The Irish sub-prime mortgage market will not follow the meltdown suffered in the United States, according to David Ingram, chief executive of specialist lender Start Mortgages.
Addressing around 400 delegates at the company's specialist mortgage conference in the RDS Dublin yesterday, Mr Ingram challenged critics of specialist lending in the Republic and said it was wrong to compare the Irish and US markets as both were different in manner in which they operated.
"There have been many inconsistent parallels drawn between the Irish and United States specialist mortgage markets," said Mr Ingram.
"In the US, they have suffered a meltdown as a result of a number of key factors. Affordability levels have been exacerbated by 17 consecutive interest rate rises in the last three years. We have seen US interest rates increased from 1 per to 5.25 per cent during this period."
Delegates were also told that the market in Ireland was specialist rather than sub-prime as the customers and their backgrounds were much more varied.
As well as customers with adverse credit, the market in Ireland was made up of customers who have difficulty getting a mortgage from a prime lender due to the nature of their work which may lead to them having variable income, customers who are new to Ireland, those who are divorced or separated, or contract and self employed workers, said Ingram.
In Ireland, the mix is currently 60 per cent adverse credit, with the remaining 40 per cent from other categories. The use of the US term sub-prime - where almost 100 per cent of customers fitted into the adverse credit bracket - to describe the Irish market was incorrect, said Mr Ingram.
He also said that some very poor lending practices had taken place in the United States where income or affordability were not verified.
"They offered 100 per cent mortgages and attractive discounts to customers with adverse credit," he said. "This resulted in significant payment shocks at a later stage. In Ireland, affordability and capacity to repay the loan is key."
Mr Ingram also said that he welcomed increased regulation around specialist lending in Ireland.
