Connect with us


More money, more problems




By Michael O’Connor

This week, the Central Bank eased their lending limits to allow first-time buyers to borrow up to four times their income, an increase from 3.5 times set in place following the housing bubble fiasco of 2008.

I appreciate that for those looking to buy a house in the current market, this represents an opportunity to finally get on the property ladder and is welcome support.

However, the reality is, it is these extended credit facilities that have driven house prices higher over the last 30 years. Creating financial mechanisms to allow home buyers to tie themselves to more and more debt is not the solution that is needed.

Imaginary Wealth

Wage increases are not the factor driving the housing market to 'unaffordable' prices. Our new-found ability to justify these surging prices is thanks to some banking wizardry.

Longer mortgage terms and lower and lower interest rates have ensured that monthly payments are as affordable as they have ever been.

Yes, €500,000 is a sizeable mortgage, but if you spread it out over 35 years at historically low-interest rates, suddenly it seems justifiable, manageable even. The bidder most willing to shackle themselves to this life sentence 'wins'.

But what happens as interest rates rise? The very thing we thought we could afford is no longer affordable as the terms of the deal change.

All this credit in the system stops working when the cost to borrow starts to increase. We no longer can afford the things we thought we could afford. The imaginary wealth we thought we had, disappears.

And yet the solution from the Central Bank is to allow more leverage in the system in a rising interest rate environment.

Can't afford a home?

Not to worry, we will just lend you more money so we can prop up this house of cards just a little longer.

Pumping more money into an already inflationary environment does the exact opposite of what is needed. Instead of addressing supply issues and regulatory issues, they continue to focus on mechanisms to help justify current prices.

The Root of the Problem

Increasing the leverage in the system just kicks the can down the road. Currently, the data shows that home sales are slowing dramatically in the face of higher interest rates and a slowing economy. We are in the middle of a stand off between buyers and sellers. Buyers who can't afford to purchase at current prices as interest rates rise and sellers who don't want to sell at a price lower than their neighbour sold for.

Instead of leaving the market dynamics of supply and demand play out, allowing some downward pressure on house prices, the Central Bank has thrown a bone to sellers and disguised it as a benefit for buyers. They hope that this attempt to 'help' buyers stretch just a little further will be enough to keep the wheels turning. It won't.

Once Again

Allowing more leverage in the system to help justify higher and higher prices is not the answer. Doing it in the face of inevitably higher interest rates is simply thoughtless.

We simply didn't build enough homes following the last housing crash to meet the demand coming from millennials reaching their household formation years.

Perhaps addressing this generationally undersupply would be a more worthwhile endeavour instead of extending lines of credit, the very thing that facilitated this price surge in the first place.

Just a thought.

To learn what companies to invest in, and for direct access to my personal investment portfolio, go to

Continue Reading


American choir to perform in St Mary’s Cathedral

Music lovers are in for a rare treat on Monday night when a top US choir visits Killarney. The Colquitt Accapella choir under the direction of Mr. Jimmy L. Jarvis […]



Music lovers are in for a rare treat on Monday night when a top US choir visits Killarney.

The Colquitt Accapella choir under the direction of Mr. Jimmy L. Jarvis Jr is from the city of Moultie in the state of Georgia in the United States of America.

The choir performs multiple times a year and also produces and performs a large musical every year, with the latest production being ‘The Addams Family’ which was a sold out success.

The Colquitt Choir will be performing at St Mary’s Cathedral thanks to support form the KDYS.

More information is available from the KDYS on 066 71 21674 or

Continue Reading


HeartBeat’s cook off – be early!

This month HeartBeat Killarney has come up with a new slant on safe cooking. A free copy of the cook book ‘101 Square Meals – Easy recipes for everyday life’ […]




This month HeartBeat Killarney has come up with a new slant on safe cooking.

A free copy of the cook book ‘101 Square Meals – Easy recipes for everyday life’ will be available to all those who come early to the May meeting on Tuesday night.

This book from Safefood which is supported by the HSE & MABS will come to life on the night as chefs from The International Hotel Killarney have very kindly volunteered to cook some of the recipes in the book for a tasting session during the meeting.

Nutritionist Paula Duggan will be on hand to discuss the nutritional benefits of each recipe prepared for tasting. She can also advise on any tweaks required to meet individual tastes and needs.

There will be four main recipes available to taste during the course of the evening; Meat Loaf, Baked Stuffed Fish, Chicken Fingers and Spanish Tortillas. There is a fifth recipe for tasting on the night but all that Chairperson Billy O’Sullivan will say about it is “It will be available at the end of the night with a cup of tea and we hope it will send everyone home with a smile on their face.”

This is a night that the HeartBeat group has worked long and hard to make happen.

“It came together because of the amazing generosity of Tracy Coyne, Catriona White and the wonderful Kitchen Team at the International.” said Billy. In these times when the price of foods has risen dramatically it is still possible to eat healthily with the guidance from this book. There are lots of tips also on food storage, freezing food, kitchen hygiene and food allergens.

HeartBeat meetings are FREE and all are welcome to come along on Tuesday May 30th at 8pm at the Parish Centre beside The Church of the Resurrection Park Road V93 WN32.


Continue Reading