[Article] Bank fears home loan overspend

Victor

Bank fears home loan overspend
From:The Irish Independent
Thursday, 27th March, 2003

http://home.eircom.net/content/unison/national/427110?view=Eircomnet

THE Central Bank is inspecting the books of mortgage lenders to try to solve the mystery of why home loans rose five times faster than house prices last year.

The Bank is worried that banks and building societies may be lending too generously, and that house buyers may be borrowing too much, especially with the economy in virtual recession.

It fears that people may be taking on bigger mortgages, expecting the house price boom to continue. But the Bank expects house prices to level off this year, and possibly fall slightly.

"We are not worried about a big fall in house prices," said Bank economic policy director Michael Casey.

"Our main concern is that mortgage lending is growing at over 20pc a year, while house prices went up only 4pc last year. We want to find out why."

He said they were satisfied with the financial health of the banks and building societies, but were more worried about the borrowers.

"We expect unemployment to reach 6pc by the end of the year, and it could go higher next year," he said. "Borrowers have to be careful about their prospects."

seamus

Can anyone say 'Mortgage chequebook'. :rolleyes: If you offer people a loan for nothing other than to piss it against the wall, then a surprising amount of people are going to take it......