Why mortgage lending policy is ludicrous

Sir, – Why would anyone in Bank of Ireland, or any other finance institution, have understood the offence caused by the advert exclaiming how “Orla” and her boyfriend had moved into her parents’ house so they could save for a mortgage deposit, when it’s likely none of the people who sat around in meetings coming up with this idea are trying to get mortgages themselves (“Bank deletes tweet advising young couples to move back in with parents”, News August 23rd). The requirement for a deposit in 2017 is ridiculous and is not a requirement in other countries. But because Irish public policymakers can only speak English they never educate themselves about the policies in other countries. Also, it’s not like any of the people who had their homes repossessed by banks were given their deposits back or the equity built up, instead those houses were sold for an amount to cover the bank debt only and no one in Bank of Ireland or any other bank cared much about the Orlas of this world.

I had a look at one of the property websites and found that a 100 per cent mortgage on a two-bed apartment in a nice Dublin middle class area with great schools, transport links and parks and sports facilities would cost €1,242 a month for a single first-time buyer over 35 years. Yet a one-bed apartment in the same complex costs €1,500 per month to rent.

But the person paying €1,500 in rent, with a track record of paying and being up to date on all bills, would never be approved for a mortgage costing €1,242, even though the mortgage is €250 a month cheaper than renting.

That’s how stupid Irish mortgage lending policy is in 2017.


This insanity is unsustainable but why the Government refuses to do even the simple things to fix the problem is not certain. Fine Gael is the party of the property-owning class so it would seem sensible that it would want more people to join it and would be taking action to remove blocks to people like Orla becoming a property owner. First, it could remove the requirement for a deposit and make mortgage applications subject to affordability only. Second, it could learn from such countries as the Netherlands or Denmark or Israel on how to create a self-funding social housing sector where the residency of a home is a separate matter to ownership of the building.

I hope over the summer some of the Fine Gael politicians spent some time reading their history to understand that in every single rentier economy there is a tipping point when enough is enough.

For those who are afraid to mention out loud that their real fear is that social housing will turn into a ghetto, the answer to that can be found on the Continent too. People in social housing on the Continent pay a management fee. It is high enough to properly maintain and upkeep the property and for people who pay it to take an interest in it being spent well, but not so high that it is unaffordable. Residents are also required to sign agreements so that if they have pets they are chipped, snipped and registered with a vet and they are registered with schools and doctors and dentists. In return for the state providing them with housing and the services and infrastructure people need, they are in turn expected to behave as responsible members of society.

Is that too much to ask from the Irish State and from Irish people like Orla and her boyfriend or from the talking heads in Bank of Ireland who came up with that ad? So far, it seems it is. – Yours, etc,


Canary Wharf,