During the recession the term \u2018Buy to Let\u2019 mortgage was almost comparable to using an expletive such was the disgust of many to the contribution such mortgages made to the property crash. But they are making a comeback.<\/p>\n
Politicians were first to jump in with their concerns. Fianna F\u00e1il finance spokesperson Michael McGrath said “Some might say that a \u2018Buy to Let\u2019 mortgage is 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 \u20ac25 billion of buy-to-let loans in Ireland, there are currently around 30% already in arrears.\u201d<\/p>\n
On Ireland\u2019s popular Morning Ireland Show the CEO of the bank said he is not concerned about their interest-only product. He said similar products are available and popular across Europe.<\/p>\n
Mr McGrath said that currently\u00a085% of the borrowers own three properties or more. Also, 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.<\/p>\n
He said that in the past\u00a0banks 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%. “In fact the majority of borrowers at ICS borrow around 55%”.<\/p>\n
The CEO added there are stringent stress tests applied. This includes rental income, vacancy periods and interest rates. This offers protection 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.<\/p>\n","protected":false},"excerpt":{"rendered":"