Friday 21 October 2016

We can't ignore alarm bells on property market again

Published 04/11/2015 | 02:30

Locking people out of the market who can afford to pay is in nobody’s interest. Photo: Frank McGrath.
Locking people out of the market who can afford to pay is in nobody’s interest. Photo: Frank McGrath.

Those hoping to buy a home will not be too taken aback by the declaration that the mortgage market is in its most dysfunctional state in the last 25 years.

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This was the verdict of Michael Dowling, who happens to be chairman of the Irish Brokers Association's mortgage committee.

Mr Dowling lays the blame on the head of the Central Bank.

Lenders can't give money out because they are constrained by the State financial watchdog's stringent rules, he maintains.

The crisis doesn't end there. The chronic shortage of available housing and the spiral in rents are combining to guarantee that the Government will be in for a roasting on the nation's doorsteps when canvassing begins this spring.

Improvement in the economy coupled with a rise in population have also been cited by ratings agency Moodys as factors that will also hike demand and prices for some time to come.

Mr Dowling argues that no other market has introduced changes the way this country did. The reduction in loan to value, and loan-to-income limits on how much can be borrowed, are having a serious impact. Locking people out of the market who can afford to pay is in nobody's interest.

Caution is understandable given our recent past, but an over-correction could also take a serious toll.

Ignoring warning signs a second time around would be beyond foolish.

Inquiry burned midnight oil but has shed little light

Truths are purported to be as much about questions as answers. The Banking Inquiry has had an abundance of questions, but the facts as to who was at fault, or otherwise, are as shrouded in fog as ever. We have seen a parade of people we thought pivotal to the decisions that led to the chain of disasters. By and large they all had the same shtick: Yes it was terrible, would that it were otherwise, we're all very sorry, but it really had nothing to do with us.     

In other words; a surfeit of regret but a deficit of responsibility, and without that, there is little propsect of accountability. From the outset, Fianna Fáil was convinced that the whole exercise was one of public shaming. Its members would not go willingly into the stocks to have the public fire turnips at them. Meanwhile, Fine Gael and Labour were too brash and too gung ho in their pledges to bring certainty and finality to locating the source of the contagion that ruined the economy.

We knew about casino capitalism, we knew that rules of prudent lending went out the window, we also knew that people who might have called a halt have been pensioned off on massive salaries. We knew somebody was snoozing on the job, while others were schmoozing, or living it large. But that's about it. The inquiry has cost €5m and much midnight oil has been burnt, too much, some will say, for so little light. So today we report that expectations are anything but great on the likely final report when it emerges. From the outset, it had been suggested that without sufficient teeth, there would be little legal bite.

So there will be no public hangings or floggings.

The politicians have given it a go. One way or another, the people will ultimately have a chance to give their own judgment in the election.

Irish Independent

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