Written answers

Thursday, 10 April 2008

5:00 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Question 62: To ask the Tánaiste and Minister for Finance if his Department has made an estimate of the number of residential property owners in negative equity; and if he will make a statement on the matter. [13752/08]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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My Department does not compile estimates of the nature requested by the Deputy. Negative equity, as the Deputy is aware, is where the nominal value of the mortgage exceeds the nominal value of the property to which the mortgage relates. A first-time residential property buyer who has obtained a '100% mortgage is the more likely type of mortgage holder to be affected by negative equity as s/he is likely to have the least amount of equity available to compensate for any drop in nominal house prices. However, 2007 figures show that first time buyers represent only about 20% of the residential mortgage market. Investment in property is usually seen as a long term investment.

It is also important to note that though '100% mortgages only became generally available in Ireland with effect from July 2005 onwards, most financial institutions do not now provide '100% mortgages to the average residential property loan applicant. It is, therefore, reasonable to assume that few residential property owners in Ireland should be exposed to negative equity.

In any event, the key issue for any prospective or existing residential property owner is the affordability of the mortgage and I have consistently highlighted the need for responsible behaviour by both borrowers and lenders and, in particular, the need to factor into their financial decision-making the effects of potential future changes in economic and financial conditions. Furthermore, I introduced a number of measures — most notably the reform of stamp duty and mortgage interest relief — in the December 2007 Budget — to assist in making housing more affordable for the residential property owner.

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