Extreme risk averse position on lending worrying, say IPAV

Commenting on the reported banning by one bank of mortgage lending to those in receipt of state wage subsidies the IPAV (Institute of Professional Auctioneers and Valuers) said the blanket nature of the ban is worrying.

Pat Davitt, chief executive of the IPAV (above), said: “While no one expects lenders to engage in irresponsible lending, blanket diktats are worrying because they are likely to impact many with good repayment prospects.

“In any event, most consumers are responsible and will of themselves not want to take on debt if they don’t have the confidence that they will have the capacity to repay their mortgages.

“The current scenario is drastically different from the 2007 recession. Leading up to 2007, people were encouraged by lenders and others to borrow without refrain in the expectation that the good times we’re not going to end,” he said.

“Borrowers were able to negotiate 100pc mortgages, up to seven times salary on properties that were 40pc higher than today, and we had 300,000 too many properties.

“Today we have 70 to 90pc mortgages, 3.5 loan To income, cheaper property prices and at least 300,000 too few properties.”

Mr Davitt said that if what is reported about lenders is true “employees with good future prospects will be penalised for no other reason than their employers took on a government offered subsidy scheme to aid the businesses through the current pandemic”.

He also predicted that it would lead to builders holding back on badly needed new homes.

“It’s difficult to see how builders would want to build if only the select few could get mortgages.

“It would kill confidence at a time when we need supply that is already hit by the pandemic and trying to recover.”

Mr Davitt said it will be crucial for the new government to give “early and clear direction with regard to state supports, how long they will continue and at what level and across what sectors”.

“It will take some months for the full impact of the Covid-19 pandemic to emerge.

“Meanwhile one would plead that lenders, while acknowledging their need to be cautious, do not stymie the market and the hopes and dreams of thousands by using a hammer to crack a nut,” he concluded.

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