Terence Flanagan (Dublin North East, Independent)
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64. To ask the Minister for Finance if he will address a matter (details supplied) regarding mortgages; and if he will make a statement on the matter. [20990/15]

Michael Noonan (Limerick City, Fine Gael)
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Central Bank regulated lending institutions, including those in which the State has a significant shareholding, are independent commercial entities.  Therefore, subject to overall compliance with Central Bank prudential and consumer protection regulatory requirements, decisions on individual credit applications are a matter for an individual institution. As Minister for Finance, I have no role in such day to day decision making of regulated financial services providers.

On a general level, mortgage lending decisions must be undertaken on a sustainable and prudential basis by financial institutions and must also conform with relevant regulatory requirements, both in relation to the financial institution itself and also in the best interest of the customer.  In this regard, I have been informed by the Central Bank that prior to offering a product or service a bank must gather and record sufficient information from the consumer appropriate to the nature and complexity of the product or service and must carry out an assessment of affordability to ascertain the personal consumer's likely ability to repay the debt over the duration of the agreement, in accordance with the requirements of the Consumer Protection Code 2012.  In the case of all mortgage products provided to personal consumers, the assessment must include consideration of the results of a test on the personal consumer's ability to repay the instalments, over the duration of the agreement, on the basis of a 2% interest rate increase, at a minimum, above the interest rate offered to the personal consumer. This test does not apply to mortgages where the interest rate is fixed for a period of five years or more.

The Deputy will also be aware, the Central Bank of Ireland has put in place new macro prudential regulations for residential mortgage lending. These regulations provide that, in respect of mortgage for a principal dwelling, first time buyers will be subject to a maximum mortgage LTV of 90% for a property valued up to €220,000, and subject to an 80% LTV on any excess value above that amount. For non-first time buyers, a mortgage will be limited to 80% of the value of a principal dwelling house. In addition, there is a loan to income limit of 3.5 times gross annual income. However, these macro prudential regulations also allow a certain flexibility and lenders can exceed these limits when assessing individual cases.  However, the final decision on whether or not to grant a mortgage, or the amount of credit that should be provided in an individual case, remains a commercial matter for an individual lender having regard to its commercial position and other relevant factors.