Banking & Payments Federation Ireland (BPFI) welcomes the opportunity to respond to the Central Bank of Ireland (CBI) call for submissions on the Loan-to-Value (LTV) and Loan-to-Income (LTI) Regulations. These regulations were introduced as part of the macro-prudential mortgage market measures set out in February 2015.
BPFI and its member banks recognise the importance of ensuring the stability of the banking system and of protecting households from the risks of over-indebtedness. We support the CBI in ensuring that the Irish financial system is strengthened and resilient to further risks and challenges. Our members have implemented the macro-prudential mortgage market measures and we are continuing to assess their impact on the mortgage market and the wider economy.
Taking account of the current market place and the quality of new mortgage lending, we are proposing the following recalibration of the regulations to address issues that have emerged since their introduction in February 2015:
- Increase the threshold for the First Time Buyer cohort from ‘up to 90% of €220,000 to ‘up to 90% of €300,000’
- Exempt equity release for home improvements from the LTV regulations
- Extend the two month time limit for valuation reports to four months
- Consider the difficulties encountered by those in the ‘Renters’ cohort and those second time buyers who have recently returned to a minor amount of positive equity
- Include a ‘safety tolerance’ within the current limits to allow for a smooth operation of the regulations
- Limit the data obligations for lenders to the specific requirements of the regulations.
BPFI’s submission to the CBI call for evidence on Macro Prudential Policy for Residential Mortgage Lending is available to download here.