Brian Ó Domhnaill (Fianna Fail) | Oireachtas source

In the aftermath of the budget I wish to add to what I said last night on the housing grant scheme that was announced. It is a retrograde and a bad step. Some commentary has been positive but that has mainly come from the construction sector. Much of the commentary has been bad in respect of the scheme. If implemented, the scheme could lead to an extraordinary uptake of debt by individuals who wish to purchase a home. The scheme provides an incentive for people to take on debt. No Government should incentivise private individuals to take on debt by way of a scheme but that is what this scheme does.

There is no incentive for people returning home. There is a total undermining of the Central Bank position on loan-to-value ratios and savings ratios. I can only guess that this initiative serves to undermine the Central Bank and to subvert it in respect of the savings initiative. The Central Bank did one thing in the aftermath of the financial crisis to try to help people. Many people have criticised the Central Bank on the limits of 10% or 20%. However, if the State subscribes to cultivating another housing boom, we are going to be back where we were before. I think that is wrong. This is going to push up prices on existing stock and it is going to help developers in parts of the country that are already over-housed. For example, in my county people cannot get a mortgage. How are they going to be able to avail of the scheme? The banks are simply not lending in certain parts of the country.The banks are only lending in areas where they know, through economic evaluations and models, they can sell on the property if the loan goes pear-shaped. Shame on the banks and, in particular, AIB, which is largely supported by the taxpayer. These are major issues which have not been addressed. This is feeding into a situation where increased lending rates internationally will cause a major crisis in our housing system again.