Construction BUSINESS

‘Restrictions are not helping the housing market’ tells Construction Industry Federation to Central Bank

To rest its mortgage lending rules for first-time buyers at a face-to-face meeting this week, the Construction Industry Federation rushed the governor of the Central Bank of Ireland.

Philip Lane met the CIF delegation, led by director general Tom Parlon and president Mick Stone, for about 90 minutes at his Dame Street offices on Tuesday.

They pushed the CIF’s case for a loosening of macro prudential habits at a time when data shows the number of first-time buyer permissions were down 27 per cent year-on-year in the three months to the end of February.

“We made the case that the Central Bank restrictions are not helping the housing market,” Mr Parlon said to The Irish Times. “They give no credit to a couple seeking a mortgage for the fact that they might be paying €20,000 a year for rent.”

The federation wants the blanket on the 10 per cent pledge lifted to €300,000 and the income limit advanced to four and a half times earnings.

Banks should be satisfied that their ability to repay is not compromised, if customers can demonstrate a track record in paying rent equivalent to a mortgage payment.

“We agree that there should be prudence” in mortgage lending, Mr Parlon said, “but we suggested that the rules should be refined to avoid some of the unintended consequences that are there in the current system.”

The CIF also appraised the governor of the wider difficulties faced by developers and builders in accessing working capital and the high interest rates being charged on loans, in spite of the main ECB rate being zero, said Mr Parlon.