Main Irish banks have submitted proposals on new mortgage rules

The deadline for the receipt of submissions on the proposed introduction of a cap on mortgages, which is due to be introduced early next year, passed at midnight.

It is understood that all the main banks submitted proposals on the new rules, but will not be publishing them.

The Central Bank plan would see potential mortgagees having to come up with 20% of the value of a property to put down as a deposit.

It would also limit the size of a mortgage to three-and-a-half times a family’s income.

If the plan goes through unaltered, house buyers would need savings of €60,000 to purchase a €300,000 home.

The heads of the country’s main banks have expressed unease at the proposed rules.

At the Oireachtas Finance Committee last month, Bank of Ireland chief executive Richie Boucher said the rules could have unintended consequences and could see house hunters turning to riskier, unsecured debt to make up the deposit shortfall.

Ulster Bank’s chief executive Jim Brown told the committee that nearly 70% of first time buyer mortgages approved by his bank this year would not have met the new deposit criteria.

The Governor of the Central Bank, Patrick Honohan, has indicated that the mandatory 20% rule could be eased for first time buyers through the introduction of a deposit insurance scheme.

He also hinted that the January 1 deadline for the introduction of the rules might be extended.

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