IPAV Calls On Government To Go Back To The Future For Low Interest Rate Mortgages

Tuesday 22nd August, 2023


Urgent Government consideration needs be given to options, beyond pillar banks, for making low interest mortgages widely available, IPAV, the Institute of Professional Auctioneers & Valuers, said today.

The organisation says home ownership needs to be promoted with a whole new policy emphasis, given the “seismic” demographic changes underway that, unless addressed, threatens the very cohesiveness of society.

IPAV highlights what it says is “the long forgotten role mutual institutions traditionally played in making mortgages affordable for large swathes of the population.”

The organisation says it’s time to reconsider this issue since mutual institutions prioritised consumer saving and home ownership.

“While it appears that Credit Unions are planning to enter the mortgage market, it is not clear, as yet, what level of interest they are likely to charge, and indeed, if they have the capability to offer mortgages on a large enough scale.

“It appears to us that while the Central Bank of Ireland has a dual role in protecting the stability of lenders and consumer protection, actions and outcomes would appear to indicate that the former is prioritised over the latter.” 

IPAV highlights that in 2017 the German public lender, Sparkasse, expressed an interest in entering the Irish market. “It appeared to receive a very cool response. Could it be that this was so as to protect the pillar banks?” it asks.

Pat Davitt IPAV Chief Executive says: “It’s time to dispense with that thinking. There are seismic changes taking place in home ownership that, unless arrested, will have major adverse implications for current and future generations to come. It’s crucially important to get as many people as possible to achieve home ownership as early in their lives as possible.  And we’re at the eleventh hour,” he warned.

He said the whole theme of the organisation’s proposals is to promote home ownership. “To do that, we now need to take new and unprecedented measures, and to ensure any such moves don’t continue to result in unintended consequences we need to co-ordinate policy across Government Departments and in all associated institutions, including Local Authorities and planning authorities,” he said.

IPAV also proposes that:

- The Help-to-Buy grant should be extended to €40,000 on new properties for purchasers under age 40.

- A new grant of €20,000 be brought in for First-Time-Buyers aged under 40 and purchasing second-hand homes.

- A new grant of €60,000 for purchasers with a child or children be brought in for FTBs under 40.

- The term of loans under the Local Authority Home Loan scheme should be extended to 40 years for younger purchasers wanting to buy a home.  

- Those earning up to €70,000 be allowed to borrow up to 4.5 times their income.

- As people are living much longer, that the option to extend the mortgage term up to 40 years should be encouraged and exercised by lenders but especially under the Local Authority Home Loan scheme.

IPAV also contends the Government needs to facilitate a genuine system of low interest loans for SME developers.

It says that while in January 2019 the Government announced a €750 million State loan scheme to assist SME builders it has a prohibitive interest rate attached to it - a margin of between 6% and 9% (over 3-month Euribor).  “This defeats the whole purpose of the scheme,” IPAV says.

It also sets out proposals to attract private landlords back into the market to ensure there is sufficient rental stock to serve more transient workers, and students.

IPAV says: “Housing needs to be given significant priority, and in a new way.”