The Central Bank’s proposal to cap mortgage lending would help to reduce risk in the market, according to ratings agency Fitch.
The body agreed with the Central Bank’s analysis that a lower loan-to-value ratio helped to reduce the frequency of foreclosures on residential property.
It said capping the loan amount based on income would improve a borrower’s ability to pay, which would also help limit exposure.
Fitch also said that the measures could lead to a fall in mortgage lending in Ireland, in the short term at least, as potential borrowers are forced to adjust to the new limits placed on them by banks.
