The mortgage stress test: could you pay if rates rose 2%?

Lenders must test whether you could repay at 2% above the rate offered, unless it's fixed for 5 years or more. Run it yourself first.

Before offering a mortgage, a lender must assess whether you can afford it. Part of that is set by Regulation 182 of the Central Bank's Consumer Protection Regulations. The lender must robustly test whether you could repay over the whole term at a rate at least 2% higher than the one offered.

The rules

• the test applies to all mortgages for consumers, except where the rate is fixed for 5 years or more
• for an introductory rate, the test is on the variable rate that follows it, or the current variable rate if that isn't known
• interest-only mortgages need an extra assessment of how the capital will be repaid
• for a variable rate, the lender must give you, on paper, the repayment after a 2% rise (Regulation 184)

An example

A couple earning €52,000 and €40,000 borrow €330,000 over 30 years at 3.9%, fixed for three years. They also repay €250 a month on a car loan.

At the stress rate, the mortgage and car loan together take 35.3% of take-home pay. There is no official percentage that passes or fails: each lender decides, looking at your spending, savings record and other commitments.

Why fixed for five years is different

With a rate fixed for five years or more, the lender doesn't have to stress test the loan. That can let you borrow a little more, within the income and value limits. But the fixed rate ends while most of the loan is still owed, and the rate then could be higher.

Run it on your own budget

• use your actual take-home pay and all your regular debts
• add childcare, commuting and other costs that the mortgage will compete with
• try +2 and +3 points, and the end of any fixed period

If you're already borrowing, a fixed-rate period ending is the moment rates can jump. Your lender must tell you the rate that will apply 60 days before it ends. See fixed or variable.

Work it out

• Mortgage stress test →
• Mortgage repayments and amortisation →

Sources

• Central Bank of Ireland: Consumer Protection Regulations, Part 3, Regulation 182: affordability test at a minimum 2% rate increase (checked 24/10/2026)
• Central Bank of Ireland: Mortgage measures (loan-to-income 4x / 3.5x, deposits 10% / 30%) (checked 24/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.