Micheál Martin (Cork South Central, Fianna Fail)

The Central Bank has calculated, on the basis of a range of models, that residential property is now undervalued by between 12% and 26%. In essence, it has indicated that houses people can afford are not moving. This is having a significant impact on the economy, particularly the domestic economy. What is particularly worrying is that banks appear to be doing their best to turn down loan applications from potential buyers. Mortgage brokers all over the State are saying banks are turning away people with immaculate credit histories. People with a clear ability to make repayments on mortgages are still not securing loans. We have seen this already in a different category, namely, loans to small and medium-sized businesses. It is very worrying that only 6,300 first-time buyers were able to get a mortgage in 2011. This was 40% lower than the figure for 2010. Clearly, that is a drag on the economy. It is a very serious issue and of considerable concern.

Essentially, the Central Bank seems to be stating the mortgage market is dead and that nothing is moving. People who want and can afford to purchase their own home are not able to do so because the banks are not lending to them. We all know that the level of mortgage transactions can have a very significant impact on economic activity such as the number of plumbers, painters and carpenters who will be employed, as well as retail activity levels in the hardware and DIY sectors. There is a clear link between what is happening on the retail side and the lack of transactions on the housing side. It seems the banks are failing to provide credit for families who are in a position to purchase houses.

What does the Government intend to do about this? When recapitalisation of the banks took place last July, there was a degree of optimism on the Government side that this would have a significant impact on investor confidence in the wider domestic economy, but this has not happened. Where is there a lack of activity and why is there inertia from a policy perspective?

See this speech in context