A material number of potential mortgage customers will be unable to get approval due to new Central Bank restrictions, Bank of Ireland's chief executive Richie Boucher has said.
Addressing politicians at the Oireachtas Finance Committee, Mr Boucher said that it was considering whether to make a submission to the Central Bank on the issue.
The Central Bank wants home buyers to pay a 20% deposit when buying a home, with the proposals slated to come into force from the start of next year.
Meanwhile Mr Boucher received criticism for the rates it levies on its existing mortgage customers.
Fianna Fáil’s Michael McGrath said the cost of funding had reduced substantially in recent times but the bank’s standard variable rates had not fallen in six years.
Mr McGrath asked how the bank could justify the rate, particularly when compared to what was available to customers in Northern Ireland.
Mr Boucher said the margin the bank made on these loans was not exorbitant, and it was providing mortgages with significant liquidity risks.
He said they were a commercial business in a competitive market and mortgage rates were subject to an ongoing review.
However Mr Boucher also said Bank of Ireland would not “slavishly” follow the lead of banks like Ulster Bank and AIB, which have reducing rates in recent weeks.
Addressing the committee on bank’s performance in recent years, Mr Boucher said Bank of Ireland had repaid the taxpayer €6bn in cash and State retained a valuable 14% stake in the bank.
This shareholding had a notional value of €1.3bn, he said.
Mr Boucher said a lot of progress had been made in the last twelve months and this was assisted by the improving economic climate.
He said the bank was now profitable and generating capital, and it had passed the ECB stress tests.
However Sinn Féin’s Pearse Doherty took issue with Mr Boucher's comments on repayments to the taxpayer, saying he was being “mischievous”.
He said there was €1.5bn in fees paid for coverage under the bank guarantee that had nothing to do with the State’s cash injection.
The rest of the figure was made up of coupons and the capital injected into the bank was not paid back.
He said the bank should be more upfront on this, however Mr Boucher said the figures he cited were from the Department of Finance.
