Seán Kyne (Galway West, Fine Gael)
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19. To ask the Minister for Finance in the event of a new stipulation being introduced that persons purchasing homes to act as their primary residence are required to have 20% of the purchase price as a deposit, his plans, while being mindful of the great need to promote sensible, sustainable lending practices, to introduce measures to assist persons in securing finance to purchase a home; and if he will make a statement on the matter. [41746/14]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Central Bank of Ireland has published a consultation paper regarding macro-prudential measures for residential mortgage lending in Ireland. The Central Bank measures, as set out in the consultation document, would place restrictions on the loan to value (LTV) and loan to income (LTI) ratios banks can apply when lending for house purchase. They would apply to all mortgage lending in Ireland by regulated firms. The Central Bank has indicated that the primary objective of these measures is to increase the resilience of the banking and household sectors to the property market and to try to reduce the risk of bank credit and housing price spirals from developing in future.

The specific measures proposed for principal dwelling houses are to:

- restrict new lending to a limit of 80% of the value of the property;

- restrict new lending to a maximum of 3.5 times gross income.  

However, the Central Bank has also stated that banks will be able to lend, in some instances, above these threshold limits. However, any lending in excess of the loan to value ratio must be limited to no more than 15% of the value of new loans issued and, in respect of exceeding the loan to income ratio, to no more that 20% of the value of new loans.  Other exemptions will also be available in certain circumstances.

As the Deputy will be aware, Budget 2015 contains a number of measures to support a functioning housing market. In particular, in order to support first time buyers to save towards a deposit for their first home, DIRT will be refunded in respect of savings up to a maximum of 20% of the purchase price. This measure will run until the end of 2017.

My Department is also committed, under the Construction 2020 strategy, to examine the concept of a mortgage insurance scheme and how it might benefit new housing completions in the Irish market. The objective of any such scheme would be to help ensure the adequate availability of mortgage finance on affordable terms for new completions, particularly for 'First Time Buyers', as the economy recovers. Of particular interest would be the means by which such schemes can support greater levels of investment in new housing, with the associated benefits for the construction sector and ultimately for the consumer. To further assist the evaluation and consideration of such a measure, I have recently written to the Chairperson of the Joint Oireachtas Committee on Finance and Public Expenditure & Reform. I have asked the committee to consider the matter of mortgage insurance in an Irish context and, drawing on the experiences of other countries, to prepare a report on the issue.