Residential Property in Ireland

Mortgage Lending Regulations (2015) - Update 1st January 2023

Borrowers in Ireland are subject to the Mortgage Lending Regulations laid initially by the Central Bank of Ireland on the 27th January 2015 and which broadly speaking still apply but were adjusted in January of 2023. The regulations apply limits to mortgage lending by regulated Banks and Building Societies in the Irish market. The intention of the Central Bank was to introduce controlled lending to avoid a repeat of the overheated property market of the prior economy and to reduce the risk of bank credit and house price spirals from developing in the future.

The measures introduced proportionate limits for loan to value and loan to income measurements for both primary dwelling houses and buy to let mortgages. Banks are still nonetheless obliged to apply their existing criteria for stress testing borrowers. The core of the regulations comprise the outer limits that banks and Building Societies must work within in issuing mortgages to buyer of property in Ireland. The lending criteria are summarised as follows:

A. Loan to Value (LTV) for principal dwelling houses (PDH):

• PDH mortgages for first time buyers and non-first time buyers are subject to a limit of 90 per cent LTV. This means that PDH buyers can borrow up to 90 per cent of the value of the property they are purchasing.
• 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 of each lender on an annual basis. This means the Lender have discretion in a cretain amount of cases to allow purchasers to borrow more than 90% of the value of the property. Each lender will have it own criteria for candidates who will qulaify for this exemption, typiclaly this is aimed at first time buyers.
• Housing loans for borrowers in negative equity who wish to obtain a mortgage for a new property remain outside the scope of the LTV limits.

B. Loan to Value (LTV) for Buy to Let mortgages (BTLs)

• BTL mortgages are still 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.

C. Loan to Income (LTI) for PDH mortgages

• PDH mortgage loans are subject to a limit of 4 times loan to gross income for first time buyers.
• PDH mortgage loans are subject to a limit of 3.5 times loan to gross income for all other purchasers.
• 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.
• Importantly switcher mortgages and housing loans for the restructuring of mortgages in arrears or pre-arrears remain outside the scope of the Regulations.

If you are considering buying a property, contact us today and we will will put you in touch with our specialisit property solicitor in your area who will guide you through the often complex and difficult process of purchase. They will advise and assist you with your purchase and mortgage. Our member solicitors' offices are welcoming and their service is personable. They will provide up front detailed written quotations at very competitive rates for all property transactions and they will agrees fees in advance so there are no surprises.