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E-mailMortgage brokers have called on the government and the Dáil to review the lending practices of the few banks still left lending into the depressed property market.
The Independent Mortgage Advisers Federation (IMAF) said that four banks actively involved in the market were rationing loans by insisting on "ridiculous" levels of income even after borrowers paid up their monthly payments.
Banks are paying lip service to satisfy politicians by offering mortgages with conditions they know cannot be met, says IMAF's senior director Michael Dowling.
According to IMAF, AIB insists a single person show net current account monthly savings of €1,500 after paying the mortgage. A joint income couple must show €2,500, or €3,000 for a family, after they pay the monthly mortgage if they are to qualify for a loan.
"We have civil servants with no risk and that AIB will not lend to them," said Dowling, adding that EBS and Bank of Ireland were not applying the same stringent thresholds. A spokesman for AIB said it assessed all mortgage applications "on a case by case basis".
IMAF warned that existing borrowers will feel increasing pain as the other banks follow Permanent TSB's lead to hike variable interest rates in the coming weeks. Dowling predicted that Bank of Ireland would be the next lender to increase home loan rates, in March.
Variable interest rates in the next 12 months will soar to match levels of the boom year of 2006 at 4.5% to 5%, Dowling said.
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It's quite repulsive to hear this,
It is in part thanks to these risk-free cash cows in the public sector that the property bubble reached the scale it did.
But putting that smouldering land mine to one side.. Surely the solution to this problem is that house prices need to match this new reality, the crash really hasn't taken hold yet and once it has no amount of government sponsored interference will arrest it, and rightly so.