NAMA plans low-cost property loans

NAMA said it is exploring options to provide finance for commercial and home mortgages but only at the low prices people are willing to pay.

The state-owned bad bank wants to get the housing market moving again and is hoping to offer loans to potential house-buyers struggling to get mortgages.

The details have yet to be finalised but the National Asset Management Agency is talking to banks about the idea.

The agency’s chairman, Frank Daly, said at a time like this, it is “imperative” that NAMA is creative in identifying solutions to get the market moving.

He said banks do not have a lot of mortgage finance available, but NAMA does, and helping kick-start transactions in the property market is part of its “brief”.

“Many sellers may still retain unreasonable expectations of the prices thatcan be realised for the foreseeable future,” he said.

The NAMA boss said the only way the property market collapse can be reversed is if buyers are allowed to dictate the prices: “The only way that the market can be lifted out of its four-year hiatus is by generating transactions at whatever prices buyers are currently willing to pay.”

The Central Bank has warned that house prices would come down by about 60% from the peak at the end of 2006 and start of 2007, with a fall of about 14% this year alone.

But Mr Daly said the market level should be set “at whatever prices buyers are currently willing to pay”.

Mr Daly also warned that NAMA is losing patience with developers whose loans were taken in by the agency and who are not “stepping up to the mark”.

He said NAMA would begin enforcement actions against the 30 biggest property developers soon.

NAMA has acquired €72 billion worth of loans from the main banks in the names of major property developers. There is an end of April deadline for the submission of business plans by a second tier of 145 debtors who owe €34bn.

Mr Daly said if they do not stick to the date, NAMA “will not indulge them further”.

He also said there will be more sales similar to Google’s recent purchase of the Montevetro building in Dublin and that the agency has seen “enormous interest” from foreign buyers.

Yesterday, the Supreme Court ruled the law underpinning NAMA is in line with the Constitution.

Real estate developer Paddy McKillen challenged the constitutionality of the agency as he sought to prevent his loans being taken over by NAMA.

Mr Daly said the outcome of this hearing is an important confirmation of the legal standing of NAMA and eliminates any uncertainty in this area.