Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

Chairperson of the board, thank you very much. I am going to reference some documents and they are actually up in front of you in a moment. This is from Vol. 3 and it is page 40. What we have here is an aggregate summary, it's in relation to the financial stability report of 2004 and it's the very end of the page there Mr. O'Reilly, where it says "A number of risks to financial stability were highlighted in the report ... Irish banks growth rate 4 times that of the European average ... Irish banks accessing substantial funding from non-Irish sources ... continued increase in house prices [and] tax policy in favour of home ownership." Just moving on further, there is a summary of the actual final stability report of 2004 and that moves to page 45 of the same document. I just want to bring your attention to the end of col. 1, which is the heading, "Household Sector". Bear in mind this is for 2004, again during your tenure. The "Private-sector indebtedness, measured as the value of debt to gross domestic product ... has increased substantially since the mid-1990s and it is now at historically high levels". Moving down then to what would bethe third paragraph on the second column it says:

First-time house buyers are now more heavily indebted by comparison with their peers in the early and mid-1990s. Consequently, the repayment burdens of first-time buyers have not fallen with the decline [of] variable mortgage interest rates, which are now at historically low levels, as households are opting [I maybe question the word "opting" here] for higher mortgage debt ... income ratios, higher loan-to-value ratios and/or longer maturity loans.

In layperson's language, this meant that the traditional way of buying a house over 20 years with three to four times one's income was now being pushed out in every conceivable way, 100% mortgages, loan-to-value ratios, the maturity levels over 35 years. This is all happening under your watch and it is happening in 2004. Can you give us an explanation as to how the standard, whatever about the standard banking model that was being referred to, I think by Deputy Higgins, and yourself earlier, where banks existed for 100 years, in a very short period of time, peoples' ability to buy a home had been completely refigured into a new model, all at additional cost? Even though interest rates now were historically low, it was still costing more to buy a house. Can you explain to us why that happened during your tenure?