Banks deny mortgage threshold claim

BANKS have rebuffed claims that they are refusing mortgages below certain amounts in order to inflate property prices ahead of the start up of NAMA.

Ireland’s largest housing charity claimed yesterday that some banks were not lending below certain levels.

Respond! said many buyers were unable to access mortgage funds for amounts less than €150,000.

A senator also stood over claims that management at one major bank had admitted to him that loans of less than €175,000 were not being released for properties in the Dublin area.

Respond! said it had witnessed “some strange banking decisions” in relation some of its own affordable housing properties. Applicants who seemed to fit the criteria were not able to access funds, despite adequate incomes, claimed the group.

National communications officer, Aoife Walsh, added: “It is akin to the shopkeeper withholding goods in order to stimulate demand so that higher prices can be charged. It seems clear to us that banks are trying to keep pricing levels elevated ahead of the establishment of the National Asset Management Agency (NAMA).

“It is in their interest to keep house prices artificially high and this could result in NAMA paying too much for the bad loans the banks will be transferring to it.”

Labour Senator Brendan Ryan claimed last month that he had information that showed Bank of Ireland was refusing mortgages in Dublin below €175,000.

The party’s consumer affairs spokesman stood by his claim yesterday, adding that the threshold was confirmed to him by management at the bank’s headquarters.

Mr Ryan said he would be raise his claims with the Oireachtas Committee on Enterprise, Trade and Employment next month.

Bank of Ireland last night denied operating thresholds. Guidelines were in place for each candidate’s application which was assessed independently, said a spokeswoman, adding: “If they come in and tick all the boxes, there’s nothing to say they won’t get the mortgage.”

Permanent TSB said it operated no threshold while AIB said amounts below €25,000 were not approved as they made sense when other costs were added.

The Irish Banking Federation and the Financial Regulator both said they were unaware of banks operating mortgage thresholds.