Professor Patrick Honohan:

The banks are being far more cautious than they were in the past. They are not giving 100% loans to builders for the first phase of building. It used to be the case that they could get very high percentage loans, but they are now getting loans of possibly 70%. The Central Bank will not instruct or encourage banks to take on that risk. That is a risk that should be taken by providers. It is an equity risk. Banks should be lending for things they can be relatively sure they will get back. There is lot of equity finance coming into Ireland from abroad. Deputy Boyd Barrett already mentioned the investors buying up blocks of flats and so on. It is possible that this channel could be used. I think builders do not want to take that higher cost because they would like to see all of their funding sourced at the low interest rates that are available from banks. I cannot see that the banks should be pushed or encouraged into taking those kinds of risks with builders and developers.