Quinn repeats concerns over house loan criteria
THE Minister for Finance repeated his concern about high loans being advanced by some lending institutions to house buyers.
Mr Quinn said there appeared to be evidence, supported in a recent article in The Irish Times business section, that some lending institutions were breaking the conventional criteria of lending prudence. "That is an imprudent process, perhaps being undertaken by some lending institutions because of the very strong competitive pressures that are within the lending market."
Replying to the Fianna Fail spokesman on finance, Mr Charlie McCreevy, he said the Central Bank had been in contact with the lending institutions. He would be having further talks with the governor and others to see if there were other measures that could be taken.
However, there was a limited number of measures available, said Mr Quinn. One did not want to interfere with what was clearly a healthy demand on the one side and yet, at the same time, the actual lending institutions had to ensure that they did not fuel the process by giving out more than was prudent.
Mr Quinn, earlier said the rate of house price inflation - currently considerably higher than the general inflation rate - partly reflected the remarkable progress of the economy in recent years.
Lower interest rates, changing demographics, rising incomes and unprecedented employment growth could all be related to the trend in house prices. Nevertheless, there were clear grounds for concern that persistent high house price inflation might generate inflationary pressures indirectly in other areas of the economy.
"Such a development would bed detrimental to the interests of borrowers and lenders alike, the construction industry and the economy generally, and so the trend over the near term future will require close attention."