Central Bank concerned about rising mortgages
Inspectors from the Central Bank have moved into all the country’s lending institutions in response to a big rise in mortgage financing over the past year.
The amount being authorised for mortgages has shot up by 23% over the past 12 months and generated mounting Central Bank concern about the extent of lending for home purchases by banks and building societies.
The bank inspectors have been directed to carry out on-site examinations of lending procedures at the institutions for residential and commercial mortgages.
Against a background of warning that house prices in Ireland could fall this year because of weaker economic growth and employment prospects, Central Bank governor John Hurley this week highlighted the issue of bad debts becoming an increasing problem after a slowdown in the economy.
The bank has also underscored concerns over the 23% leap in mortgage finance in the face of the economic slowdown.
Mr Hurley has already contacted all lending institutions to remind them of the need to maintain high lending standards in relation to residential and commercial property.
The bank also warned today that 2003 was likely to be the worst year for Irish jobs since 1991 – and revised its economic growth forecast down significantly for this year.
The Central Bank expectation now is of a less-than 2% growth in Ireland’s gross national product this year, and a rise of 27,000 in the country’s jobless total.
In gross domestic product terms, anticipation is of a growth of 3.5%, according to the Central Bank’s latest quarterly bulletin, which added: “There is little prospect of a significant improvement in the economic situation in the short-term.
“Domestic demand is unlikely to provide much stimulus to output growth.
“This reflects weaker growth in disposable income and an increase in precautionary savings prompted by the deterioration in the economy.”
Fine Gael said the figures underlined serious economic difficulties that were being created by current Irish government policy.
Finance spokesman Richard Bruton said: “The Central Bank Report delivers the painful message that Government policy is bad for business, is bad for jobs, is bad for hard-pressed families trying to make ends meet.”
