Irish home loan rules ‘strictest in Europe’ – agents

NEW rules on home loans being planned by the Central Bank will be among the strictest in Europe, estate agents have said.

Delegates attending the European Confederation of Real Estate Agents Conference in Dublin expressed surprise that Ireland was introducing a 20pc deposit requirement when, out of 14 countries represented, a deposit was required in only one. Aside from Ireland, only Norway requires home buyers to come up with a deposit – which in Norway is 15pc.

Sven Johns, Counsellor of the Board of Confederation, which represents 66,000 members, said in his country (Germany) house prices are slowing compared with 2013.

“We have been applying the European Capital Requirements Regulation and we think if this works properly across Europe it should not be necessary to extend loan to value (LTV) restrictions.”

Pat Davitt, Chief Executive of Ireland’s Institute of Professional Auctioneers and Valuers added: “Our new deposit requirement contrasts with countries across Europe where there are no LTV restrictions by national banks. In Germany, for example, a 100pc financing of the purchase of a residential home is generally possible and not prohibited. But banks consider the risk of a client and make their decision on the basis of the international banking regulation rules.”

Enforced LTVs do not exist in any other country with the exception of Norway, he reiterated. There are plans in the UK to give the Bank of England LTV powers only in circumstances where “a dangerous housing bubble is developing”.

In the Netherlands, which has experienced a bad property crash, borrowers can take out loans of 110pc. Making further comparisons, Mr Davitt said Ireland’s interest rates are also among the highest in Europe, while Irish buyers find difficulty getting fixed interest rates and long-term fixed interest rates don’t exist.

In the UK, fixed rates for five years are available at 2 to 3pc.

Mr Davitt went on to call for a more in-depth analysis by the Government before “isolated and dramatic measures” are introduced. He also called for a national property council to be set up with all stakeholders as a matter of urgency to plan for a sustainable property market.

“Priority needs to be given to addressing the real problem – the shortage of property in Dublin and some other cities.

“The counter-cyclical principle holds that lending should increase in the aftermath of a crisis, where there is pent-up demand. It should also be properly restricted when it shows signs of overheating,” he said.

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