Concern over new interest-only buy-to-let mortgages on the market

Concern has been raised over new buy-to-let mortgages being advertised by ICS Mortgages (Dilosk DAC).

The mortgages involve the option of the borrower, including private landlords, to pay interest only for up to 15 years - writes rte.ie

Speaking on RTÉ's Morning Ireland, Fianna Fáil finance spokesperson Michael McGrath said he believed the new interest-only mortgages being offered posed very serious risks.

He used the example that if €200,000 was borrowed at the advertised interest rate of 4.45%, the borrower would have paid back €160,000 by the time 15 years are up without the balance being reduced.

Mr McGrath said these mortgages were being offered based on a number of assumptions, including a strong rental market and with regard to interest rates.

He said: "Some might say that these mortgages are being offered to landlords for investment purposes, but because of full recourse lending here, these loans could result in judgments against individuals and will be registered against family homes.

"When you look at the existing stock of around €25 billion of buy-to-let loans in Ireland, there are currently around 30% already in arrears."

The lender has been regulated by the Central Bank. However, Mr McGrath has called on the regulator to make its views on these loans known.

He said it was his belief that they were never fully investigated before being approved.

Also speaking on Morning Ireland,CEO of Dilosk (the parent company of ICS) Fergal McGrathsaid he is not concerned about their interest-only product. He said similar products are available and popular across Europe.

Mr McGrath said that currently85% of the borrowers own three properties or more, and they can make payments any time.

He said the reason they favour interest-only mortgages is to allow them to maximise their monthly cashflow,it gives them more freedom, and is also more tax-efficient.

He said that in the pastbanks were lending up to 90%-100% interest-only mortgages and this obviously caused issues.

But he said, under new rules set out by the Central Bank this is now capped at 70%, and "in fact the majority of borrowers at ICS borrow around 55%".

The Dilosk CEO added there are stringent stress tests applied, including rental income, vacancy periods and interest rates,which offerprotection to both the lender and the borrower.

He said there is "no shred of evidence" that interest-only mortgages have been the cause of loans going into arrears.

Mr McGrath saidthe company is regulated by the Central Bank and all its products comply with the guidelines of the European Banking Authority and he would welcome a further examination by the Central Bank if necessary.

Read more news of Dublin on our site.

rte.ie
market newinterest
If you notice an error, highlight the text you want and press Ctrl + Enter to report it to the editor
4 views in september
I recommend
No recommendations yet

Comments

Comments are designed to communicate and discuss the features of an enterprise or event, as well as to find out the interesting questions on it.

Society
A number of Ulster Bank customers are currently being impacted by an issue with the bank’s Anytime and Mobile Banking services. In a statement Ulster Bank said that it was aware that there are some issues on its Anytime and Mobile Banking services, and that it is working to fix them. The bank advised customers that its telephone banking and ATM services have not been impacted by the problem. "We are aware that customers are currently experiencing issues lo...
Society
TWO national school teachers and an accountant have been spared jail for their part in a violent brawl in a well-known Dublin pub. Teachers Michael Davitt and Seamus O Cearra, as well as accountant Conor Shannon all walked free from court today after admitting violent disorder charges in the 10-man melee. A fourth accused, warehouse manager and soccer team captain Stephen Cantwell also avoided a prison sentence while a fifth, electrician David McSweeney wa...
Incidents
Two people have been hospitalised with serious injuries and a man arrested on suspicion of drink-driving following a collision in Co Wexford. The two-car crash happened at The Leap in Clonroche at around 8.30pm yesterday evening. A man and woman, both in their 50s, were taken by ambulance to Wexford General Hospital. The driver of the second car, a man in his 50s, was arrested at the scene on suspicion of drink-driving. He has since been released from cust...
Society
Long-standing plans to deliver hundreds of new homes on the site of the former Player Wills cigarette factory on Dublin's South Circular Road have come up against yet another obstacle. Documents lodged in the High Court showed the site's Nama-appointed receivers, Paul McCann and Stephen Tennant of Grant Thornton, are locked in legal proceedings in an effort to remove a company operating a salvage business from the site. The case relating to the tenancy rig...
Society
Health Minister Simon Harris has been told his decision on whether to grant access to a revolutionary new drug for children with a rare degenerative condition is one of life or death. Families, friends, supporters and sufferers of spinal muscular atrophy (SMA) gathered outside the Dail yesterday to call for access to the drug Spinraza. The only drug ever manufactured to treat SMA, a degenerative neuromuscular disorder, it is licensed, available and changin...
Society
Storm damage at the ploughing championships has forced organisers to cancel the second day of the event. More than 100,000 people had been scheduled to attend Ireland's largest annual outdoor event outside Tullamore, Co Offaly. However, two delayed openings were not enough to save the National Ploughing Association (NPA) event, after tents were badly damaged by the gusting winds. NPA assistant managing director Anna Marie McHugh said the organisers will no...
Society
A dream holiday to Ireland turned to tragedy for a tourist who died after her caravan was blown into the sea as Storm Ali battered the country. The woman, named locally as Elvira Ferraii from Switzerland, had arrived in the Clifden area of Galway the day before the tragic incident. She rented a caravan and was staying at the Clifden Eco Beach camping and caravan site in the Claddaghduff area, along the Atlantic coastline. At around 7.45am yesterday the car...
Society
Teachers Michael Davitt and Seamus O Cearra and accountant Conor Shannon all walked free from court yesterday after admitting violent disorder charges over the 10-man melee. A fourth accused, warehouse manager Stephen Cantwell, also avoided a prison term while a fifth, electrician David McSweeney, was jailed for six months. Passing sentence, Judge Brian O'Shea said the teachers were "ambassadors for their schools" whenever they went out and they had "let t...
Society
ESB Networks says 39,000 homes, farms and businesses are still without power this morning after StormAli crossed the country yesterday. Repair crews workedthrough the night, but 1,600 individual faults remain on the network. It says it hopes to restore power to everyone affected today. ESB Networks Operations Manager Derek Hynes said most repairs are in the Cavan/Longford, Monaghan and Mayo areas. He saidcrews need to get to 1,600 locations today andwarned...