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Dáil Éireann díospóireacht -
Tuesday, 5 Oct 1999

Vol. 508 No. 3

Written Answers - House Prices.

Derek McDowell

Ceist:

86 Mr. McDowell asked the Minister for the Environment and Local Government his views on the maximum home loan which should be issued to a couple, one of whom earns £25,000 per annum and the other of whom earns £20,000 per annum; the average price of a three bedroom starter home in the greater Dublin area; his further views on whether the couple with a combined annual income of £45,000 can afford to buy a starter home; the plans, if any, he has to enable these couples to buy a home of their own in 1999; and if he will make a statement on the matter. [18726/99]

The maximum mortgage loan which it would be appropriate to advance in any instance can be determined only by reference to the particular borrower's circumstances including the level and nature of income, outgoings generally, and likely ability to meet repayments in the event of a change in circumstances. It is incumbent on lenders to carry out rigorous assessment of these, and any other relevant factors, in each case. Obviously, borrowers should also exercise great care in ensuring that they do not take on commitments that they might not be able to meet.

Mortgage lending institutions in Ireland have traditionally applied a maximum loan to income ratio of two and a half times the principal income plus once the second income. I would be very concerned about any general relaxation in mortgage lending standards at this time. This would have adverse effects on house prices and set back the progress being made with the Government's measures to achieve balance in the housing market and house price stabilisation.
Survey data in my Department indicate that, in the first eight months of 1999, around 15 per cent of new houses and 20 per cent of second-hand houses in Dublin were purchased for £95,000 or less. Typically, these would have been starter homes purchased by first-time buyers, and would be affordable by persons on the incomes quoted.
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