Pearse Doherty (Donegal, Sinn Fein)
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79. To ask the Minister for Finance if he has raised the issue of a review of the macroprudential lending rules with the Central Bank of Ireland; and if so, the context and the result of any such discussions. [5131/16]

Michael Noonan (Limerick City, Fine Gael)
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In February 2015 the Central Bank of Ireland, in line with its mandate to safeguard financial stability, put in place macro-prudential measures for new residential mortgage lending.  These measures apply proportionate loan-to-value and loan-to-income limits to mortgage lending by regulated financial service providers in the Irish market.  The key objective of these measures is to increase the resilience of the banking and household sectors to the housing sector and to reduce the risk of bank credit and house price spirals from developing in the future. 

The Central Bank is independent in the formulation and implementation of these macro prudential measures.  In that context, the Deputy will be aware that when he appeared before the Oireachtas Finance Committee last January the Governor of the Central Bank stated that the Bank is firmly committed to deploying such macro prudential tools on an ongoing basis, with periodic reviews to ensure that the measures are appropriately calibrated.  In that context he also stated that he expected the first review of the mortgage rules to be published by the Bank by November this year.  This review will be based on an analysis of the evidence provided by data on the first year of the operation of the rules, while taking into account other factors that may have influenced the mortgage market during this period.  He also indicated that the Central Bank is open to tightening or loosening the calibration of these rules in response to the evidence but also referenced that the value of stability in a rules-based framework means that the evidence threshold to justify adjustments to these rules is significant. He noted that tools such as mortgage macro prudential rules and the recently introduced system of counter-cyclical capital buffers would have mitigated the costs of the boom-bust credit cycle in Ireland in the mid-2000s and that the Irish economy remains vulnerable to adverse shocks, with limits to household leverage offering protection to households and banks.