Sir, – The ability of the Central Bank to maintain a rules-based system of mortgage control is questionable, given past experience in this country. As was reported in "ESRI voices concern over housing market move" (Front Page, December 17th, 2014), the ESRI in its submission to the Central Bank states that the new mechanisms were "the only real protection" against a credit-fuelled boom and it was concerned about the effects on the housing market from the housing supply side. The loan to value proposal is set at 80 per cent and the loan to income is set at 3½ times annual earnings by the Central Bank.
The new mechanisms aren’t “the only real protection” and the above proposals are skewed to favour the wealthy. On the loan to value side, a loan to value on houses up to and including €400,000 could be set at 90 per cent; for properties between €400,001 and €900,000, a loan to value could be set at 80 per cent, with €900,000 the maximum mortgage available for a property from any institution. The loan to income could remain at 3½ times annual income with account taken of longer terms than 25 years, say 40 years, for those purchasing properties up to €400,000, to allow for the high cost early stage, with reviews half way through the period to allow for earlier redemption, if required by the borrowers. This approach, strictly maintained, would allay the fears of the ESRI and be beneficial towards housing supply and borrowers and dampen any housing boom.
Our purpose is to provide affordable housing for all of our population and not investment vehicles. – Yours, etc,
HUGH McDERMOTT,
Glasnevin,
Dublin 9.