90% loans for First-Time buyers

Last night the Central Bank confirmed it will ease its mortgage limits for first-time buyers.

It’s published the long-awaited details of its new limits for mortgage lending – which will need new laws to take effect. As was originally proposed, most mortgages will require a 20% deposit.

For first-time buyers there is some good news, as they will be able to borrow up to 90% of the value of a property up to €220,000 and 80% of any amount above that value.

Buy-to-let purchasers will be required to come up with 30% of the purchase price themselves. However in a crucial limit, all mortgages are limited to 3-and-a-half times the buyer’s total income. The rules mean that a first-time buyer wanting a three-bedroom house in Dublin, costing  €350,000, will need to save up €48,000 – and will need a salary of over €86,000 to borrow.

Speaking this morning Economist with Daft.ie Ronan Lyons said “In the Dublin market in relation to loan to income, 3-and-a-half times is not a lot so I wouldn’t be surprised if we see the price of second hand homes in Dublin fall this year..there is a very clear link now between what you earn and what you can borrow”.

Both the Government and the Central Bank say the measures will protect both borrowers and banks.