Housing dysfunction: Time to tackle lenders’ power

The dysfunction in our housing market was underlined again yesterday when MEP and former minister Brian Hayes warned that the Central Bank requirement that potential home buyers must have a 20% deposit before they can be considered for finance was “unfair”.

Mr Hayes also told a banking conference in Dublin that standard variable rates (SVRs) being charged by Irish banks are too high compared with the rest of the eurozone. It is not hard to agree with Mr Hayes but it would be easier to cheer him if the Government, of which he was a member until not so very long ago and which had to assume ownership of two national banks, was far more assertive in its dealing with banks that only exist because of taxpayer support.

Be that as it may, the housing crisis and the slow response to it, the difficulties in the rental market, and the fact so many housing units are unoccupied, all point to a situation that does not encourage social or economic stability. Mr Hayes suggested that we need longer-term, fixed mortgages or 10-year fixed mortgages, which are being offered in a small number of cases. Longer-term products would encourage certainty for the borrowers and for the banks, he suggested.

Essentially, he described a situation where the interests of institutions hold far greater sway than the interests of individuals. Until that imbalance is addressed, it is unlikely that our difficulties around housing will ease.


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