Closing the stable door after the horse has bolted

Bank of Ireland has banned 100 per cent mortgages -- except for civil servants in safe, pensionable jobs and other certain high-earning professionals, the Sunday Independent has learned.

The development is clear evidence that civil servants, who have benefited from huge benchmarking pay increases, are regarded as protected from the current economic uncertainty facing most other taxpayers in the credit squeeze.

It also reflects a loss of confidence in the economy, and is a clear indication that financial institutions believe negative equity is now a reality in the housing market, and will be for the foreseeable future.

Only those who have the potential to ride out the storm in the property market, because they enjoy secure long-term employment, will be offered full loans.

This clearly includes cosseted civil servants, who are hoping for further pay increases from the benchmarking body in a fortnight's time.

Their expectations are real following the massive pay rises recently awarded to public sector managers, including members of the cabinet, who received pay increases of between 12 and 15 per cent.

Following inquiries by this newspaper, the bank issued a short statement confirming the new directive: "Having reviewed our policy with regards to our 100 per cent first-time buyers product, with effect from today, Friday November 23rd, our 100 per cent product is now limited to certain customer segments," it read.

The Sunday Independent has learned that the memorandum has already been sent to Bank of Ireland managers and brokers acting on behalf of the country's second largest financial institution.

The clampdown on 100 per cent mortgages comes as a new survey showed that almost €15,000, or close to 5 per cent, has been wiped off the value of an average house so far this year.

The latest Permanent TSB/ESRI house price index showed that last month house prices nationally fell by 1.3 per cent.

Niall O'Grady, head of marketing at Permanent TSB bank, said that the normally strong autumn buying period had been marked by a "deferral of purchase decisions". He said the fact buyers were waiting to see what would happen was now having an impact on the rental sector, where rents are rising steadily.

The Sindo