Labour 'Shocked' At Continuing 100% Mortgages

The Labour Party has called for an outright ban on 100% mortgages after it was revealed the practice was continuing in a Government publication.

Banks providing 100% were believed to have been a huge contributory factor in the world financial crisis, as loans were given to people who couldn't pay them back. This led to false estimates on the amount of money banks had on their books and an overvaluation of the property market and the economy.

Now revelations in the latest publication from the Department of Housing that banks are continuing to offer 100% mortgages has been met with "shock" by a Labour TD.

Spokesperson on Housing and Local Government, Ciarán Lynch, said the loans should be banned.

"The revelation in the Dept of Environment's Housing Bulletin, that banks continued to provide 100% mortgages to first-time buyers, as recently as last year, is truly shocking. In 2008, it was already becoming clear that property prices were declining and that financial markets were coming under pressure, yet our banks persisted in selling these products," he said.

Mr Lynch added that the banks had a duty of care to ensure the loan value actually related to the property value.

The Labour TD said: "In a market environment where property prices were clearly collapsing, banks who were doling out 100% mortgages were in dereliction of duty in this regard. These practices were not only questionable but core to the difficulties we're now in.

"They were bending the rules and exposing their customers to properties that were depreciating. Without question the 100pc mortgages should be banned."

Mr Lynch said the financial institutions had been driven by greed and profit without as much as a "modicum of regard" to the welfare of their customers or to greater good. "These are the very banks, whose skins, thanks to NAMA, we are now saving by putting the entire country into hock for decades to come," he added.

(DW/BMcc)