Allied Irish Bank is offering its staff a "special package" in which workers can avail of a 100% mortgage, it has been revealed.

But concern has been expressed that the practice may lead to problems in the housing market and increased financial burdens on this select group.

AIB spokeswoman Helen Leonard said: "We do have a special mortgage package available to our staff.

"Included in this package is a provision for a maximum funding of up to 100% for first-time buyers purchasing a family home. The application is assessed by a team of lenders using normal bank-lending policy, ensuring that the staff member demonstrates sufficient repayment capacity to repay the home loan over the term sanctioned."

The bank employs over 25,000 staff in 10 countries.

But Labour's Brendan Ryan has questioned the wisdom of offering such large home loans at a time of economic instability.

"Although these people are their own staff and they would be in a position to ascertain more than anyone else whether they can re-pay, it is in itself a big issue in that it was this kind of crazy lending which left so many people with unnecessary money woes," he said.

Ryan believes that these staff-perk practices could have a wider effect on the housing market, as they do not encourage saving habits in those buying and create a more unstable future if the buyer encounters financial difficulties.

Ryan has previously highlighted the refusal of banks to grant young people mortgage approval in north Co Dublin.

"At present, brand new two-bedroom apartments are available in north Co Dublin at approximately €150,000 and young people with a capacity to service such a mortgage are being turned down, which is a scandal," he said.

"At a time when the government is encouraging first-time buyers and lower-income earners to avail of the Affordable Housing Scheme, it is scandalous that banks will not lend on these properties."

Controversial 100% mortgages became less viable as the financial crisis kicked in last year, with the result that most people applying for mortgages are no longer being offered full loans.