Oireachtas Joint and Select Committees

Thursday, 10 May 2018

Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach

Banking Sector: Quarterly Engagement with the Central Bank of Ireland

9:30 am

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The banks are clear on what they need to do to meet that.

I will raise one other issue and come back in later to discuss tracker mortgages. The definition of a "first-time buyer" in the context of the macroprudential rules makes a huge difference, particularly when the Government's help-to-buy scheme is considered. In the case of a house on sale for €400,000, if I am a non first-time buyer, I need a 20% deposit or €80,000 whereas a first-time buyer requires 10% or €40,000 and can then claim half that back under the help-to-buy scheme, which means the deposit required is €20,000. That is a dramatic difference. This is not only because of Central Bank rules because the scheme is a significant factor as well. What is the Central Bank's rationale for having such a different approach for non first-time buyers? I am thinking of people who may have bought ten or 15 years ago and who may be coming out of negative equity or who might not have much equity but their homes are unsuitable because their families have grown and they need more bedrooms. However, they are faced with the prospect of a 20% deposit requirement, even though their repayment capacity may be good and, therefore, they are stuck. What does Professor Lane say to those people?

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