NAMA, the state agency set up to sort out the banks, is planning to launch a mortgage service in a desperate bid to revive Ireland’s property market.
Officials at the state run agency believe they have no choice after the continued unwillingness of the banks to lend mortgages for property purchases, the very thing that got them into trouble in the first place.
The Irish Independent has confirmed that NAMA is now working on the controversial plan to lend money directly into the residential and commercial property markets.
The move comes after the IMF and the EU expressed concern at the lack of activity in the Irish housing market, due largely to the reluctance of the banks to issue new mortgages.
NAMA is investigating how it can lend to home buyers and professional investors in conjunction with Bank of Ireland and AIB.
The new plan would see the banks lend NAMA finance in a bid to revive the stagnant property market.
Potential buyers are currently being asked to provide a minimum of 30% deposit for home loans with the banks reluctant to issue mortgages at all.
NAMA chairman Frank Daly revealed the new plan when he addressed the Society of Chartered Surveyors in Dublin on Tuesday and the Government has backed the idea to release some of the €1billion in cash available to the agency.
“The Government’s primary objective is to support economic growth,” said a spokesman for the Department of Finance.
Society of Chartered Surveyors Ireland spokesman Peter Stafford said NAMA has the resources to fund the idea.
“It’s a good thing that NAMA has recognised that liquidity is an issue in both the commercial and residential property markets, and the agency is well-placed to introduce measures to promote bank-lending to both these markets,” said Stafford.
UCD Professor Karl Whelan was critical of the plan however when he spoke to the Irish Independent.
“I don’t think NAMA should get involved in mortgages. That should be left to the regular banks,” said Professor Whelan.