Exemption from new mortgage rules for those in negative equity – Heydon

Fine Gael Kildare South TD, Martin Heydon, has said that the new mortgage guidelines issued by the Central Bank this week do not apply fully to those who already own a house and are in negative equity.

“I have had concerns that the new rules would impact on those who already have starter homes, many of which are now in negative equity but who hope to trade up or move to a new property.  The Central Bank has confirmed in their new guidelines that those with negative equity mortgages will not be required to have an additional 20% deposit.  However, the new loan to income guidelines, where a maximum mortgage is limited to 3.5 times gross salary will still apply to these loans.

“It is estimated that 40pc of mortgage holders are currently in negative equity, and the exemption from the new rules for them is intended by the Central Bank to avoid unduly limiting mobility for these borrowers. I am aware of many young people, couples and families in the Kildare area who have already bought a starter home but who wish to move or trade up due to pressure on space with children in small homes they never intended to stay in. I am therefore pleased that the Central Bank has introduced some flexibility for this group.

“I also welcome the changes introduced for first time buyers as I had called on the Central Bank to review their original proposals which seemed unduly harsh on many young people hoping to get into the property market.  At the end of the day we need to see a balance between access to mortgages for those who want them and ensuring we don’t end up with the property disasters of the last decade.  I hope the revised Central Bank guidelines will help to achieve that.”