Banks warned against over lending

”Banks

Batt O’Keeffe, minister of state for housing is urging banks not to over lend to young people who could be affected by mortgage increases. Mr O’Keeffe was speaking after the publication of the Department of the Environment’s Annual Housing Statistics Bulletin 2006. The publication illustrates that nearly 50% of all new mortgages taken out in 2006 were by first-time buyers, one third of these had signed up for a 100% mortgage. The average loan was for a period of between 31 and 35 years.

The minister also commented that the economy is strong and interest rates are likely to increase again before the end of the year. However, it is anticipated that they will fall in 2008. It is a buyer’s market now with prices steadying and there is more value for money.

The Financial Services Authority has also remarked on this subject and they are concerned that many have been given mortgages that will run well beyond their retirement, in spite of them having no income to pay the loan. Thousands have signed up for interest-only mortgages without putting in place a savings plan to pay off the original loan meaning millions could be forced into serious debt problems.


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