Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context

Question 64: To ask the Minister for Finance if he is satisfied with the current mortgage lending rules in terms of allowing potentially viable mortgage holders to buy their own homes; and if he will make a statement on the matter. [25484/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The decision on whether or not to grant a mortgage to a borrower must remain a commercial decision for the lending institution concerned. It is important that each lending institution is allowed to assess properly and independently the risks that it is considering when deciding whether or not to approve a mortgage. Mortgage lending must be undertaken on a sustainable and prudential basis by financial institutions and conform fully with the regulatory requirements, both in relation to the financial institution itself and also the safeguarding of the borrower's interests. When providing a product or service to a customer, a financial institution must comply with the 'Knowing the Customer' and 'Suitability Provisions ' of the Consumer Protection Code, issued by the Central Bank. This process involves, inter alia, gathering relevant information from the customer about his/her financial situation, individual circumstances and needs.

Based on this information, the financial institution is required to complete a 'Suitability Process ', where only products suitable to that particular customer are offered. While affordability is a prime component of suitability, a fuller consideration of a customer's individual circumstances and needs would be required in order to comply with the suitability provisions of the Code.

In this regard, when assessing suitability - in relation to mortgage products - the Central Bank is of the opinion that factors such as employment, income and repayment capacity, purpose of borrowing, type and length of loan, plans for early redemption, attitude to fixed/variable interest, age, savings track record should be considered. As suitability is specific to the circumstances and needs of each individual customer, financial institutions should be satisfied that written statements reflect an assessment of each customer's specific circumstances and needs, thereby meeting the 'Knowing the Customer ' requirements of the Consumer Protection Code.

The Consumer Protection Code may be accessed at www.centralbank.ie.