Written answers

Tuesday, 17 May 2016

Department of Finance

Mortgage Applications Approvals

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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229. To ask the Minister for Finance if he is aware of a continuous fall in recent months in the number of mortgage approvals, in particular for first-time buyers; the action he will take to support home ownership; if he will make a submission to the Central Bank's review of the application of mortgage rules; and if he will make a statement on the matter. [10646/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Recent data published by Banking and Payments Federation Ireland indicates that, in the three month period ending March 2016, the average number of mortgage approvals declined by 13.7% on a year on year basis.  (For first time borrowers, the year on year decline was a little greater at 15%).  In terms of the value of mortgage approvals, the year on year decline was 14%.  However, it should be noted that there was a strong level of mortgage approvals at the end of 2014 and in early 2015 when the Central Bank macro prudential proposals for residential mortgage lending were the subject of public consultation.  As a consequence, some easing off of activity on a year on year basis could be expected when comparing the first quarter of 2016 against 2015.  However, if the early 2016 position is compared to the first quarter of 2014, a more robust level of mortgage loan demand and approval is in evidence.  Also, it should be noted that the amount of residential mortgage finance actually drawdown in the first quarter of 2016 (at around €1bn) was a little higher than the same period in 2015.

There is general agreement that action is required to bring the housing market into a better balance and that the main focus should be on measures which will increase the supply as opposed to the demand for houses.  While there are some measures in place to support first time buyers, such as that contained in section 266A of the Taxes Consolidation Act 1997 which provides for refunds of deposit interest retention tax on savings used to purchase or self-build a property, in general policy action needs to focus more on the constraints that are inhibiting housing supply.  To that end, I will work closely with by colleague the new Minister for Housing, Planning and Local Government who will have the lead role in implementing the comprehensive range of policy actions for housing as set out in the new Programme for Government.

Regarding the review of the macro prudential measurers for residential mortgage lending, the Central Bank has informed me that this will take place later this year with publication expected in November. The Central Bank has indicated that, while the general framework of mortgage rules is intended to be a permanent feature, arising from this forthcoming review the calibration of these rules can be tightened, loosened or left unchanged in response to its analysis of the operation of these rules from inception through summer 2016. However, it has cautioned that, given the value of a stable rules-based system, any changes to the existing measures will require a high evidence threshold.  As part of the review process, the Central Bank has indicated that it will invite written public submissions that provide evidence-based analyses of the impact of the rules and that details on this process will be provided in advance of the submission period. The macro prudential regulations were put in place under the provisions of section 48 of the Central Bank (Supervision and Enforcement) Act 2013 and that Act requires the Central Bank to formally consult with me, as Minister for Finance, on any new regulation it proposes to put in place under that section including in relation to the mortgage lending macro prudential measures.

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