Regulator may not approve mortgages 100%

The Irish Financial Services Regulatory Authority said it has no plans to approve the sale of 100 per cent-plus mortgages, a …

The Irish Financial Services Regulatory Authority said it has no plans to approve the sale of 100 per cent-plus mortgages, a move that was supported by the country's major banks.

"Ratios higher than 100 per cent are not on the agenda," Liam O'Reilly,the authority's chief executive said yesterday in response to a newspaper report stating that the regulator would not oppose loans of more than 100 per cent.

He also said the criteria surrounding all mortgage applications must be carefully monitored and that it was the responsibility of each financial institution to ensure that their credit standards and lending policies were appropriate to each borrower.

"This is a good move," said Dermott Jewell, chief executive of the Consumers' Association.

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"It is difficult enough for consumers to manage a 100 per cent mortgage and anything in excess of that would require extraordinary financial skills that would be beyond most of us."

The 120 per cent mortgages, are usually secured partly on the property's value, with the remainder unsecured. They have been available in the UK for the past few years. However, the 100 per cent mortgage only arrived in Ireland this year.

First Active, Ulster Bank and Permanent TSB started offering 100 per cent mortgages recently, meaning the property's full purchase price is covered by the loan. All three financial providers say they have no plans to offer loans above 100 per cent.

"We made it clear that the first-time buyer 100 per cent mortgage is our maximum," First Active spokesman Brendan O'Hora said.

Bank of Ireland and IIB said they have no plans to introduce mortgages of 100 per cent or higher.

Earlier this month, Central Bank Governor John Hurley raised concerns about the level of personal debt, saying that the economy is threatened by strong growth in personal borrowing linked to the housing market.

"Institutions have a responsibility to inform their customers about the risks of borrowing large amounts of money," said Mr O'Reilly. "They should only advance loans where they are confident that their customers will have the ability to pay."