THE GREAT MORTGAGE DROUGHT; Home-Loan Lending Plummets in Spite of Taxpayer Bailout of Banks; Bank Lending Dries Up despite Bailout; Even People with Good Jobs Struggle for a Mortgage

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Byline: Eva Marie Gibney

YOUNG couples with steady incomes are being rejected for mortgages at an astonishing rate, it has emerged.

When taxpayers bailed out the banks to the tune of a e450billion guarantee scheme and e7billion recapitalisation, it was on the understanding they would help rejuvenate the economy.

However, as many as four out every five mortgage applications by brokers have been turned down, it was reported last night.

The Irish Daily Mail has previously told how small businesses, the backbone of the economy, are being choked of funds by the banks.

And yesterday, the Professional Insurance Brokers Association - whose members analyse the best package to suit their clients' circumstances - were taken aback by the high rate of rejections.

Between 60 per cent and 80 per cent of mortgage applications by its members were declined, the association said.

PIBA, which has more than 900 member firms throughout Ireland, warned that banks are penalising families who want to borrow wisely. The latest figures appear to back up their claim as it emerged that mortgage lending more than halved last year.

Almost 46,000 home loans were drawn down in 2009, nearly 60 per cent fewer than the previous year, according to statistics from the Irish Banking Federation and Pricewaterhouse Coopers.

Last night, Labour's finance spokesman Joan Burton asked Brian Lenihan what exactly he was doing to ensure banks are lending money where it is so badly needed.

The Finance Minister agreed to pump billions into the banks in September 2008 on the understanding they would free up the credit flow. PIBA described the 60 per cent drop in mortgage lending as 'alarming'.

Rachel Doyle, director of its mortgage services said between 60 per cent and 80 per cent of their members have their mortgage applications declined by lenders.

She said: 'This is impacting adversely on individuals who wish to borrow prudently, it is stymieing recovery in the property market and it is having a knock-on effect on the economy.'

Ciaran Phelan, chief executive of the Irish Brokers Association added: 'People are deterred from even applying for mortgages at the moment as they feel that no one is being accepted. The experience amongst brokers would indicate that joint applicants in particular, with solid financial statements, as ever, can borrow much more than single applicants and have a good change of securing a mortgage. …