The Deputy Governor of the Central Bank, Sharon Donnery has defended plans to maintain mortgage rules saying that they were intended as a permanent feature of the housing market.
Speaking on RTÉ radio’s News at One, Ms Donnery said that the mortgage rules had shown their worth during the pandemic and had helped to protect both homeowners and lenders.
The pandemic had led to the Central Bank introducing a number of measures such as payment breaks, she said. “We looked at payment breaks, and we saw a much lower level of breaks among those that borrowed under the mortgage lending rules — people were better able to withstand the stress”.
The banks did not want to “amplify” the stress being experienced by people and because of the mortgage rules the banks were able to withstand the stress of the Covid crisis which meant that the measures were working well, she said.
Exceptions to the rules were allowed to take into account individual circumstances, she said.
There were “significant wider issues” in the housing market, particularly with regard to supply. “The answer to that is not to take on more debt”.
Ms Donnery added that supply was a bottleneck issue. Additional credit would just allow people to bid against each other and ultimately pay higher prices, she warned.
Low interest rates were another factor in the housing market, she added.
The mortgage rules could not be viewed in isolation. The rules had been intended to be a permanent feature of the housing market, she said, but they would be reviewed to see if they needed to be adapted to prevent significant negative effects.