The Central Bank of Ireland has published new regulations on residential mortgage lending.
Loan to Value (LTV) for principal dwelling houses (PDH)
There are different limits for different categories of buyers:
· PDH mortgages for non-first time buyers are subject to a limit of 80 per cent LTV.
· For first time buyers of properties valued up to €220,000, a maximum LTV of 90 per cent will apply. For first time buyers of properties over €220,000 a 90 per cent limit will apply on the first €220,000 value of a property and an 80 per cent limit will apply on any excess value over this amount.
· The cumulative monetary value of loans for principal dwelling purposes which breach either of these limits should not exceed 15 per cent of the euro value of all PDH loans on an annual basis.
Housing loans for borrowers in negative equity who wish to obtain a mortgage for a new property are not within the scope of the LTV limits.
Loan to Value (LTV) for Buy to Let mortgages (BTLs)
· BTL mortgages are subject to a limit of 70 per cent LTV.
· This limit can only be exceeded by no more than 10 per cent of the euro value of all housing loans for non PDH purposes during an annual period.
Loan to Income (LTI) for PDH mortgages
· PDH mortgage loans are subject to a limit of 3.5 times loan to gross income.
· This limit should not be exceeded by more than 20 per cent of the euro value of all housing loans for PDH purposes during an annual period.
Switcher mortgages and housing loans for the restructuring of mortgages in arrears or pre-arrears are not in the scope of the Regulations.
It is expected that the regulation will be introduced under legislation in the coming weeks.