Tuesday 16 October 2018

Ban 100pc mortgages, says watchdog

Charlie Weston

Charlie Weston

THE Consumers' Association of Ireland has launched a blistering attack on 100pc mortgages, claiming it is reckless and irresponsible for lenders to be touting these mortgages.

In the event of an economic downturn, first-time buyers with 100pc mortgages risk losing their homes and still owing the banks money, the CAI said.

The consumer group called on the financial regulator to ban 100pc mortgages and accused it of showing a reluctance to get involved in regulating the products.

The CAI commented: "Surely its job is to protect the consumer? It would do well to remember it has a duty to protect consumers - something it seems to have been blinded to during Ireland's all-consuming property frenzy." Currently, 100pc mortgages are available from Bank of Ireland, Permanent TSB, Ulster Bank and First Active, according to a research report by Brendan Murray in the current edition of the CAI's 'Consumer Choice'.

In its broadside against the banks, the CAI said: "It is reckless and irresponsible for lenders to be touting these products."

The consumer body pointed out that when people save money for a deposit it offers them some degree of protection from future events.

The magazine said borrowing the full price of a property exposes people to negative equity even if there is the slightest downturn in house prices brought on by an interest rate hike or an economic shock. Negative equity means people still end up owing the bank money if they try to sell up, as the value of the mortgage will be greater than the value of the house.

Permanent TSB said yesterday people have to demonstrate an ability to repay - whether they are borrowing 100pc or 70pc of the value of their home.

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