The head of the European Central Bank's new bank supervision arm has cautioned against making bank loans more accessible to house buyers in Ireland.
Danièle Nouy, the president of the ECB's Supervisory Board, said that she agreed with the Central Bank of Ireland's tougher new deposit requirement rules.
They foresee a buyer deposit of 20% and new guidelines on the loan-to-income ratio.
She said lending to potential home buyers had to be prudent in order to maintain the soundness of the banking system.
Responding to a question by Fine Gael MEP Brian Hayes at a meeting of the European Parliament's economic affairs committee, Ms Nuoy said she was supportive of the Central Bank's new stance.
"I have grown up in a country [France] where this was just the normal mortgage," she told the committee.
"I think it's less painful for possible borrowers not to be able to immediately buy [the] real estate asset, flat, house, than to be able to buy it, but then not be able to face the commitments.
"We have seen with the sub-prime crisis in the US that a number of people were more poor after this kind of acquisition than before, so lending has to be prudent.
"Otherwise you will hit the soundness of the banking system or create very serious difficulties for the households that are not able to meet their requirements."
