Mortgage insurance proposal criticised

Mortgage insurance will drive up prices, provide minimal protection to borrowers and do little to improve the supply of houses as it is “the wrong medicine for the job”, a group of industry experts said yesterday.

At a hearing of the Oireachtas finance committee, a number of experts, including Trinity College economist, Ronan Lyons, New Beginnings co-founder, Ross Maguire and Karl Deeter of Irish Mortgage Brokers expressed concerns over the proposed entry of mortgage indemnity guarantees to the market.

Mr Lyons said there should be no question that mortgage insurance would drive house prices and rents higher. “The direct effect of mortgage insurance is going to be to increase prices relative to rents and relative to incomes; I don’t think that’s in debate. If you give more people more credit, the first most important thing to happen is that prices go up relative to rents and relative to incomes.”