There is need for a debate on how much financial institutions can lend in light of the problems being experienced by first-time buyers, according to the managing director of ICS Building Society, Mr Ted McGovern.

He said increased earning power and lower interest rates needed to be recognised and "reflected in borrowing ability". "Many middle income people are now effectively excluded from the private housing market because of current house prices and the limitations of traditional borrowing multiples," he stated.

Mr McGovern suggested that disposable income be used instead of pre-tax earnings when mortgages applications were being assessed. The existing criteria used in the Republic were "fairly conservative" when compared with other EU states, he added.

He said ICS was constantly turning away borrowers who had the funds to repay their loan, but did not necessarily meet the standard terms. He called for a dialogue between financial institutions and the Central Bank about the issue.