IL&P raises €2.15bn to fund lending

Irish Life and Permanent has raised €2.15 billion in a major securitisation programme that will be used to fund future mortgage lending.

The group, which is the Republic's biggest mortgage lender, said the programme was fully subscribed. It is the largest ever residential mortgage-backed securitisation undertaken by an Irish financial institution.

The fund-raising follows Irish Life and Permanent's recent trading statement that indicated the group expected to lend about €4 billion in mortgages in the first six months of this year.

At its banking operation, it said new lending for the first six months of 2006 was expected to increase by almost 50 per cent with total loan book growth comfortably in excess of 25 per cent year on year.

Yesterday, the group's finance director, Peter Fitzpatrick, said the international interest in the programme underlined the confidence in the Irish housing market. "This offering attracted very strong demand right across Europe with over 75 financial institutions supporting the offer," he said.

"The success of this programme also underlines the level of confidence internationally in the quality of lending being undertaken in the Irish mortgage market," Mr Fitzpatrick said.

A number of other Irish banks have also recently raised new finance to fund the expected continued strong growth in mortgage lending in Ireland.

While international interest remains strong for these securitisation programmes, economists are increasingly warning about the continuing high rate of growth in Irish house prices.

Yesterday, Davy economist Rossa White said house prices were now rising at five times the pace of rents, three times wage growth and twice the pace of disposable income.