Mortgage Credit (Loans and Bonds) Bill 2012

Abstract

The Danish mortgage banking model was created in 1797 with the Kreditkassen following the 1795 Great Fire in Copenhagen which destroyed a large proportion of the city and left many homeless and created an instant and wide-ranging demand for housing. In order to meet this demand a pooling system was designed to obtain the necessary level of capital at a reasonable rate. Though bubbles were not entirely prevented throughout the history of the Danish system it is extremely robust and has acted as a moderating influence on the housing market in Denmark. The aim of this process is to provide capital to allow the housing and banking markets to mend. The Irish banking sector continues to mend its balance-sheets. That places a priority on banks having large capital backstops and limiting lending to the wider economy. The continued concerns about existing mortgage arrears and the recession-reduced household disposable incomes available to serve mortgages that are currently being serviced weighs heavily on the banks with respect to their lending decisions.