# Central Bank mortgage measures remain unchanged



## Brendan Burgess (28 Nov 2018)

*28 November 2018

https://www.centralbank.ie/financia...ity/macro-prudential-policy/mortgage-measures
*

5 Conclusions 

The mortgage measures as currently calibrated continue to promote a sustainable role for mortgage lending in the wider housing market and are contributing to financial stability.  


The analysis carried out for the 2018 review of the mortgage measures has
confirmed that the aims of these measures, to increase bank and borrower
resilience and reduce the risk of bank credit-house price spirals from
emerging, are being met. The analysis indicates that the mortgage measures
as currently calibrated, are achieving their objectives and are contributing to
overall financial stability. As a result, the LTV and LTI limits for the various
borrower categories and the related lending allowances above those limits
will remain unchanged in 2019.


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## Brendan Burgess (28 Nov 2018)

A nice table explaining the existing measures


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## Brendan Burgess (28 Nov 2018)

*3 Risk characteristics of new mortgage lending *


While there have been shifts in the distribution of
LTVs and LTIs indicating the measures are more
binding, there has been little change in average LTVs
and LTIs and no sign of a generalised deterioration in
lending standards at present. The relative prevalence
of FTB and SSB loans with LTI and LTV allowances,
respectively, remains broadly similar to that in 2017.
Portfolio level analysis across the loan books of the
Irish retail banks does not point to any significant
weakening of resilience.


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## Brendan Burgess (28 Nov 2018)

This is my summary


So it's easy for First Time Buyers to get more than 3.5 times income, but it's impossible to get more than 90% LTV.



Brendan


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## Sarenco (28 Nov 2018)

The only real gripe most people have with these rules is that the quota of exemptions that each lender can grant is fixed on a calendar-year basis (as opposed to rolling 12-month periods).

Unless I missed it, that issue seems to be completely ignored in this review.  Which seems odd.


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## Brendan Burgess (28 Nov 2018)

Sarenco said:


> Unless I missed it, that issue seems to be completely ignored in this review. Which seems odd.



Very odd indeed.  But maybe they are keeping it like this to give people something to gripe about? 

Brendan


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## cremeegg (28 Nov 2018)

The discussion around this topic seems very basic to me. What effect are the rules having on bank stability, what effect are the rules having on house prices. This is primary school stuff.

The important question is when regulation restricts the action of the free market, where will the unrelieved pressures find an outlet.

Here is one possible answer. https://www.askaboutmoney.com/threads/50-of-residential-property-purchases-are-for-cash.210580/


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## Brendan Burgess (28 Nov 2018)

cremeegg said:


> The important question is when regulation restricts the action of the free market



What are you suggesting? 

That we should have no lending restrictions so that the lenders will end up competing with each other for business by offering 100% mortgages and 5 times loan to income? 

Brendan


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## cremeegg (28 Nov 2018)

Why do I have to be suggesting anything. I am wondering what way or ways the market will find to reassert itself.

I just think that when regulation restricts the market, pressures build up that will be relieved in some other way. People want somewhere to live, if regulation makes it more difficult to do that through a mortgage financed purchase, that demand will find some other outlet. Maybe rents will rocket !

I am suggesting (as an analysis, not as a policy prescription) that the existing regulation may be tilting the market away from buyers dependent on a mortgage to cash buyers.


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## Brendan Burgess (28 Nov 2018)

Sorry, I thought that you were implying something, but I see now that you are not.

The market creates its own pressures and problems.  Lenders have to be restricted. They naturally will compete with each other to the detriment of all of us.  The depositors will lose or the taxpayer will have to bail out the depositors. 

Brendan


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