Restrictions on mortgage lending proposed by Ireland’s central bank could push up rents and frustrate potential homebuyers, making the country less attractive to foreign firms, the finance ministry said on Tuesday.
Ireland’s central bank wants to avoid any repeat of the reckless lending and lax regulation that led to a devastating property crash six years ago, and has proposed the limits as prices recover quickly amid a lack of supply in urban areas.
The measures would require banks to restrict lending above 80 percent of the value of a home to no more than 15 percent of the aggregate value of all housing loans, while also limiting lending in excess of 3.5 times a borrower’s gross income.
In its official response to the proposals on Tuesday, the finance ministry said such a loan-to-value (LTV) limit would be unduly restrictive and have implications for the distribution of home ownership. First-time buyers especially would find it more difficult or “even impossible” to save a deposit while also paying high rents.
“The primary balance to be struck is to ensure that measures put in place to protect financial stability will not have an undue negative impact on sustainable economic recovery or have unintended social impacts,” the ministry said.
via Reuters 
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