Central Bank has recently announced that there will be strict new lending criteria for mortgages lending from January 2015.
Central Bank announced that from the 1st January 2015 the majority of home buyers will need a 20% deposit before obtaining a mortgage. This is up from the previous standard 8-10%. This is just one of the new rules introduced by the Central Bank. Central Bank is introducing these draconian seeming rules in an attempt to prevent another property bubble. This means that from the 1st January 2015 if you want to buy a property for €200,000.00, for example, you will be required to have a deposit of €40,000.00. A further restriction being introduced relates to new buyers being restricted to using 3.5 times their income to assess how much they qualify to borrow.
The property market has improved in the past year and the trend appears to be that that it is once again “a sellers’ market” with demand outweighing supply which is how the last property bubble came to be. We anticipate that these new rules will result in a flood of application for mortgage approval before the New Year in a market were competition between financial lenders is widespread. The new rules will undoubtedly be unpopular amongst new buyers but are they necessary going forward?
For more information about buying or selling property please contact Mary Bergin Solicitor at info@faganbergin.com or by telephone at 01 8727655.
