Junior Minister Brian Hayes has called on the country’s banks to ensure that reasonable mortgage lending returns this year.
His call comes at a time when the government has urged financial institutions to move quickly and resolve cases of those in mortgage difficulties, including the possible writing off loans.
Addressing the Irish Banking Federation this morning Mr Hayes said nobody wants a return to the great party of the property bubble as the country is “still trying to recover from that hangover.”
However, the Junior Minister told the IBF that mortgage lending is needed in the economy, especially to drive initiatives announced in the Budget to get the residential sector moving again.
He said he hoped the market would bottom out in 2012, as prices in some parts of the country are now less than the cost of rebuilding the property, which is unsustainable in the long term.
He highlighted how the recapitalised banks were given money for possible losses on the mortgage book and called on those and other providers to work closely with the Central Bank and move quickly on a case-by-case basis with people in difficulty.
Minister Hayes said banks may need to rethink future mortgages – including only fixed-interest residential loans and non-recourse mortgages that may dampen credit provision, but would limit reckless lending too.