Statement by Marian Finnegan, Chief Economist, Sherry FitzGerald Group Wednesday, November 23rd, 2016
Sherry FitzGerald, Ireland’s largest estate agents, have today (Wednesday) welcomed the amendments to the macro prudential policy rules announced by the Central Bank of Ireland.
The amendments include the following; Firstly, as of January 1st 2017, the ceiling on the loan to value (LTV) ratio for all first time buyers will be set at 90 per cent. This compares to the current position, which puts the ceiling at 90 per cent for loans up to €220,000 but at 80 per cent for the balance of loans above €220,000.
The structure of the proportionate LTV allowances was also amended today. 5% of the value of new lending to first time buyers will be allowed above the 90 per cent LTV limit and 20 per cent of the value of new lending to second and subsequent buyers for primary residences will be allowed above the 80 per cent LTV limit.
This replaces the current requirement which allows 15 per cent of total lending for primary dwellings above the LTV limits. It should be noted that the 3.5 times loan to income restriction remains unchanged.
Commenting Marian Finnegan, Chief Economist, Sherry FitzGerald Group said; “We welcome the amendment to the lending policy. We believe the previous calibration of the macro prudential policy had placed a significant burden on the economy. The restrictive lending policy towards first time buyers had stifled the supply of new residential units and led to the exclusion of important cohorts from the market. The new policy is more in line with international practice and it should help underpin an increase in construction activity.”
Further commenting Ms. Finnegan said; “The preliminary Census figures released earlier this year has revealed a greater increase in our population that had been forecast. This combined with the historically low construction levels of recent years’ means that the gap between the demand for housing and the supply has widened considerably. As such our current forecasts suggest that we need to be delivering 35,000 units per annum over the next ten years. It is essential that any barrier to delivering this supply be removed. Therefore, today’s announcement should be welcomed.”
For any further information, please contact:
Director of Communication
Sherry FitzGerald Group
Ph: 01 237 6500 / 086 252 3277
Sherry FitzGerald Group
Ph: 01 237 6341 / 086 814 8251
Note to Editors:
Founded in 1982, Sherry FitzGerald has grown to become Ireland’s largest firm of estate agents with over 90 owned and franchised branches throughout Ireland.