Call for An Post home loans

Post offices should become the primary mortgage providers for first-time buyers, according to the Public Banking Forum of Ireland.

The forum believes the struggling post office network should extend mortgage and banking facilities in order to survive.

It has put forward proposals around providing interest-free loans to first-time buyers to allow them to get on the property market.

Instead of charging interest on mortgages, post offices would charge a nominal percentage administrative fee which would be far cheaper than banks that charge interest for the lifetime of the mortgage.

The Irish Postmaster Union (IPU) has previously called on An Post to support new services and innovations across its network in a bid to save the 1,300 branches across the country.

There were 198 closures between 2007 and 2010 and a further 24 net closures between 2011 and 2014.

In its draft postal strategy statement 2018-20, ComReg forecast that An Post’s financial and liquidity situation will remain a main challenge because of the company’s obligations to provide a national mail collection and delivery service.

Forum chairman Séamas Ó Muilleaneoir said: “They are an essential service, but our post offices are doomed. A lot of rural Ireland is being shut down and we need drastic action.”

He suggested ‘An Post Bank’ become the primary administrator of mortgage credit for first-time buyers of the average-priced house for those on the average wage.

“What we are suggesting is that there is no reason why the post offices couldn’t administer your mortgage credit for an admin fee of, let’s say €10,000 over the lifetime of the mortgage,” said Mr Ó Muilleaneoir .

“If you have €10,000 you could pay maybe €500 a year and there would be no interest charged.”

However, he added that this would only be available for average priced houses for people on an average salary and would be a once-off for those first-time buyers.

He said banks are “essentially gouging huge sums of interest payments” from the mortgage holders and the forum proposals would aim to tackle this.

The forum has said that around 500 to 700 post offices are in immediate danger of closure and An Post’s future is precarious. However, it claimed that “there is light at the end of the tunnel” if Government, An Post & the postmasters are willing to embrace dramatic change.

The forum welcomed the launch of An Post’s new smart current accounts and said An Post’s financial facilities should be extended.

“We must consider that in Ireland the commercial banks have over 95% of the market, whereas in Germany the commercial banks, including Deutsche Bank and Commerzbank AG, have only 12% of the market,” the forum said in a statement.

“70% of German banking is provided by community banks, lending locally to the productive economy, without engaging in speculation or securitisation.”