Noonan: Banks’ mortgage deals will help stabilise rents

Banks offering interest-only mortgages and other incentives to buy-to-let investors would help stabilise rents, Finance Minister Michael Noonan said, adding that the jump in Dublin house prices was not a cause for concern yet.

However, the Government was urged to take comprehensive action now to ensure speculators sitting on huge tracts of development land were encouraged to release it to prevent another housing boom and bust.

Mr Noonan said he would pursue getting some of the funds put into the banks back from the bailout fund, the ESM, “in the course of next year”.

Commenting on new mortgages designed to attract investors from abroad by the Permanent TSB and Bank of Ireland, Mr Noonan said the county was at the early stages of a restoration of the fortunes of the construction industry. There were some pressures reflected in increasing rents in Dublin.

“To lend on favourable terms to the buy-to-let sector seems to me to be addressing a particular problem in the rental market and I would hope that would lead to the stabilisation of apartment rents as extra apartments are provided,” he said.

He said the rise in Dublin house prices over the past year was quite small in proportion to the overall drop of almost 55%.

“There is no need for concern yet, we need the system to be restored.”

But Karl Deeter of Irish Mortgage Brokers said they were studying the history of property prices in Ireland and found the boom to bust cycle has been happening every 20 years for around 300 years.

“The Government was warned about the house price inflation more than a year ago with a shortage of housing stock, but the Government has failed to take action that could help, such as taxing land which is being held by speculators, creating a shortage and firing up prices.”

Mr Noonan said he would not pursue the issue of trying to get help from the ESM on the tracker mortgage situation. How the ESM will function was still being debated.

“Trackers are an issue, but one that will be discussed in the immediate future,” he said.

Meanwhile, the eurozone finance ministers signed off on the final review of Ireland’s bailout programme. Mr Dijsselbloem said they were confident that Ireland would be able to stand on its own feet from next year. Economic commissioner Olli Rehn said: “The successful conclusion of the Irish programme is a strong signal that our common response to the crisis is delivering results.”

More in this section

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.