The Central Bank has announced a significant change to its mortgage measures, which will mean that first-time buyers will now be able to borrow up to 90% of the value of their home, with a 10% minimum deposit. 

This higher ceiling on the loan-to-value (LTV) ratio for all first-time buyers is a shift from the current requirement, which puts the ceiling at 90% for loans up to €220,000 but at 80% for the balance of loans above €220,000.

The change will come into effect from January 1st.

The 20% minimum deposit requirement continues to apply to second and subsequent buyers. 

Other "refinements" include:

• The current two-month valuation period will be extended to four months in recognition of the fact that a portion of house sales can take longer than the average three months to conclude.
• The structure of the proportionate LTV allowances is amended. From January, 5% of the value of new lending to first-time buyers will be allowed above the 90% LTV limit and 20% of the value of new lending to second and subsequent buyers for primary residences will be allowed above the 80% LTV limit. This replaces the current requirement which allows 15% of total lending for primary dwellings (the sum of lending to first-time buyers and second and subsequent buyers) above the LTV limits.

The Central Bank's review of its mortgage measures confirmed that "the overall framework is appropriate and the measures have contributed to financial and economic stability", while the refinements will "improve the effectiveness and sustainability of the measures".

Governor Philip Lane said:

"Over the past 18 months, the measures have helped to ensure that those who buy homes are better prepared to manage their mortgage payments in the event of a future downturn in the economy or in the housing market.

"While our review process affirmed the value of the overall framework, some modifications to the measures were suggested by our evidence-based analysis.

"The 3.5 times ceiling on the loan to income ratio remains unchanged. The 90% loan to value ratio limit for all first-time buyers simplifies the overall framework, with only 5% of lending permitted above this level. The 20 per cent allowance for lending above the 80% loan to value ceiling for second and subsequent buyers is broadly in line with current lending patterns.

"The loan to value requirements for all other buyers will remain in place. Taken together, these measures constitute a sustainable framework to underpin our financial stability objectives."

The Central Bank has also published a report on the review process and a feedback document which responds to the submissions made during the consultation process.  All submissions made in the consultation process will be published on the Central Bank website.