100% mortgages 'inflated house prices'

Banks and lending institutions have been accused of escalating the housing crisis by providing 100 per cent mortgages.

Des Geraghty, chairman of the Affordable Housing Partnership, said he was "absolutely convinced" that financial institutions had escalated house prices with these mortgages.

He said the price of the house did not seem like "real money" to young couples because they did not have to contribute a deposit to it from their savings. This resulted in the inflation of prices "beyond prudent levels".

Mr Geraghty urged banks to review the practice of 100 per cent mortgages and ideally to "jointly agree to desist from this practice".

He was speaking at the launch of Focus Ireland's 2006 annual report. Declan Jones, Focus Ireland chief executive, said the practice of 100 per cent mortgages was not "the most prudent of policies". He said the mortgages tied young couples into a lifelong commitment of bank repayments but borrowers could not tell what might happen in 20 or 25 years' time.

This raised serious questions for the next generation. "Where will the children of the people who have these mortgages be living?" Mr Jones asked and warned that this could have long-term implications for the homeless services.

He pointed out that the number of households on the local authority housing waiting lists had almost doubled, from 23,000 households in 1991 to more than 43,000 today while the number of homeless people had increased from 2,700 in 1991 to 5,000 last year.

"And we all know that the past 15 years have been the most prosperous in Ireland's history."

Mr Jones blamed successive governments for failing to tackle the issue. "There are too many blockages to delivering housing and these include the scarcity and cost of land, the cost of buying housing, lack of adequate funding as well as local public opposition to the development of social housing," he said.

Focus Ireland has called on the Government to use the next budget to frontload a capital investment of €2 billion under the National Development Plan, to acquire 10,000 social housing units next year.

Focus Ireland services worked with more than 5,000 people last year and helped more than 270 households to secure a home and sustain it.

Mr Geraghty criticised people for objecting to social housing at local level and said there was no evidence that its provision affected the market.

"It is one of the scare tactics that is used to try to prevent integrated community development," he said.

Being homeless: Siobhán's story

Siobhán wanted to be a prison officer when she left school but she got pregnant before her Leaving Cert. "That put an end to studying," she said.

She had three children while her partner worked on the building sites. "We were very young and we both had our demons to fight." Her family had disowned her for getting pregnant; her partner's father was a violent alcoholic.

Four years ago, her partner started taking heroin. "In six months I was doing it too. It was an escape," she said. "It seemed so welcoming, so harmless, but it's like cheese in a mousetrap."

They lost everything and moved to Dublin for a fresh start. They got a house in Clondalkin but her efforts to wean herself off heroin failed. Her partner's sister removed the children and they were evicted. "We had nowhere to go but the park, where another homeless person lent us a blanket to sleep under."

Eventually they got a place in a a B&B and were put on a methadone programme. "We were in the B&B a year and a half, trying so hard to get it together, when my partner died in the bed beside me." Siobhán was three months pregnant.

She then came into contact with Focus Ireland's family support group. Her baby was taken from her but Focus Ireland helped her to get him back. Her older three children still live with their aunt and, while two will not speak to her, the youngest wants to come home.

She now has a two-bedroom apartment through Threshold "so I'll be ready when my other son joins us". She is visited regularly by child support workers and has had help with budgeting and housekeeping.

"I've never worked but I'm doing a course on landscaping," she said. "I've always loved gardening."