Mr. Karl Deeter:

He was referring more to wealth than equality. That is where the conversation needs to be. Equality in terms of credit is like ninja loans, that is, no income, no job, no assets. That has terrible outcomes. I am glad to see, after five years of chatting with Senator Hayden, that we agree on something. She was referring to the fact that housing wealth is actually the main wealth in the world. To take the example offered by Mr. Maguire of two different people, one of whom has rich parents, we are not saying they are bidding for two different houses but the person who gets locked out stays renting. Every month he or she has a fixed overhead because housing is an overhead that cannot be avoided, and the person in the mortgaged house also has an overhead. The difference is that the person in the mortgaged house has a balance sheet improvement every time he or she makes a payment, whereas the person in the rented house does not. One can speak about equality but this is really a question of wealth and it goes beyond the argument of equality, which is total bunk. Ultimately it is about lifetime wealth. The Central Bank says this is about prudence. That is fine but prudence does not cost the bank. Prudence comes at a cost to the people who are locked out and are forced into this life of reduced wealth that we have just described. If they have access to an insurance scheme, they also have to pay the fee for a bond. It is claimed this will stop people from taking on more than they can handle. One can stay in the rental market and take on more than one can handle.

The level of rent arrears is very high and local authorities, in this regard, make those who dealt in sub-prime mortgages look like risk experts. The rent arrears situation for local authorities is absolutely catastrophic.

If a person can save money while paying a high rent at a time of high taxes it is proof he or she can carry a mortgage. The loan to value ratio is not the question; it is a matter of cost. If interest rates are forecast to be low, as they are for the next three years, then it means our capacity to raise interest rates will have a lower ceiling before the next recession kicks in so I cannot say that this move will have any societal benefit. It will help incumbents and give money to insurance companies but it will not fix our problems.