Fianna Fáil Spokesperson on Finance Michael McGrath has said new data on mortgage approvals point to an air of panic in the property market at the moment.
In November, the number of mortgages approved grew by 57% year on year. In value terms, the growth was even more pronounced in November, up 63%. As a result, the average mortgage approval increased to €187,000 (€179,000 in October).
Deputy McGrath commented: “These figures raise serious concerns about overheating in the property market which I believe is being driven in part by people’s reaction to the proposed 20% deposit requirement for future mortgages which has been proposed by the Central Bank.
“These figures are unlikely to have dissipated when we see the December figures. This highlights the risk associated with the sudden introduction of restrictions in respect of the minimum deposit and loan to income ratios. A more sensible approach would have been a gradual introduction of more realistic rules.
“In our submission to the Central Bank’s public consultation on new mortgage lending rules, we said a minimum deposit level somewhere in the range of 10% to 12% was more realistic for prospective homebuyers and would have the potential of creating stability while still maintain market access for buyers. At a time when rents are spiralling, anyone renting in the private sector would find it next to impossible to save a 20% deposit for a new mortgage.
“Fianna Fáil is also of the view that the dramatic escalation in house prices, particularly in Dublin, is the result of supply not keeping up with demand rather than by any suggestion of free flowing credit. As such, we believe that in parallel with new mortgage rules, a concurrent strategy to ensure a stable supply of suitable new housing units is needed. We are also suggesting to the Central Bank that the maximum length of a mortgage should be set at 30 years.
“I believe the Central Bank needs to act swiftly to ease concern among homebuyers on a high minimum deposit rate being introduced as this might go some way to cool market pressure.”