Housing loan lenders cannot NORMALLY lend more than 90% of the value of a property to first time buyers, because:

• A. (i) they will be in breach of money laundering regulations.
• B. (iii) they are limited from doing so by the Central Bank of Ireland.
• C. (ii) the lender has limited resources.
• D. (i), (ii) and (iii).

Answer: (A)

Anti-money laundering obligations influence mortgage lending. Banks must verify where the borrower's funds come from and monitor for suspicious activity as part of their AML duties. When the loan-to-value is high, there is less borrower equity and a tighter window to perform robust due diligence on the source of funds and the transaction as a whole. Keeping LTV around 90% helps ensure that the funds backing the purchase can be clearly traced and that the lender can satisfy AML requirements without exposing itself to greater risk of illicit money slipping into the housing market. While regulators' broader lending guidelines and a lender's own risk appetite play a role in setting limits, the practical reason tied to AML controls is why lenders commonly cap lending to first-time buyers at about 90% of the property value.