The CEO of St Francis Credit Union is warning the loosening of mortgage lending rules coupled with a rise in interest rates could see borrowers find themselves in financial difficulty very quickly.
The Central Bank yesterday announced first time buyers will be able to borrow up to four times their gross income.
From January, new lending rules mean that first time buyers will be able to draw down a mortgage four times the value of their annual salary – an increase from the current 3.5 times rate.
Former owners will now only require a 10% deposit when moving up the property ladder and divorcees, those separated or those who’ve experienced insolvency will now be viewed as first time buyers by lenders.
The changes come with a warning from the Central Bank that the new rules should be seen as “ceilings not targets” for lenders.
Fears have been expressed in some quarters that house prices could rise as a result, but CEO of St. Francis Credit Union in Ennis, Louis Fay, says it’s the financial difficulty prospective buyers could find themselves in that he’s concerned about.
Listen back to the full interview here:
Douglas Hurley from DNG O’Sullivan Hurley Auctioneers doesn’t foresee contractors increasing house building in response to the new mortgage lending rules.
The Ennis auctioneer says it’s construction costs, not demand, that’s preventing contractors from building and that the new borrowing rules do nothing to address that.
