Joan Burton (Dublin West, Labour)
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38. To ask the Minister for Finance if his Department has had discussions with the Central Bank regarding mortgage deposit requirements for prospective first-time buyers seeking to purchase their home who cannot save a sufficient deposit due to rising residential rent costs; and if he will make a statement on the matter. [33937/16]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Central Bank, which has an independent mandate to preserve and protect financial stability, introduced mortgage lending regulations to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future.  The current regulations, which were introduced in February 2015, provide for certain loan to value (LTV) and loan to income (LTI) restrictions on residential mortgage lending by Central Bank regulated institutions.

Last June, the Central Bank initiated a review of these macro prudential measures and to assist the process it launched a call for evidence based submissions.  My Department contributed to this process and its submission is available on the Department's website at the following link: www.finance.gov.ie/what-we-do/banking-financial-services/consultations/departments-submission-central-banks-review-0. In summary, the Department's submission recognises the overall importance of macro prudential controls on the extension of credit for housing purposes but it also suggested that it would be appropriate at this time to make some adjustment to the existing measures to have regard to, in particular, the position of first time buyers; for example, it asks the Central Bank to consider the adoption of a "capacity to pay" test (e.g. the payment capacity of potential purchasers based on rent paid over a five year period to be off set against the current deposit rules), an increase in the allowance for lending for primary dwelling mortgages in excess of the LTV and LTI caps to 20% and 25% respectively and that the first time buyer LTV limit of 90 per cent be applicable to the first €320,000 value of a property (compared to the current limit of €220,000). It is expected that the Central Bank will shortly report on the outcome of its review.

Separately, as the Deputy will be aware, the Government also provided for a "Help to Buy" scheme in the recent Budget and this was discussed with the Central Bank to ensure that the rebate under the scheme would qualify in meeting the deposit requirement for first time buyers under the Central Bank's macro-prudential rules.