* Final decision on new rules due within days - Honohan
* C.bank chief says his view will probably prevail
* Senior govt official says proposals not “socially acceptable” (Adds central bank governor comments)
By Padraic Halpin
DUBLIN, Jan 19 (Reuters) - Ireland’s central bank is unlikely to water down proposals for tough new restrictions on mortgage lending despite resistance from banks and the government, its governor said on Monday.
The central bank wants to avoid any repeat of the reckless lending and lax regulation that led to a devastating property crash six years ago, and has proposed new limits as prices recover quickly amid a lack of supply in urban areas.
The proposals, which the central bank is due to finalise in the next few days, would require banks to restrict lending above 80 percent of the value of a home to no more than 15 percent of the aggregate value of all housing loans, while also limiting lending in excess of 3.5 times a borrower’s gross income.
Governor Patrick Honohan indicated that there was limited room for any easing up after a senior official from the finance ministry said earlier on Monday that the limits as currently proposed were not “socially acceptable.”
“There’s been resistance from different sources. We are trying to see what can we do to achieve the goals of what we set out, are there any elements that need to be re-looked at?” Honohan told reporters.
“The final decision will be taken on this in the coming days and I wouldn’t like to anticipate that, I’m not the only decision maker. I’m hoping my views will actually prevail, I’m sure they will probably.”
Ann Nolan, head of financial services at the finance ministry, said the proposed measures could cut the property market off from buyers without parents able to provide a large deposit.
“I don’t think it should be a position where the only people who get on the property ladder are those who have parents who can give them a big lump sum,” Nolan, who wrote the government’s response to the proposals last month, told a conference on Monday. “I don’t think that’s socially acceptable.”
Nolan said that there was a balance to be found. She said she wouldn’t like banks to go back to lending above 90 percent of the value of a home and wouldn’t have a problem with stricter rules in certain situations.
Speaking at the same conference, John Fell, deputy director general for macro-prudential policy and financial stability at the European Central Bank (ECB), said the timing of the Irish central bank’s proposals seemed fairly good and that the ECB would look reasonably favourably on the measures. (Editing by Toby Chopra and Susan Fenton)