Construction BUSINESS

Review Confirms Core Elements of Mortgage Measures Remain Unchanged

 Breaking News
  • Tech Companies Continue to Dominate Dublin City Centre Prime Office Market International tech companies continued to dominate the capital’s commercial office market in 2017 and are expected to do so again this year. Analysis from the Lisney report, Lisney 2018, ‘Our View’ highlights the impact these large and rapidly expanding companies are having on the market. Facebook and Google alone are on track to occupy 4% of all [...]...
  • PM Group Acquires UK Specialist Engineering Firm PM Group has announced the acquisition of PROjEN, a 100-person multi-disciplinary engineering firm based in the UK, with offices near Manchester and in Edinburgh. The company has joined PM Group as PM PROjEN. PM PROjEN provides multidisciplinary engineering and project management services in the chemical, petrochemical, advanced manufacturing technology and energy sectors. “The acquisition of PM [...]...
  • House Prices – More Onerous Rules For Non First-time-buyers Exacerbating Supply Issue The very slight moderation in house price inflation in the latest CSO house price data – from 11.6pc in the year to October to 11.3pc in November in Dublin and from 12.8pc to 11.7pc in the rest of the country in the same period, comes as no surprise as housing supply is still a gulf [...]...
  • Residential Property Prices Rise by 11.6% in the Year to November In the year to November, residential property prices at national level increased by 11.6%, according to the CSO’s Residential Property Price Index November 2017 report. This compares with an increase of 11.8% in the year to October and an increase of 9.2% in the twelve months to November 2016. In Dublin, residential property prices increased by [...]...
  • PM Group Appoints Two New Board Directors Project Management Holdings (PM Group), the award-winning international project delivery firm headquartered in Ireland with over 2,200 people worldwide, has announced the appointment of Andy Rayner and Anthony O’Rourke to its Board. Andy Rayner (pictured right) is the Group’s Pharma Sector Director and Chief Technology Officer (CTO). Andy has worked with PM Group since 1989 and has [...]...

Review Confirms Core Elements of Mortgage Measures Remain Unchanged

Review Confirms Core Elements of Mortgage Measures Remain Unchanged
December 04
10:45 2017

The outcome of the annual review of the residential mortgage measures has been published by the Central Bank of Ireland. The review is based on analysis of mortgage lending data in the context of wider housing market developments. The review considered the appropriate setting for the measures in 2018, given the current conditions and the outlook for the credit and housing markets. It also examined any practical implementation issues indicated by the Central Bank’s ongoing monitoring and supervision of regulated mortgage providers.

The mortgage measures were introduced as a permanent feature of the market in 2015 to increase bank and borrower resilience and ensure the system can better withstand future economic shocks. The measures are a key element of the Central Bank’s macro-prudential policy in line with our mandate to safeguard financial stability and protect consumers. In accordance with our mandate, the Central Bank is committed to ensuring that the role played by mortgage credit in the wider housing market remains sustainable. The measures are not designed to target a specific level of, or growth in, house prices.

Announcing the outcome of the Review, Governor Philip R. Lane (pictured above) said: “Our analysis suggests that the level of house prices is broadly consistent with current economic developments but it remains important to mitigate the risks for households and banks in the event of a future decline in house prices. On this basis the core elements of the measures, the loan to income (LTI) and loan to value (LTV) limits, will remain unchanged in 2018. In particular, lending will continue to be limited to 3.5 times income. This is the anchor of the measures and an essential constraint on excessively risky lending.

“However, our analysis indicates that the measures could operate more effectively by introducing separate loan to income allowances, similar to those we introduced for loan to value allowances last year. From January 2018, there will be separate LTI allowance pools for FTBs and SSBs: up to 20 per cent of the value of new lending to FTBs and up to 10 per cent of the value of new lending to SSBs will be permitted above the 3.5 LTI limit.

“These allocations broadly reflect current lending patterns in excess of the LTI limit to FTBs and SSBs. In combination with the separation of LTV allowances for FTB and SSB groups that we introduced last year, this revision delivers a simpler, more sustainable long-term policy framework. The larger allowance for above-ceiling lending to FTBs compared to SSBs reflects the different characteristics of these two groups. In particular, first-time buyers are typically younger, with current income levels lower relative to expected future income levels. However, the measures remains sufficiently flexible to allow us to respond to risky lending developments, should they arise in either buyer group.”

The detailed report sets out the analysis underpinning the changes made following the Review. The report also details a further technical amendment to the mortgage measures in relation to calculations on the value of collateral in the case of mortgages issued for construction purposes. The technical amendment ensures that the current prudent practice in the market, of taking the lowest available valuation for mortgages financing construction works, such as in the case of renovations, continues into the future. This amendment is not expected to have a material impact on the market, as it reflects the most common practice.

The Central Bank will continue to monitor developments as part of the annual review of the mortgage measures.

Governor Lane concluded: “We will continue to monitor developments through our annual cycle of reviews. We stand ready to adjust these borrower-based measures and/or other macro-prudential policy tools as may be appropriate to safeguard the long-term sustainability of Irish mortgage lending and the stability of the wider financial system.”

About Author

admin

admin

Related Articles


Constrcution Summit

PROMO – Construction Summit 2016 – Sustaining the Momentum

Lean Construction Ireland – Enhancing Ireland’s Competitive Advantage

The Magazine – Construction Business

The Magazine – Construction Summit

Upcoming Events

  • January 13, 2018Bouw&Reno
  • January 16, 2018Swiss Bau
  • January 17, 2018Formex
  • January 18, 2018Haeuslbauer
AEC v1.0.4

New Subscriber





Subscribe Here



Advertisements