Central Bank governor Gabriel Makhlouf has been urged to allow people borrow up to four-and-a-half times their salary to help people currently “locked out” of the property market.

Adjusting the mortgage lending rules will help relieve soaring rent prices and ease future pension pressures, the Institute of Professional Auctioneers and Valuers (IPAV) has claimed.

In a letter sent to Mr Makhlouf last month, IPAV chief executive Pat Davitt said concerns over the mortgage rules have escalated recently, because people on average incomes have been “effectively locked out of the property market”.

The loan-to-income rules mean people can currently only borrow up to three-and-a-half times their annual salary.

Mr Davitt warned that young buyers earning €50,000 or less are advancing into middle age, and will increasingly find housing options limited as they get older and it becomes more difficult to access a 30-year mortgage.

He also forecast the mortgage rules would have severe implications on pension planning.

The letter, seen by the Sunday Independent, suggests adjusting the rules to improve access to the property market. Mr Davitt said this would also free-up sought-after rental property, easing rents and reducing government spending on housing assistance payments.

“Under the existing mortgage rules, someone on an average wage of €45,000 can borrow a maximum of €157,500 assuming they already saved 10pc (€17,500) towards a deposit. They can buy a property up to a value of €175,000 — but there are few properties available at this level,” Mr Davitt wrote.

“If the Central Bank enabled those earning up to €50,000 to borrow four-and-a-half times income, as opposed to the current three-and-a-half times gross salary, a person earning €45,000 could borrow €202,500 and with a salary of €50,000 one could borrow €225,000.”

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He said such a move to increase borrowing limits would improve an average earner’s ability to buy a home.

Central Statistics Office data last year showed average annual earnings for full-time workers stands at €48,946.

The letter cites Banking Payments and Federation of Ireland (BPFI) data from 2019 which found more than one third (36pc) of first-time buyers earned more than €80,000.

This figure stood at 15pc in 2004 and 16pc in 2016, showing lower earners are increasingly finding it difficult to access the market.

“Purchasers with incomes up to €50,000 were at 20pc in 2019. Those with incomes up to €40,000 — the most common type of earner in the county — formed less than 10pc,” Mr Davitt wrote. "In 2012 those earning up to €50,000 formed almost 50pc of buyers and those in the under €40,000 income bracket formed almost 30pc.”

Mr Davitt said the rules have long-term consequences, affecting people’s financial independence because of a “diminished or depleted financial power arising from not owning one’s own home”.

He also warned there were also consequences for the State’s welfare system, which is based on assumptions of people owning their own homes when they retire.

“An additional advantage of greater home ownership is that each case in which it happens, it opens up to the market an additional rental property,” he added.

“The availability of such rental properties would not only help those members of the community who have difficulty in finding a suitable rental property, it would, critically, put downward pressure on rental prices.”

Earlier this year the Central Bank’s deputy governor Sharon Donnery said an analysis of the mortgage measures showed “house price levels could have been approximately 25pc higher” over the previous 12 months if the rules were not in place.

Separately an ESRI study this year showed house prices would be 8.8pc higher without the rules and there was “a mutually reinforcing relationship” between mortgage credit and house prices.

A Central Bank spokeswoman said they review the measures annually.

The Central Bank has also previously announced it is conducting a broader review of the overall framework for the mortgage measures, she added.

“The rapid growth in rents in recent years reflects an underlying imbalance between housing supply and demand,” she said.

"The most effective way to ensure rents become more affordable is to have more rental properties come on the market in areas where demand is highest.”