Buyers still getting 100 per cent mortgages, Central Bank figures show

The Central Bank yesterday gave an update on how its mortgage-lending rules are affecting its lending activity – and in the process revealed a surprising insight. It’s still possible to get a 100 per cent mortgage.

The much-maligned product was too easy to obtain in the years leading up to the crash. Now Central Bank figures are showing that banks are still offering 100 per cent mortgages – albeit in the very low double-digit figures.

Yes, five first-time buyers (FTBs) who received exemptions on the Central Bank lending rules on loan to value got 100 per cent mortgages in the first half of the year, while another person borrowed 104 per cent, and another home-buyer borrowed 106 per cent of the purchase price – enough perhaps to buy a home and do it up in one go. Another three FTBs borrowed 94-98 per cent.

And it’s not just FTBs who are borrowing so much: the figures also show that nine trader-uppers managed to secure mortgages of 100 per cent or more during the first six months of the year, while a further 11 borrowed 90-100 per cent.

Less surprising, perhaps, is the number of homeowners in negative equity who also borrowed more than 100 per cent of the purchase price. Given that they will be bringing debt from the sale of their original home, which is in negative equity, to the new mortgage, a number of the 240 or so borrowers in this category also borrowed more than 100 per cent in the first six months of the year.

It’s very clearly not a return to the bad days of the boom; over the years 2005, 2006, 2007 and 2008, the share of FTBs obtaining 100 per cent mortgages was 13 per cent, 34 per cent, 26 per cent and 23 per cent respectively, according to the Central Bank. So if 1.8 per cent of those FTBs who gain an exemption also get a 100 per cent mortgage it’s not something that should set the alarm bells ringing.

However, it’s a surprising footnote to a mortgage-lending policy that purports to increase the “resilience” of Irish households to the vagaries of the property market.