Owen McGee

Good morning, David.

Thanks for having me on.

Yeah.

So if you think about a post-global financial crisis back in 2008, 9, 10, 11, the central bank made a move to say, right, we're going to put manners on the banks.

And what we're going to do is we're going to put strict rules in place that at that time it was you could borrow up to three and a half times your salary and you have to have a minimum deposit of 10%.

So what does that mean?

It means if you have a household income, say of a couple with 50,000 euros each,

what started out as they could borrow three and a half times that, they could borrow €350,000, three and a half times their combined income of €100,000.

Single person, €100,000 by 3.5, same thing.

Now, a couple of years ago, they said, okay, let's relax the rules a little bit.

And they moved it up to four times salary for first-time buyers, but they left it at three and a half times for second and subsequent buyers.

So it's four times now is what the rule is from the central bank.

But then the central bank kind of took a step back and said, you know what, this is supposed to be a commercial transaction.

We can't interfere that much.

So what we'll do is, in 15% of cases, now not individual loans, but of your total loan book, and what I mean by that is, if you're a bank and you lend out 100 million, 15 million of those loans, you can have what's called an exception.

So in other words, you can break the rules, right?

And maybe that's to create competition.

Maybe it's to...

kind of put some reality into it that not every single case is exactly the same as going to fit into that criteria.

So it was to give them some discretion and it meant that they could move from that.