Fianna Fáil Raises Concerns Over New Mortgage Rules

Thousands of non-first time home buyers are at risk of being trapped by the Central Bank's "onerous" 20% deposit rule, Fianna Fáil finance spokesperson Michael McGrath has said.

Responding to new mortgage rules published by the bank, Deputy McGrath said: "In our submission to the Central Bank, we had expressed grave concern at how the rules as initially proposed would impact on first time buyers. On first glance, it would appear that a sensible balance has been struck between the legitimate aspiration of families to own their own home and our collective determination to avoid the mistakes of the past. However, I am very concerned with the rules that are being proposed in relation to non-first time buyers as they do not take account of the complex housing needs that many people currently face."

Under the new rules the bank states that "mortgages for non-first time buyers are subject to a limit of 80 per cent LTV”; Deputy McGrath called on the bank to clarify what is meant by this: "In the absence of any clarification from the Central Bank, this would appear to mean that anyone who already has a mortgage and wishes to move home for whatever reason needs a 20% deposit in respect of the new mortgage.

He added: "This could result in an entire generation of people being trapped in houses and apartments which are no longer suitable for their needs even though they have demonstrated a clear capacity to meet their existing mortgage payments. It is simply unfair that a family who may never have missed a mortgage payment and now wishes to move to a new home is faced with an onerous 20% deposit requirement on the value of the new mortgage. For a family wishing to trade up to a €350,000 home they will now need to have €70,000 in cash having cleared their first mortgage with the proceeds from the sale of their home. This will prove impossible for many families.

"We will study these new rules in greater detail and provide further comment in the coming days."

(MH/CD)