before the Oireachtas.

Professor Honohan yesterday said this may happen in a matter of days.

Under the plan, banks will only be able to lend up to a maximum of 80% of a property's value. 

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.

Any loan over €220,000 will require a 20% deposit for that portion of the mortgage.

A 70% limit will apply for banks lending to investors purchasing buy-to-let properties.

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.

Central Bank press conference on lending regulations

"We reserve the right to tighten them and ramp them up," Professor Honohan told a news conference today.

He added that if the new rules prove to have been introduced in good time, this should not be needed.

Professor Honohan also said that there is a housing problem in Dublin, where price rises are outstripping the rest of the country as housing supply returns at a slower rate than expected.

Property prices in Dublin rose 22% year-on-year in December, new CSO data showed today. 

Mr Honohan said new mortgage lending restrictions were being introduced to make sure the problem did not get worse but that other action would be desirable elsewhere. 

"We're trying to make sure that problem doesn't get worse. Some of these challenges are difficult challenges, certainly the return of supply is slower that I would have expected," he told today's news conference.

New lending rules not a 'panacea'

Meanwhile, an organisation that helps people with mortgage difficulties has said new lending rules are really trying to prevent a future credit bubble.

Speaking on RTÉ's Morning Ireland, Ross Maguire of New Beginning said the new rules are not a panacea and the property market remains dysfunctional.

He said issues around supply of houses, planning, regulation and taxes all need to be addressed.

Read the Central Bank's FAQs on new mortgage plans

The chief executive of the Independent Mortgage Advisers' Federation has said that the new regulations will result in an initial dampening down in property prices, but that this had already happened in the last quarter of 2014.

Speaking on RTÉ's Six One News, Michael Dowling said that property prices in Dublin had fallen by .1% in the latter quarter of 2014 and that the market had started to correct itself.

There is no doubt that the changes will impact on prices, he said.

However, he said that the impact will also be felt by buyers who will need a higher deposit to buy and who will have less ability to borrow based on the gross income multiples that now apply.

The chairperson of the national housing charity Threshold has welcomed the new measures by the Central Bank.

However, Senator Aideen Hayden said she would like to see them revisited as the economy improves.

Speaking on RTÉ's News At One, she said she expects to see further pressure on the rental market and that she would like to see rent regulation introduced.

Fianna Fáil finance spokesman Michael McGrath welcomed the easing of restrictions for first-time buyers.

However, he said it would prove impossible for many non first-time buyers to meet the 20% deposit requirement if they wanted to move out of homes that no longer suited their needs.

Sinn Féin finance spokesman Pearse Doherty gave a broad welcome to the announcement and said the rules should help to establish a normal, healthy lending market.

Minister for Health Leo Varadkar said the new limits on mortgage lending are designed to avoid the return of a property bubble but said they cannot work in isolation.

Mr Varadkar said an increase in supply is also necessary to prevent property prices spiking particularly in cities.

However, he said the Central Bank measures did make sense.

Mr Varadkar said: "If you go back ten, 15 or 20 years ago, it wasn't usual for people to have to have a substantial deposit before they bought a house and banks were restricted in how much they could lend in terms of a multiple of your income.

"It's not just about protecting the banks, it's about protecting the public from another credit-fuelled property bubble which is in nobody's interest."