Short memories on 100% mortgages would devastate prospective buyers
Short memories on 100% mortgages would devastate prospective buyers - The Labour Party
Labour housing spokesperson Conor Sheehan has expressed his concern at calls for the reintroduction of 100% mortgages by Independent Ireland.
Deputy Sheehan said:
“I am deeply uneasy about 100% mortgages. A Back to the Future approach to the worst of Celtic Tiger reckless lending will not solve the affordability crisis that is crippling putative First Time Buyers.
“Anyone claiming that these are the panacea is either stupid or deliberately disingenuous.
“The short-term memory on 100% mortgages is of great concern to anyone who recalls the devastation of the Celtic Tiger era where some financial institutions encouraged people into these mortgages. Many of these same families found themselves in negative equity and unable to meet mortgage repayments. It devastated people.
“Throwing out policy suggestions on the hoof like this just shows the lack of joined up thinking amongst some in politics. Making policy to get a headline could be disastrous.
“These mortgages carry substantial risks and many people of a certain age in this country bear the scars of risky lending during the Celtic Tiger either through negative equity or even insolvency.
“With a 100% mortgage, the buyer does not have any equity in the property and if the housing market contracts they could find themselves in negative equity as many did. The higher interest rate offered by these loans will also make them more expensive over the longer term.
“We need to give Credit Unions more opportunities to underwrite mortgages and ensure that a household’s ability to pay rent is counted as part of their credit rating and assessment for mortgage loan calculations.
“Labour has a clear suite of proposals that would support people seeking to get on the housing ladder. We’ve called for the development of a Rent to Buy scheme for those in cost rental, where they have successfully paid their rent for three years and see a portion of their payments converted into a deposit for purchasing their own home.
“We also need to see a single market for financial services across Europe. Ireland has consistently some of the highest mortgage interest rates in the European Union. We need to see the completion of the European Banking Union to have a single market for banking to give Irish people access to financial services and products with better rates from across the Eurozone.”