Blog – McCarthy & Associates – Galway Talks, 23/10/14

mortgageComment:  In the last 24 hours we have seen two developments in relation to the property market.  First of all the Private Rental Tenancies Board (PRTB) published a study which showed that there is a lack of supply in the rental sector, and that due to the fact that so many people, there is also a desire for longer term leases.  They have stated that they are not in favor of rent controls, which I believe is correct.  Intervention in the property market, as we have seen in the past, has a tendency to be ineffective. 

Press reports indicated yesterday that the Government is considering bringing in an insurance scheme, whereby 10% of a mortgage given to a first time buyer will be insured.  This will be a private scheme run by an insurance company and would have a cost associated which the borrower would have to pay.  This would allow first-time buyers to continue to get a 90% mortgage and in my opinion seems to be a way of circumventing the recent Central Bank announcement.

It is evident that there seems to be no Government policy in relation to the whole issue of first time mortgages.  We have the Central Bank making announcements and the Government reacting.  It would seem the Government is very slow to criticize the Central Bank and we have a ridiculous situation whereby they are considering bringing a scheme to counteract the new rules that the bank are introducing.

It has been well flagged that the problem with rising house prices is a lack of supply and how any of these developments will address that problem is a mystery to me.  Whilst I believe an insurance scheme is a positive development, and may have a beneficial affect on the level of lending that the banks are providing, the Government needs to make up its mind on this matter and provide some direction to the market.