Easing Of Mortgage Rules - “A Cynical Ploy To Prop Up The Private Banks" - Brian Leeson
Brian Leeson has dismissed the easing of mortgage borrowing limits in the Twenty-Six Counties as a “cynical ploy to prop up the private banks.” The Éirígí Chairperson was responding to the news that private banks will now be allowed to issue mortgages four times greater than the income of the borrowers, up from the the previous limit of 3.5 times.
Speaking from Ballinteer in South Dublin, Leeson said, “The decision by the Central Bank to ease mortgage lending rules must be seen in the context of the fourteen-year-long government strategy to return the private banking sector to the ‘normality’ of super profits and full private ownership.
This entire strategy is predicated on fattening up the the loan books of the Irish banks to a level that will draw in enough private investors for the government to sell all of its shares in all of the banks.
The most effective way to fatten up those loan books is by fattening up the value of the land, housing and other property assets that are tied to those loan books. And this is exactly what the government have been doing for years.
Through their fiscal, banking, housing, taxation and other policies, successive governments have deliberately driven up the prices of land, housing and other property assets in the knowledge that such price increases would dramatically increase the value of the loan books of the banks.
Brian Leeson outside the Central Mental Hospital site in Dundrum. Building large volumes of Universal Public Housing on public land is the only way to permanently solve the housing crisis.
The establishment of NAMA, the rolling out of the red carpet for the vulture landlords, the transfer of billions of euros of public money to private landlords via RAS / HAP and the refusal to build significant volumes of public housing are just some examples of government actions that were designed to heat up the private housing market and by extension to increase the value of the loan books of the private banks.
Just last month the Dublin government sold the remainder of its shares in the Bank of Ireland, returning it to full private ownership. It’s no coincidence that this sale came at a time when house prices have returned to close to Celtic Tiger levels.
The decision of the Central Bank to loosen up mortgage limits will not help more people to buy homes. Instead, it will just increase the buying power of virtually every buyer in the housing market at the same time, without doing anything to increase the supply of housing. This scenario can only have one outcome and that is to drive house prices up even further.
The timing of the Central Bank decision comes at a point when increased interest rates and cost of living expenses might otherwise have had a dampening effect on house prices. Allowing people to borrow more money at this time is the equivalent of pouring petrol on a house fire that was potentially about to be brought under control.
All of the available information tells us that the decision to increase mortgage limits at this time is nothing but a cynical ploy to keep house prices artificially high and to prop up the private banks that rely on those artificially high prices.”