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Central Bank set to relax mortgage lending rules in Ireland

Dublin: The Irish Central Bank has proposed loosening mortgage lending rules in Ireland.

The central bank plans to take steps to encourage more people to purchase homes, thereby alleviating the housing crisis. Although the Central Bank will officially release the report containing the Financial Expert Group’s recommendations today, there has been no indication that the plan will be implemented. Today, Central Bank Governor Gabriel Makhlouf will announce only minor changes to mortgage loan rules. People do not expect major reforms in the face of the inflationary crisis.

Currently, the loan limit is three and a half times the income, but the recommendation to lend up to four times the income may mainly come from the Central Bank.

No major changes are expected to the existing rules regarding deposits. First-time buyers must put down at least 10% of the property’s value, while second and subsequent buyers must put down 20%.

A 30% deposit is required for buyers of buy-to-let properties.

In order to avoid a preemptive collapse,

Ireland’s house price system has been in place since 2015, with the Central Bank conducting extensive research to ensure that mortgagees can meet their repayments and the property market remains stable in the event of a crisis. This is a management to avoid a crash like the one that occurred after 2008.

The Central Bank reviews the rules on an annual basis and makes necessary changes.

The argument for more loans to low-income earners

The central bank indicated in December that one of the consultation proposals was for those earning less than €60,000 to receive loans of up to 4.5 times their income, but there was no indication whether that would be included in today’s announcement.

Increase in mortgage interest rates and liquidity

After the European Central Bank (ECB) raised key rates to 1.25 percent in July, ICS, Finance Ireland, and another non-bank, Avant Money, raised some mortgage interest rates, while AIB raised rates on new fixed-rate loans last week to counteract a potential mortgage market crisis caused by a rise in interest rates. It is also critical to alter central bank policies.

Some housing charities have complained that Ireland’s housing syndicate, which the central bank will release today, is a ploy to keep people out of the market because they are afraid of higher interest rates to combat the threat of inflation and price rises.

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