Existing mortgage measures in Ireland are outdated and need to be amended to reflect economic realities, Property Industry Ireland (PII), the group within employers body Ibec representing the property and construction sector, has said.

The Central Bank of Ireland's existing mortgage measures, including the 3.5x loan-to-income (LTI) limit and the 90% loan-to-value (LTV) threshold, were introduced in 2015 as the housing market recovered from the shock of the financial crash.

In its submission to the Central Bank's review of Macroprudential Mortgage Measures, PII said the rules had had the "desired effect" in the first six years but that the measures are now "restricting home ownership opportunities for a generation of first-time buyers".

"PII is not calling into the question the importance or the benefits of the mortgage measures. They are an important pillar to managing the systemic and cyclical risk within the sector," PII director David Duffy said.

"However, the design and calibration of these measures needs to be amended to reflect that the economic landscape is significantly different to when the existing measures were introduced in 2015, including the significant reduction in and much wider availability in fixed long-term interest rates."

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PII has advocated for a debt service ration (DSR), a mechanism that would take household income after tax and other repayments into account and set a maximum mortgage repayment value based on affordability, to replace the current LTI limit.

The organisation said Central Bank mortgage measures are amongst the strictest in the EU and meant that house hunters require a combined household income of at least €90,000 to satisfy the LTV criteria on the average new home, valued at €350,000.

"This restrictive mechanism is locking out a generation of young families and average income households from home ownership," Duffy added.

"DSR is fairer on households because it is focussed on how much a household can repay instead of what their income is."

Duffy wen onto say that the difficulties in accessing housing was leading to greater demand and inflation in the rental market, making rents higher than a standard monthly mortgage repayment.

"Declining homeownership amongst our younger age cohorts and increased rental costs significantly impair their ability to own a home and save for a pension at the same time, leading to long-run implications for Irish society and Irish pension and fiscal policy," Duffy stated.

“Addressing the housing crisis will require a suite of policies. Amending these mortgage measures will be an important step."

(Pic: Getty Images)