A NUMBER of mortgage providers are to curtail lending for homes in rural areas, the Irish Independent has learned.
The revelation appears to confirm that a two-speed housing market has developed.
Property prices in towns and cities are expected to recover well ahead of rural areas.
KBC Bank and ICS Building Society have both said that they will require much larger deposits from those buying outside urban areas.
This follows last year's move by EBS Building Society to stop lending for the purchase of apartments outside urban areas and commuter-belt locations.
KBC Bank will now require a deposit of 20pc of the value of the property to be put up by those buying in rural areas, but a deposit of just 10pc for purchases in urban areas -- defined as towns and cities with a population of more than 15,000.
The bank will also consider funding first-time buyers and movers for up to 80pc of the purchase prices in larger population centres in counties Meath, Kildare and Wicklow.
ICS has told mortgage brokers it will require anyone buying a one-bed apartment to have a deposit of at least 35pc of the value of the property if they are buying outside Dublin, Limerick, Galway and Cork cities.
Last summer, EBS said it would stop lending for apartment purchases outside major urban locations.
If the apartment is in a major urban location like Dublin, Limerick, Cork or Galway cities, EBS will lend up to 85pc of its value.
If it is in a commuter-belt town -- like Navan, Co Meath or Newbridge, Co Kildare -- EBS will lend up to 80pc.
But if the apartment is not in one of these categories, the application will not even be considered.
Many of the country's 2,800 ghost estates are in rural areas.
The ghost-estate problem is at its worst in western counties were the large number of unfinished estates is coupled with low populations, a recent report for the Department of Environment found.
Mortgage broker Karl Deeter of Irish Mortgage Brokers said lenders were now discriminating against those seeking loans to buy property in rural areas.
"If you are not buying in Dublin, Cork, Limerick or Galway cities they do not want to know. This is all part of a growing trend to discriminate against properties outside of the cities," Mr Deeter said.
The latest Daft.ie report showed asking prices falling by 50pc from their peak in Dublin.
By contrast, prices have fallen by just 30pc in rural parts of Mayo and Limerick.
Daft economist Ronan Lyons said there was now a two-speed property market in operation throughout the country.
"It is the cities, and particularly Dublin, that are most likely to stabilise first, and it remains to be seen if this happens in 2011," he said.
"Those places away from the main cities and from Dublin's orbit have taken the smallest steps so far towards sustainable prices."
New figures from ratings agency Moody's showed that almost 13,000 struggling homeowners face losing their homes after failing to pay mortgages for at least a year.
The situation is expected to get worse as a toxic combination of government spending cuts and tax increases slash household disposable incomes, reducing borrowers' ability to maintain mortgage payments.