Fianna Fáil General Election candidate for Wicklow Cllr Pat Casey has backed Fianna Fáil Finance Spokesperson Michael McGrath’s call for rental payments to be taken into consideration when applying for a mortgage.
The Central Bank introduced new rules on mortgage lending in February 2015 which has made it difficult for young couples and individuals to purchase their first home. Cllr Casey has pointed out that many mortgage applicants have a strong track record in making timely rental payments, but under the new rules these payments cannot be taken into account as evidence of responsible personal finance management.
Cllr Casey commented, “I’ve been inundated with calls from young couples who are finding it next to impossible to purchase a home as a result of the new Central Bank mortgage lending rules. These people are stuck between a rock and a hard place when it comes to purchasing a home. The recent increase in rents has made it difficult for them to save for a deposit. The rents they are paying often amount to more than a mortgage payment.
“Our Finance Spokesperson Michael McGrath has pointed out that the Central Rules should be modified in order that an established track record of paying rent is taken as evidence of ability to service a mortgage. I believe this is a simple proposal worth implementing.
“A survey carried out by Daft.ie last September found that it was cheaper to buy rather than to rent in 43 out of 54 areas covered by the survey. This means that, in up to 80% of the country, individuals and couples would actually be financially better off on a monthly basis paying a mortgage than paying rent for an equivalent property.
Cllr Casey added, “In our election manifesto, Fianna Fáil will be putting forward a proposal which will establish a state top-up of 25% for regular savers who are putting money aside for a deposit. This will be a significant help to home buyers over the medium term but we also need to do something to help those potential home buyers who have shown clear capacity to pay a mortgage but are restricted in their ability to save for a deposit by high rents. This is a particular problem in urban areas where the rental crisis is most acute.
“We are suggesting that the Central Bank examine the potential of allowing up to 25 per cent of the deposit requirement for a first time buyer be met by taking in to account rent payments over the previous 3 years. This could potentially open up home ownership to a considerable cohort of people who have proven their ability to meet a monthly mortgage but are effectively shut out of the market at present because of the deposit rules, concluded Cllr Casey.