Minister of State for Housing Batt O'Keeffe has warned banks against "over-lending" to young mortgage customers as the housing market cools.
Mr O'Keeffe was speaking after the publication of the Department of the Environment's Annual Housing Statistics Bulletin 2006, which shows 47 per cent of all new house mortgages taken out last year were by first-time buyers, one third of whom had taken out 100 per cent mortgages.
The most typical loan was for a term of between 31 and 35 years.
Urging banks to make sure that young customers' quality of life was ensured, Mr O'Keeffe said: "You should not over-lend money to people who could be affected by mortgage increases".
He said his department had always "exercised caution" in relation to 100 per cent mortgages. "We have also indicated to people they should consider down-the-road the affordability."
Mr O'Keeffe said: "The economy is strong, interest rates are likely to go up a quarter per cent again this year, but all the predictions are that in 2008 they will begin to fall. I would say to a young constituent that it is a buyer's market now, and that prices are stabilising and there is better value for money."
But Fine Gael's Gay Mitchell said it was "extraordinary" that "with the general election over and the Dáil in recess that the Minister for Housing is only now finding his voice to raise this issue".
Mr Mitchell also said that "self-serving" estate agents and financial institutions should be held accountable for misleading the public on predicted house price increases.
Speaking on RTÉ Radio this morning Mr Mitchell said that there was a "set formula which roughly says that when house prices have been driven up by low interest rates and then interest rates increase, prices of houses begin to decline again roughly 18 months to two years later.
"Estates agents should have said that this formula is known . . . European Central Bank (ECB) interest rates began to increase exactly two years ago in 2005, and none of our so called "honest" brokers made any mention of this," said Mr Mitchell.
"The very people who talked this up - estate agents and finance houses - are the people who benefited from it, meanwhile young people in increasing numbers . . . are in hock for 35 to 40 years, some of them, with 100 per cent mortgages.
"Now, after this event, we're told 'oh actually we got it wrong' - they didn't get it wrong - they got their fees based on these exorbitant prices, they got their interest on these exorbitant prices, and . . . they have continued to forecast an increase in prices," Mr Mitchell said. "It's very self-serving to say the least," he said.
According to today's housing statistics, almost 33,000 housing units were completed in the first five months of this year - an average of 1,600 per working week. The average price of a new home increased by 9 per cent last year to €314,087 while second-hand homes increased in price by 6.8 per cent to an average of €375,577.
The biggest price increase in the State was for new homes in Dublin, which saw a 16.1 per cent increase, to average €419,330, while the most expensive homes were second-hand dwellings in Dublin, which saw an 8.9 per cent increase last year to average €517,865.
In a statement issued in response to the Department of the Environment report, Arthur Morgan, Sinn Féin spokesperson on Housing, said that the Government had claimed over the last number of years that there was no affordability issues with the Irish housing market. "Numerous reports pointed to an overvaluation in the housing market. Yet the Government failed to act. A situation likely to lead to huge problems in the time ahead was allowed to flourish. "Negative equity and house repossessions are now real dangers for many people," he said.