Mortgage Measures

The mortgage measures are an essential element of the Central Bank’s macroprudential policy framework.

The mortgage measures aim to ensure sustainable lending standards in the mortgage market.

In doing so, the measures look to prevent the emergence of an unsustainable relationship between credit and house prices and ultimately support the resilience of borrowers, lenders and the broader economy.

The measures work by setting limits on the amount of money that people can borrow to buy residential property using loan-to-income (LTI) and loan-to-value (LTV) limits.

Loan-to-Income limit

The LTI limit restricts the amount of money you can borrow to a maximum of 4 times gross income for first-time-buyers and 3.5 times gross income for second/subsequent buyers.

So, for example, a first-time buyer couple with a combined income of €100,000 can borrow up to a maximum of €400,000.

A second and subsequent buyer with the same income can borrow up to a maximum of €350,000.

Loan-to-Value limit

The LTV limit requires you to have a minimum deposit before you can get a mortgage. The size of this deposit depends on which category of buyer you are.

First-time-buyers and second/subsequent buyers need to have a minimum deposit of 10%
Buy-to-let buyers need to have a minimum deposit of 30%.

Allowances

Banks and other lenders can lend a certain amount above the limits.

The proportion of lending allowed above the limits applies at the level of the borrower type, such that:

15 per cent of first-time-buyer lending can take place above the limits.
15 per cent of second and subsequent buyer lending can take place above the limits.
10 per cent of buy-to-let-buyer lending can take place above the limits.

The Central Bank has set out the key principles of the framework for the macroprudential mortgage measures in its framework document.

The Central Bank regularly monitors the mortgage measures and housing markets more broadly and communicates its findings and judgements on these in its biannual Financial Stability Review.

Evolution of the mortgage measures 2015 - 2021

These measures were first introduced in 2015 and were reviewed on an annual basis until 2021.

The following provides previous reviews of the mortgage measures, associated research and Statutory Instruments.

Previous Reviews of Mortgage Measures

2021 Review of Mortgage Measures (FSR 2021:II)

2020 Review of Mortgage Measures (FSR 2020:II)

2019 Review of Mortgage Market Measures (FSR 2019:II)

2018 Review of Mortgage Market Measures

2017 Review of Mortgage Market Measures

2016 Review of Mortgage Market Measures

Research Papers

The regulations have been based on in-depth economic analysis and empirical evidence. This research has been published and can be found below.

Economic Letter: Macroprudential Measures and Irish Mortgage Lending: A Review of Recent Data

Policy Paper: The Introduction of Macroprudential Measures for the Irish Mortgage Market

Research Technical Paper: Credit conditions, macro-prudential policy and house prices

Research Technical Paper: Designing macroprudential policy in mortgage lending: Do first-time-buyers default less?

Economic Letter: Do First time buyers default less? Implications for macro-prudential policy

Economic Letter: Mortgage insurance in an Irish context

Economic Letter: House price volatility: The role of different buyer types

Economic Letter: Assessing the impact of macro-prudential measures

Economic Letter: Macro-prudential measures and the housing market

Economic Letter: Macro-prudential Tools and Credit Risk of Property Lending at Irish banks

Economic Letter: Assessing the sustainability of Irish residential property prices: 1980 Q1 - 2016 Q2

Economic Letter: Housing supply after the crisis

Economic Letter: Exploring developments in Ireland's regional rental markets

Economic Letter: Modelling Irish Rents: Recent Developments in Historical Context

Economic Letter: Macroprudential Measures and Irish Mortgage Lending: Insights from H1 2016

Economic Letter: The Effects of Macroprudential Policy on Borrowers Leverage

Economic Letter: Model-based estimates of the resilience of mortgages at origination

Economic Letter: Originating Loan to Value ratios and the resilience of mortgage portfolios

Economic Letter: The income distribution and the Irish mortgage market

Economic Letter: Macroprudential and Irish mortgage lending: An overview of lending in 2016

Economic Letter: Macroprudential measures and Irish mortgage lending: Insights from H1 2017

Economic Letter: New mortgage lending activity in a comparative context

Financial Stability Note: Macroprudential measures and Irish mortgage lending: An overview of 2017

Financial Stability Note: Macroprudential measures and Irish mortgage lending: Insights from H1 2018

Financial Stability Note: Lending above macroprudential mortgage limits: The Irish experience since 2015

Financial Stability Note: Have First-Time Buyers continued to default less?

Financial Stability Note: Mortgage servicing burdens and LTI caps

Financial Stability Note: A measure of bindingness in the Irish mortgage market

Financial Stability Note: Mortgage borrowers at the loan-to-income limit

Financial Stability Note: Mortgage repayment affordability across the income distribution

Financial Stability Note: An overview of the Irish housing market

Statutory Instruments

2022 Regulations (Statutory Instrument No. 546 of 2022)

The following Statutory Instruments will be revoked with effect from 1 January 2023

2015 Regulations (Statutory Instrument No. 47 of 2015)

2016 Regulations (Statutory Instrument No. 568 of 2016)

2017 Regulations (Statutory Instrument No. 559 of 2017)

2019 Regulations (Statutory Instrument No. 369 of 2019)

2021 Regulations (Statutory Instrument No. 666 of 2021)

Previous Consultations

The regulations were also informed by a public consultation issued in 2014. The Central Bank of Ireland published a feedback document providing an overview of responses to the submissions made during the consultation process and the review process undertaken by the Central Bank of Ireland.

For further information see: CP87 Macro-prudential policy for residential lending.

About the Mortgage Measures Framework Review

Over the course of 2021 and 2022, the Central Bank conducted a review of the mortgage measures framework. The purpose of the review was to ensure that the mortgage measures continue to remain fit for purpose, in light of the evolution of the financial system and the broader economy since the measures were first introduced in 2015.

The review considered the overall framework for, and strategy around, the mortgage measures. The conclusions of the review were informed by the Central Bank’s analysis of a wide range of evidence, lessons from international experience and the feedback received through engagement with the public and other stakeholders. The review concluded in October 2022 with the publication of the revised framework for macroprudential mortgage measures.

For further information see: Mortgage Measures Framework Review

See also: