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Clarity on banks’ use of mortgage rule flexibility is required – Doherty

24 May, 2016 - by Pearse Doherty TD

Sinn Féin Finance Spokesperson Pearse Doherty TD has said it essential that there is clarity as to whether and how banks are using the flexibility allowed to them under the Central Bank’s mortgage rules.  He was speaking after the main banks refused to confirm to him if and how they are using the flexibility which allows up to 15% of family home mortgage lending to fall outside the loan to value to limit and up to 20% to fall outside the loan to income restrictions.

Deputy Doherty said:

“I am extremely disappointed with the lack of disclosure of information in response to parliamentary questions to the Department of Finance regarding the new mortgage rules and to my own questions directly to the banks. There has been much debate about the new rules and their impact and a lot of anger aimed at the Central Bank. The Governor Philip Lane will soon call for submissions which are based on analysis of the evidence but this essential piece of evidence is known only to the banks. I understand from the Central Bank this consultation process is set to begin in the near future.

“AIB, Permanent TSB and Bank of Ireland are banks which the State have an interest in, it beggars belief that they won’t disclose details of the use of the discretion available to them to offer leeway under the new mortgage lending rules. It is particularly galling for the 99% State-owned AIB to refuse to state if they are fully embracing the flexibility allowed to them.

“These details are in the public interest to allow proper analysis of these new rules and allow us to judge whether these are too restrictive for some, given the level of grievances aired as of late especially by many first time buyers and in the media.

“Rents rose 8.8% in Dublin last year and 16% in Cork and with deposits now averaging €51,000 and €32,000 respectively in each city. We need to establish if these banks are using the leeway available to them to assist credit worthy applicants especially young families who have trouble getting this money together. For me this is exactly the type of applicant for whom the flexibility in the rules should be spent on.

“The new Governor has stated that there will be a review of these rules. Before then, we need to get full disclosure as to whether it is the rules that are causing so much concern or if the banks are hiding behind the rules. I am now publicly calling on the banks to release to information and again on Minister Noonan to compel those State backed banks to publish these details.” 

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