Andrew Doyle (Wicklow, Fine Gael) | Oireachtas source

The LTI limit of 3.5 times income has not been changed. When I tried to get a mortgage 30 years ago banks applied prudent lending rules for mortgages to purchase or build a home. The LTI limit at that time was set at 2.5 times the income of the private earner in addition to 1.5 times the secondary income. Rule-of-thumb measures have traditionally been applied to mortgage lending. During the bubble, however, no rules applied and lending institutions - which have since left the Irish market - engaged in aggressive advertising to encourage people to remortgage their homes or set up current accounts on their mortgage in which they retained a certain amount. Weekend events were also held in hotels in provincial towns to highlight the value of investment properties abroad and encourage people to remortgage their homes.

The reason the Central Bank introduced new rules on mortgage lending was to control lending to first-time buyers and give them a small advantage over buyers of second and subsequent houses. Under these rules, first-time buyers could secure mortgages of 90% of the sale value for houses priced at up to €220,000. Different criteria applied for higher price houses. All the submissions received by the Central Bank have been published on its website. The submission from the Department of Finance proposed that the 90% threshold be applied to the first €320,000 cost of a home, in other words, it proposed to increase the current figure by €100,000. The Central Bank, in its wisdom, decided to remove the limit.

These changes are not aimed at increasing profits for developers or anyone else but to encourage house building. Even if we build so-called affordable houses, the basic economic fact remains that supply must meet demand if we are to get stability in the market. A graph of house-building figures for previous decades would show a spike as the rate of house building increased rapidly followed by a trough as it fell almost twice as quickly. We need to bring stability into the market and offer certainty for buyers.

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