THERE was a glimmer of good news yesterday for the two extremes in the housing market -- those struggling to repay mortgages; and those willing and able to take on a new one but who find the banks are not forthcoming.
Looking at AIB's horrific figures yesterday, one can see why the bank would be unable to provide credit, even to low-risk borrowers. It is harder to see why it and the other banks kept insisting there was no problem.
Not only did AIB have €10bn of losses last year, it lost €22bn of its deposits and had to replace them with very short-term loans from the ECB. These are not circumstances in which credit is going to flow.
The hope is that things are about to change. The banks have got a lot more state capital -- €13bn in the case of AIB. They also have a programme to hive off a lot of their loans, giving them a better mix of loans and deposits.
AIB says this will put it in a better position to write off the debt of those having difficulty with mortgage repayments. It remains a black mark against Fianna Fail that it acted to deal with commercial property loans, through the establishment of Nama, with far more alacrity than it tackled the problems in the mortgage market.
Both are a threat to the finances of the banks and the State, but there is a lot more human suffering in the travails of the housing market. Nama is now seeking to come to the rescue; offering to top up loans to prospective house buyers if the banks are short of funds. If it works, that would release more funds to help those in arrears.
This is not entirely an act of charity. Nama will be the owner of many thousands of apartments and houses taken from developers and builders who cannot repay their loans. It will want to sell those at the best price possible. If lack of credit is holding back the market, it could make sense to use some of its money from other sales and interest payments to help buyers.
After three years of inactivity, there must be pent-up demand for housing. But buyers need not just mortgages, but confidence that they are not paying too much. The dilemma for Nama is that it does not want houses to sell too cheap, but that may be the only way to get the market moving.