Brendan Burgess
Founder
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Sindo Opinion 26th October
But because the rules will allow the banks to go above these limits for around one- fifth of home loans issued, they are not excessively rigid. Lenders will have some leeway (but not too much) in giving higher loans if they see the borrower has exceptional circumstances. That is as it should be, not least because no single set of rules can ensure that banks don't behave badly or stupidly.
Both of the proposed measures are thoroughly sensible and should have always been in place. They should help return retail banking to the safe-if-staid kind of business it used to be in the past, and still is in many other countries where such limits are in place.
If the Central Bank is be criticised, it is for not signalling clearly that it would tighten these measures further if it believes total lending is growing too fast in the future. It could also be criticised for not introducing the rules sooner, preferably in the depths of the crisis when memories were fresher and fewer first-time buyers' expectations would have been disappointed.
Rather than promising costly and socially damaging subsidies, the Government would be better off providing some real leadership by backing the Central Bank and explaining why borrowing too much before having saved enough is dangerous for individuals and dangerous for society.