BANKS are tightening the criteria for mortgages over fears of sharp house price falls and because so many people have suffered income shocks.

Several lenders will no longer allow exemptions from Central Bank lending rules, a move that is likely to hit first-time buyers hard.

One in five mortgage borrowers was granted exemptions in 2018, but now banks are suspending these types of loan.

The move will raise greater concern for the supply of homes, if it prompts builders in turn to scale back plans.

Separately, Taoiseach Leo Varadkar warned that people breaking restrictions could mean lockdown having to be extended by two or three weeks. It comes amid evidence of increased traffic on our roads and more people taking bus journeys in the capital.

The coronavirus has claimed 37 more lives, it was confirmed yesterday. The total death toll of 1,014 includes five healthcare workers and 576 people living in residential facilities.

Meanwhile, after pressure from the Government, the majority of motor insurers now say they will offer refunds to customers to reflect a lower volume of claims due to the travel restrictions.

Lenders including Ulster Bank, KBC and Dilosk/ICS have now all suspended approving loans that require an exemption from the Central Bank rules.

The massive uncertainty for the housing market due to the Covid-19 crisis has left lenders worried.

There is concern that property prices will collapse, and fears income falls will leave people unable to service loans.

A heavy price fall could mean that granting someone an exemption would see the house worth less than the loan.

A report from Davy last week said residential transactions were “starting to collapse”.

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This has prompted banks to put valuations on some properties that are at least 10pc lower than prices which have already been agreed by buyers and vendors, according to mortgage brokers.

In recent years, banks granting exemptions to the Central Bank lending rules has become a major part of the property market here.

People who got an opt-out from the lending limits tended to be from Dublin, with earnings in the lower to middle-income range.

The lending limits mean first-time buyers need a deposit of at least 10pc and second-time buyers need 20pc.

These are called the loan-to value (LTV) limits.

The rules also stipulate that people can only borrow three and-a-half times their income,known as the loan-to-income (LTI) limit.

Lenders can approve a number of mortgages that are exempt from these limits.

But the coronavirus outbreak has plunged the property market into huge uncertainty.

Mortgage broker Karl Deeter said lenders don’t know what the market is going to look like in the months ahead.

He gave the example of if a first-time buyer gets a lending exception on income by borrowing four times their wage.

The loan is 90pc of the value of the home.

If prices fall by 10pc or more and their wages drop, they could be in a situation of having a 100pc mortgage, at five times their income because of the wage cut, Mr Deeter explained.

“We tell the banks to lend responsibly but sometimes in doing that it can have adverse effects,” he said.

Ulster Bank said it temporarily paused exception lending for all new applications this month.“

Any exception lending up to that date will remain in place, subject to confirmation that customers’ income and employment status remains unchanged as a result of Covid-19,” Ulster Bank said.

KBC Bank has also suspended approving exceptions.

It will honour loan offers and approvals in principle where exemptions have been granted.

Dilosk, which trades under the ICS brand, said it had suspended offering exemptions.

Asked about mortgages already approved in principle and loan offers where exemptions have been granted, it said it was looking at each application on a case-by-case basis.

AIB said it had not yet changed its credit criteria.

The bank said that it was “actively engaging” with those with loan offers, and those with mortgage approval in principle.

Bank of Ireland said it was “very conscious of the potential impact of Covid-19 on income levels and we are assessing each application carefully, taking individual customer circumstances into consideration”.

Both Permanent TSB and Finance Ireland said they have not changed how they manage the Central Bank exemptions.