Catherine Noone (Fine Gael) | Oireachtas source

In the area of mortgages I have already spoken briefly about the 80% loan to value limit on mortgage lending the Central Bank is proposing. What has been less remarked upon is the proposal on the ratio the Central Bank wants to cap at 3.5 times the combined earning of the borrowers. Last week the chief executive officer of Ulster Bank, Jim Brown, told the Oireachtas finance committee that if the new proposed rules were enforced this year, 68% of first-time buyers would not have been granted mortgages. That is hugely concerning because without access to mortgage credit, young families will place increasing demands on the rental and social housing markets. A balance must be struck as a matter of priority between tight regulation and access to credit for first-time borrowers. The solution may lie in private international companies which could bridge the gap between needing to make finance safer and the increasingly pressing need to house the population.

In effect, private insurance could offer mortgage protection policies to first-time buyers that would cover 10% of the loan to value amount, allowing banks to lend up to 90% of the mortgage. The bank would then be protected against the first 20% of any loss on the mortgage. This achieves the Central Bank's aim of making the bank safer or limiting the risk to the bank while, at the same time, not putting house purchase beyond the reach of first-time buyers. Similar mortgage insurance methods have been used in the US for almost a century to enable borrowers to obtain finance for housing. Of course, we need to ensure we do not create any sort of bubble, as commentators have suggested, but we also need to ensure ownership remains an attainable ambition for young creditworthy families. There was a call last week for a debate on mortgages and I am sure the Leader is arranging one but this is something I will propose to the Minister for Finance if he comes to the House to discuss the matter in the near future.