Economist against mortgage scheme

The Government’s planned introduction of a mortgage insurance scheme could set it on a collision course with the Central Bank and create a new property bubble, according to a leading economist.

Trinity College assistant professor of economics Ronan Lyons warned that Finance Minister Michael Noonan’s proposal aimed at kickstarting the property market could cause significant inflation and be at odds with maximum loan-to-value proposals discussed by Central Bank governor Patrick Honohan.

Mr Lyons suggested, however, that the introduction of such measures could be brought forward in light of Mr Noonan’s proposals.