Central Bank eases mortgage lending rules

From January, first-time buyers will be allowed to borrow up to 4 times their household income.   Currently the maximum loan to income multiple is set at 3.5 times one’s income (single or combined). For example, a person earning €80,000 per year would be able to borrow €280,000 when applying for a mortgage. From January, the same borrower will now be able to borrow €320,000.  

Interestingly, the ease in rules, allows for first-time buyers who apply for a top-up loan or re-mortgage with an increase in the principle may also avail of the 4 times loan to income multiple, provided the property remains their main home.

The definition of a first-time buyer is also broadened to include borrowers who are separated, divorced, or have undergone insolvency or bankruptcy and no longer have an interest in their previous property.  

The income multiple will not change for second-time buyers, therefore the loan to income multiple of 3.5 times will still apply. However, the requirement to have a 20% deposit will be reduced to 10% putting them in line with the same deposit requirements as first-time buyers.

Publishing the review this morning, The Governor of the Central Bank, Gabriel Makhlouf said “The mortgage measures are essential in our mission to serve the public by maintaining the financial stability of the economy and households as a whole, so it is a good policy practice to review these given the broader changes in the economy.   While not always immediately visible to people in their daily lives, the benefits of the measures are long term”.

Please get in touch with a member of the Biograph mortgage team if you want to discuss how these changes may impact your future mortgage application.