The Central Bank just recently announced a consultation process on proposals which would restrict the amount banks could lend in relation to a borrower’s income and also introduce a cap which would mean that loans could not exceed 80% of the house value. This would commence in January 2015. The majority of home-buyers will have to therefore put down a 20% deposit and be allowed borrow a maximum of 3.5 times their salary according to the Central Bank.

The Bank is proposing than no more than 15% of all new mortgages for private dwelling homes should have a loan to value ration of above 80%. This means that most first-time buyesrs will be expected to have at least a 20% deposit when purchasing a home. In addition the Central Bank is proposing that just one fifth of new mortgages should be issued above a level of 3.5 times an income.

Certain exemptions are proposed to the new rules. These cover residual debt from home loans in negative equity, switcher loans, and loans in arrears. Buy to let borrowers will also be expemt from the income restrictions.