A group campaigning against proposals to introduce 20 per cent deposit requirements on new mortgage applicants will deliver a petition to the Central Bank tomorrow.
The Central Bank plan, which were initially announced in October with Monday set as the deadline for submissions under a consultation process, is designed to prevent the emergence of a new property bubble.
Under the proposal, borrowers would be required to have a 20 per cent deposit when purchasing a property, although there would be some exceptions.
While the Central Bank plan, as proposed, would limit mortgages to 80 per cent of the value of a property and impose an income limit of three and a half times salary, governor Patrick Honohan has indicated that certain aspects might be eased. Minister for Finance Michael Noonan has also said the proposals should be softened.
However, a new group called Uplift have claimed the rule will cause more problems than it solves.
“The Central Bank’s 20 per cent deposit rule is going too far, too soon,” it said in a statement. “Uplift members have been telling us that many of them pay the same amount of their income on rent as they would do on a mortgage.
“Having to save for a 20 per cent deposit on top of this means their dream of owning their own home disappears. Others are worried about keeping a roof over their heads, as rents will inevitably increase further if the Central Bank goes ahead with its plans.”
The group added mortgage regulation “serves an important function” as it “stops the banks from having free rein and it ensures that people don’t take on debts that are beyond their means”.
Uplift has compiled a petition opposing the proposals, which currently has more than 400 signatories. It will be delivered to the Central Bank tomorrow.
The proposals have drawn criticism from some quarters, with Fine Gael MEP Brian Hayes claiming they are “discriminatory”.
With average property prices in the Dublin area at €350,000, Mr Hayes said the task of saving €70,000 to use as a deposit was “impossible” for many young people when wage and rent levels were taken into account.
“Demanding a 20 per cent deposit is a blunt instrument that discriminates against particular groups,” he said. “In fact, Ulster Bank said recently that, had the 20 per cent restriction applied in the last year, nearly 70 per cent of those first-time buyers wouldn’t have got a loan from them.”
He warned that the 20 per cent deposit restriction “will have unintended consequences, which will help no one”.
Mr Honohon has said the proposals would help to ensure a new generation of home-owners do not become over indebted.
“What we want to achieve by these measures is to have in place a standing regime which ensures that a credit-driven bubble does not take hold, and that a new generation does not become over indebted.”
