If you tune in to radio every day you’ll hear a variety of ads from Irish retail banks cheerily promoting their mortgage offerings. The message is simple: “We’re open for business and only too eager to help you take a step on the property ladder.” They make it all sound so easy yet the reality is so much different.
Since the economy was locked down in March to contain the spread of the coronavirus, lenders here have tightened their already onerous mortgage lending rules, making it yet more difficult for customers to secure a loan to buy a home.
Gone are the income exemptions that they would offer to certain buyers, as allowed for under the Central Bank of Ireland’s macroprudential rules.
Last week The Irish Times revealed that AIB had issued a defacto ban on mortgages for anyone who has been in receipt of the wage subsidy scheme (some 410,000 workers at the last count). Extra scrutiny is also being applied to applications from people working in "high risk" sectors, which is most of the Irish economy right now. These measures were also applied at EBS and Haven, both subsidiaries of AIB.
The bank, which is 72 per cent owned by the State and was bailed out a decade ago to the tune of €20 billion, has since softened its stance after coming under fire from politicians and consumer advocates. In effect, it now judges each application on a case-by-case basis but that probably won’t change the end result for impacted applicants.
It's a similar story at all of the other Irish mortgage lenders. Brian Hayes, the former Fine Gael politician and current chief executive of the Banking & Payments Federation Ireland, was sent out to bat for the banks but his pleadings about the need to lend prudently rang hollow.
Irish banks are still scarred by the legacy of the Celtic Tiger years when they threw money around like it was going out of fashion, and the €65 billion bailout by taxpayers post the 2008 financial crash. No-one wants a return to the loose lending of the past but a little understanding of the stresses being experienced by customers who simply want to put a roof over their head wouldn't go amiss either.