Expert warns mortgage rules could wipe out market growth

As the Central Bank considers the permutations of the responses it received to its mortgage lending consultation last week, one economic commentator has suggested that if implemented the rules could wipe out any growth in the slowly recovering mortgage market.

Goodbody Stockbrokers is predicting mortgage lending growth of 30 per cent next year,which would bring the market that bit closer to the €8 billion or so that market commentators ascertain to be a “normally” functioning mortgage market. However, Goodbody economist Dermot O’Leary says that if the Central Bank goes ahead with its plan to require home buyers to stump up a deposit of 20 per cent and limit the income multiple to three times income, it will kill off any growth in mortgage lending in 2015.

This would in turn mean that the proportion of purchases transacted by cash buyers would remain elevated into 2015. On Monday the Central Bank said that cash purchasers account for about 50 per cent of residential property sales.

While the activity of real estate investment trusts in snapping up large numbers of apartments contributes to this high figure, Mr O’Leary said it is also a function of the low levels of activity in the market.