Joe O'Toole (Independent)

My apologies for not being present for the Second Stage debate. I have not seen the Minister of State's speech but I agree that this is an important piece of legislation. My understanding of the Basel II agreement, which comes into force on 1 January next, is that it should have a major impact on the levels of securities demanded by the central and reserve banks in order to credit the mortgage and lending companies. This idea we have been suffering with over the last number of years regarding 110% or 100% loans will no longer look as attractive to bankers.

I have noticed that in recent times some banks have got in under the wire, so to speak, offering fantastic deals to people who have a mortgage of less than 60% of the asset value of the homes. This means banks will now be more attracted to lending funds to people whose assets are significantly greater than the amount of the mortgage. The total value of mortgage underwriting to the 100% value of assets will be significantly restricted, both by this legislation and the implementation of the Basel II agreement, which will be introduced on 1 January next year.

I apologise if I am not completely au fait with the facts but this is my understanding of the matter. It is very important for us to get on-side with the issue as asset value will become more important. I do not wish to be a prophet of doom or be seen to reinforce the negativity of some commentators in the media, but if we did see a negative equity position come about, it would clearly be exacerbated by the high percentage of mortgage values being offered. With this legislation we at least have a mark to market approach in terms of what can be offered to a customer.

This is very sensible legislation which will doubtlessly pass unremarked by the world at large. It is a significant change in the position of banking in terms of the prudential arrangements to be put in place for bankers. It is also a significant change in terms of the relationship between bankers and central or reserve banks. Consequently there will be protection for many people looking for loans.

I wish to put this on record because I know that at some stage people will argue that it is unfortunate banks will not give 95% or 100% loans to people. That is part of what has been driving up the cost of houses. Banks will work to the market and it is in the interest of young people, in medium term, for this legislation to be passed. It puts proper brakes on the unrestricted offering of money and the increasing of credit limits without asking. The idea behind the term "Press here to increase your borrowing limit" is appalling. Wrapping up current accounts with mortgage accounts is an appalling recent development.

I apologise for delaying the House, but I welcome the Bill and thank the officials, who worked through extraordinarily boring, but important, legislation. We appreciate that work, even if it is not often recognised.