THE IRISH Banking Federation has rejected claims that its members are refusing to issue mortgages below a certain threshold and are thereby acting to prop up property prices.
It was responding to claims by housing charity Respond that the banks could be distorting the property market by not lending below certain levels.
“The effect of this policy is that house prices are remaining artificially high, which is important for banks prior to the assessment of house and land prices by the National Asset Management Agency [Nama],” said spokeswoman Aoife Walsh.
However, the IBF said its members remained committed to facilitating home ownership and it had no evidence of the practices alleged by Respond. AIB also denied that it applied a minimum threshold
It pointed out that first-time buyers’ share of the overall mortgage market had increased consistently over the past 18 months and now stood at 25 per cent. “Lenders continue to focus on the mortgage applicant’s capacity to repay over time. To do otherwise would be in neither the borrower’s nor the lender’s interests,” a spokesman said.
Respond said some buyers were unable to access mortgage finance as it was not in the interests of the banks to lend to those seeking mortgages of less than €150,000.
“Respond has witnessed some strange banking decisions in relation to some of our own affordable properties whereby applicants who seem to fit the criteria perfectly are not able to access a mortgage of less than €130,000,” said Ms Walsh.
Some of those who were refused mortgages had public service jobs, had saved the deposit and had other savings, she said.
“It seems clear to us that banks are trying to keep pricing levels elevated ahead of the establishment of Nama,” added Ms Walsh.
However, the IBF pointed out that house prices have fallen by over 22 per cent from their peak, according to one survey.
