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Central Bank Review of the Macroprudential Measures for Residential Mortgage Lending

28th November 2018

Banking & Payments Federation Ireland (BPFI) notes the outcome of the latest Central Bank of Ireland review of the macroprudential measures for residential mortgage lending.

BPFI member banks will continue, in accordance with the macroprudential measures, to provide support for those wishing to purchase a home.  In so doing, they recognise the importance of ensuring the stability of the banking system and of protecting households from the risks of over-indebtedness.

Mortgage approval and drawdown statistics compiled and published by BPFI reflect the pattern of growth in the mortgage market during 2018 to date. The total value of mortgage drawdowns in the first nine months of the year was €6.1 billion compared to €5.1 billion in the same period of 2017.  FTBs and mover purchasers accounted for around 48.7% and 32.8% of this total in the third quarter of 2018 respectively.  The level of approval activity by lenders has also increased, amounting to €8.6 billion to end-October compared to around €7.8 billion during the same period in 2017.

However, BPFI member banks have encountered a number of operational challenges which have been advised to the Central Bank.  For example, a ‘smoothing process’ as between one year and the next would better enable lenders to manage the flow of approvals through to drawdown in a more measured way and still ensure that, over time, the objectives of the macroprudential rules are met.  Also, a ‘transition period’ between the announcement of any change to the rules and implementation of that change would better enable lenders to deal with, for example, the instance where mortgage approval is provided pre-announcement but actual mortgage drawdown takes place post-announcement.

BPFI’s Acting Chief Executive, Maurice Crowley, states:

“Managing and predicting how mortgage approvals translate into actual drawdowns present an on-going challenge to lenders to come within the exemption limits set under the macroprudential measures. Consequently, we have previously asked the Central Bank to take into account the operational challenges which lenders face.”


Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland.  Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Jillian Heffernan, Head of Communications, 087 9016880

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