New mortgage lending rules came into effect on 11th February 2015. The Central Bank recognises the fundamental objectives of the new mesures as a way to ‘increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future.’ (FAQ, Central Bank Of Ireland. 2015)
The two main conditions being highly publicised in the media relate to LTV and LTI limits.
LTV (Loan to Value) restrictions for FTB’S are as follows:
- 90% LTV for on the first €220,000 of the value on the residential property, then then 80% LTV limit will be applied to the remaining value. The €220,000 cap was decided by taking into consideration the level and distribution of house prices across the country.
LTV restrictions for non-first time buyers are as follows:
- 80% LTV lending applies to new mortgage lending.
LTI (Loan to Income) restrictions are going to have a huge impact on borrowings for both FTB’s and non-FTB’s. A cap of 3.5 times annual gross income has been applied to all new mortgage lending. With the exception of buy-to-let lending. This measure will greatly reduce borrowing capacities across the board.
Those unaffected by the new measures:
- If you have secured AIP prior to the regulations being imposed , you will not be affected by them for the duration of your mortgage approval.
- If you are refinancing or switching mortgage, LTV and LTI limits are not imposed.
- If you are in negative equity, LTV limits are not imposed. However, LTI restrictions are enforced.
- If you are buying-to-let LTV limits will apply, LTI restrictions will not apply.
If you have any queries about these new measures go to out Contact page and get in touch for a chat.