Bertie and I didn't talk about impending crash - Noel
Published 23/08/2015 | 02:30
Noel Ahern, the former housing minister, has said that he never raised his concerns about the property bubble with his brother, the then Taoiseach Bertie Ahern.
During 2005, banks and building societies were offering first-time buyers "dodgy" 100pc mortgages. Only one political figure in government at the time expressed concern - Noel Ahern.
Now, in an interview with the Sunday Independent, Noel Ahern has said he did raise concerns with "other agencies", such as the Central Bank and the Department of Finance, but when he met his brother "over a pint, we tended to talk about other things."
Mr Ahern, who was in office in the run-up to the crash throughout the last decade, had serious concerns over the proliferation of 100pc mortgages and the impact they had on the market.
The former minister who represented Dublin North West until 2011, has admitted that he and his brother did not tend to discuss the crisis.
"I can't say I can remember chapter and verse, if I was meeting him occasionally socially, after hours, I'd say we'd be talking about other things, rather than the day job," he said.
"If you got an hour to go for a pint or to watch a football match, him and myself would have been chatting about other things.
"I would have said my penny's worth in other settings. There was some official concern over 100pc mortgages. Many did not want to know."
But recalling his time in office, Mr Ahern said he and his officials had strong concern at the offering of 100pc mortgages by First Active at a time when the market was already buoyant. He said this forced the other banks to follow suit, which had a disastrous impact.
Mr Ahern, wrote to all the banks, warning them that they were abandoning prudence by increasing loan-to value ratios and not requiring any deposit.
Mr Ahern' s concerns related to the possible inflationary effect of the move and the nightmares that young families who went all-in on 100pc mortgages would be in if the property bubble burst.
"There was concern, we certainly had concerns about 100pc mortgages and we fought a battle on that with the banks and with the Central Bank, the Regulator and the Department of Finance alright," he said.
Detailing the reaction he got from the state bodies, Mr Ahern said his concerns were dismissed.
"There was a bit of an attitude from them that 'it was only a promotional thing from a building society' and 'it will go away, it's only an advertising thing' and 'where's your evidence?' that sort of thing," Mr Ahern said.
"Six months after they were accepting that, all of the other banks moved to follow First Active," he said.
"It defied logic, but we were very much concerned about the 100pc mortgages, because they were dodgy.
They assumed the market would continue to increase and people would be protected by those increases," he said.
Mr Ahern said that in the early part of the decade it was a stated government policy to increase housing supply in order to meet the demand. He defends that increase as being appropriate for the time.
"We did want that and my own mantra was 'supply, supply, supply', which was prudent in the early years. The thinking was that if you increased supply, you meet the demand and you take the sting out of the thing," he said.
"For the five years I was there, that was the policy. That was a success and we were hitting completion numbers not seen before.
"And then it took off again, which defied logic [after the 100pc mortgages were introduced]," added Mr Ahern.