Sir, - I have heard of a recent case in which a bank manager, eager to help a customer to secure a house mortgage, encouraged the applicant to state that a lodger would be brought into the new house, "the rental income thereby increasing the value of the loan which could be applied for". This, taken together with certain other embellishments to the applicant's annual salary, resulted in an approved loan equal to four times the applicant's annual income. A risky business for the applicant.
As for the bank, should the borrower eventually default under the burden, it will receive at least a few years of repayments, its administration fees, possibly a sales commission from an insurance company and, more importantly, the house itself. At the same time, the bank insists that borrowers wrap themselves in all sorts of insurance to diminish further its risk.
The banks of Ireland routinely make millions a year from the provision of mortgages. I fail to see why such institutions should not pay a higher rate of corporation tax on their profits from this form of lending and thereby earn a more appropriate return for such mundane and risk free activity. Our banks might also consider the role that their aggressive lending policies have played in stimulating the current inflation in house prices. -Yours, etc.
Kilkishen,
Co Clare.