Billy Timmins (Wicklow, Independent) | Oireachtas source

I will be brief. I wish to raise three issues which I hope are in order. I, Deputy Mathews and a number of other Oireachtas Members have made a submission to the Minister for Finance calling on him to ensure a fair valuation of properties when adjudication is being made on the issuing of a mortgage. A mortgage should be based on the historical ratio of income to average house price. I understand the bank spoke earlier about a 72% loan to value as an average, that it rises to 85% if the value is in excess of €400,000, and that there is a certain limit in regard to one-bedroomed apartments. The concept we propose is not based on the market value, which can increase where there are people with funding who can compete with one another and drive prices up.

What we suggest is that we have what might be termed a "fair value" on a property, based on a historical data multiplier - a link between average income relative to average house price. I understand that historically average house prices were five or six times the average income. Loans should only be issued for houses on this basis and this should not be let get out of kilter. For example, if a house in Portlaoise is valued at €400,000 and the multiplier is four times the average income, the fair value would be €320,000. The grant for the mortgage should be based on that. I sent this proposal to the Irish Banking Federation and it said there was merit in the proposal but they felt it was not a necessary tool.

I suggest that if this policy had been in place prior to the crash, we would not be in the current difficulty, because it would ensure we had sustainable and responsible lending. What is the view of AIB on this? The proposal might seem draconian, but it would stop banks lending money on a basis that is unsustainable for the future. Notwithstanding the fact that on the day the money is lent, the individual is in a position to make repayments, this can change if employment takes a hit.

Who would ever have thought that public sector wages would decrease to the extent that they did?

The second issue is in respect of the demand for housing. Perhaps it does not come under the witnesses' remit, but what do they think of the demand for housing? The Taoiseach stated that if 30,000 houses were built in Dublin tomorrow morning they would sell. Other conservative estimates put the need at 5,000 houses, while other projections outlined the number and type of houses needed nationally between now and 2015. I realise that there is a geographic variation in the demand. One could say that there are two and a half Irelands, consisting of Cork, Galway, Dublin and the rest of the country.

Morgan Kelly made a point about the SME mortgage time bomb. I do not know whether the witnesses referred to it earlier, but do they have views on it? He gave a stark lecture. Many people put him down as the guru who forecast the difficulties that arose. Apparently his forecast about the banks was not correct, because he said they were in good order in 2006 and 2007, but it is my understanding-----