Seán Kyne (Galway West, Fine Gael)
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23. To ask the Minister for Finance his views that the new regulations under consideration by the Central Bank of Ireland, such as a requirement to have 20% of a deposit of house price to secure a mortgage and other restrictions being considered by financial institutions, such as restricting mortgage lending to persons under 40 years of age only, overlook substantial causes of the housing and construction bubble, and the subsequent financial turmoil, which were the availability of 100%, 110% and higher mortgages and that these restrictions will hamper a person's ability to purchase a home with further consequences for the rental market and ultimately contribute to an increase in homelessness; and if he will make a statement on the matter. [45970/14]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Central Bank of Ireland has recently 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. A copy of the Consultation Paper is available on the Central Bank website.



The Central Bank is undertaking a wide public consultation process on its proposals and any person who has a view or comments on the proposals can submit them electronically to the Central Bank at by 8 December 2014 and these will be taken in to account by the Central Bank in its further consideration of the matter.

I am on the record as recognising the importance of sustainable and sensible mortgage lending and that there should be no return to the cycle of boom and bust mortgage lending. However, there is also a need to be mindful of the real needs of the economy and that any new macro prudential measures will not cause an undue distortion of economic and prudent lending activity. While I recognise that this is an area that falls within the independent competence of the Central Bank, there is a case to be made for introducing such measures in a more graduated manner for example in relation to the proportion of private home mortgages initially that can exceed the 80% LTV threshold.  Some adjustment to the proposals would allow home buyers and lenders time to adapt their economic behaviour and adjust to the new regulatory realities.

It is noted that a number of other countries who have introduced similar macro prudential measures have also adopted a graduated implementation approach. My Department's submission to the Central Bank is being finalised at present and will be submitted by the due deadline of Monday next.

As the Deputy will also be aware, Budget 2015 contained 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.