Joan Burton (Dublin West, Labour)
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Question 114: To ask the Minister for Finance his views on the report in respect of the borrowing statistics for the month to 30 April 2006 showing some of the highest recorded increases in borrowing and in particular a €1.8 billion increase in residential mortgage borrowing; his further views regarding the surge in borrowing and property prices; his proposals to address the issue; and if he will make a statement on the matter. [21998/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As the Deputy will be aware, a high proportion of household indebtedness in Ireland relates to borrowing for house-purchase which, in turn, involves the acquisition of an asset for the households. In the same way, borrowing by the business sector generally underpins investment, and the creation of business assets yielding future income. It therefore reflects the strong performance of the economy and confidence in Ireland's economic prospects. Demand for housing has risen strongly in recent years and has been underpinned by demographic factors, the innate strength of the economy and the impact of an accommodating monetary stance, including historically low interest rates. House prices have risen rapidly in recent years driven by these fundamental factors. It is reasonable to assume that, over time such factors as the large increase in new housing supply will restore equilibrium to the market. This should allow output to move gradually closer to sustainable demand and result in more moderate price increases. There is currently a broad consensus amongst commentators such as the OECD and the IMF that the most likely outcome for the housing market is for a "soft landing". Whilst the pattern of mortgage growth and associated debt levels in the economy are supported by a range of fundamental factors such as growing employment, rising real incomes, favourable demographics and low inflation and interest rates, the Central Bank has highlighted the need for borrowers and lenders to take account of the current very low level of interest rates and the fact that this situation cannot continue indefinitely. I share the view that both borrowers and lenders need to factor into their financial decision-making the prospective impact of potential changes in the future economic and financial environment.