Banks should fix mortgage rates

Young people were urged to exercise caution and not allow themselves to be stampeded into buying a house, warned Deputy Billy Kelleher today. "Banks and Building Societies have moved to protect their almost monopoly grip on the Irish housing market by reducing their rates to match the new kid on the block the Bank of Scotland," said the Cork North Central TD. "Their competitor argued that their profit margins were high and had been for too long. That assertion obviously proved correct when they subsequently followed suit and dropped their rates - but not before they learned the lesson the hard way and lost £150 million in mortgage business. "Their actions showed that there was room for manoeuvre in the finance markets - and typically they, for the main part, only matched the new kid on the block. They have once again proved their only motivation is profit - and anyone considering buying a house should beware of the offer to increase the ratio between earnings and loans - and remember they will be unforgiving in the rate of an interest rise or a sudden inability to pay," said Deputy Kelleher. "While the housing market has faced difficulties in the past four or five years, it was this Government that did not shy away from its responsibilities and set about tackling the problem. "I recognise that there have been difficulties for young people setting up their first home, and I sympathise with them. But housing supply is increasing and measures taken by this Government ensure that more houses will come onto the market in ever increasing numbers. Prices are moderating and will stabilise - and home buyers should not rush out now with the promise of easy finance and no guarantees of fixed repayments. "If the banks and building societies really want to show that they care for young people they should offer the same low rates for fixed mortgages. That way young couples can plan for the future - and not lie awake at night worrying about international money markets and the profits required so bankers can rest easy at night," said Deputy Kelleher.
26/09/1999