Mortgage Exemptions in Ireland Fall as Covid Dents Home Lending

Exemptions to mortgage lending rules fell during the Covid-19 pandemic but there was no sign of a deterioration in borrower credit quality, according to a report from the Central Bank of Ireland, the Irish Times reported. Just 13 per cent of new home lending by value was granted an exemption to rules on income multiples and home value in 2020, the regulator found, down from 17 per cent in 2019. The rate of exemptions had been higher than 2019 in the first three months of the year, but there was a sudden drop in exemptions in April as the impact of the first Covid lockdown was felt. The mortgage rules put in place by the Central Bank to ensure responsible lending by banks allow for exemptions against the 80 per cent loan to value threshold for up to 20 per cent of lending to existing homeowners. Only 5 per cent of lending to first-time buyers can exceed the permitted 09 per cent loan to value measure. In terms of loan to income – where the threshold is 3.5 times income – exemptions are allowed for 20 per cent of lending to first-time buyers and 10 per cent of existing homeowners. The Central Bank report found that those receiving exemptions on the income multiple were most likely to be single applicants purchasing in Dublin. They were two to four years younger on average and tended to use a broker rather than directly dealing with the lender. Read more.