There has been talk recently of a crash in the housing market. If these warnings are realistic it would pay borrowers to make sure they are not overextended. After all, no one wants to owe more in a mortgage than their home is worth.
But how realistic is this talk? The overall strength of economic growth in Ireland continues to confound most observers. Over the past two or three years this growth has been accompanied by dark mutterings of a crash and of a property price bubble.
As Dr Dan McLaughlin, chief economist at ABN Amro, says the cries have been heard for two or three years now and the supposed catalyst has changed.
The danger a few years ago was of a world recession, the air was full of words like deflation and global recession. This was followed, he says, by talk of rising interest rates. After all it was a virtual doubling of interest rates to around 15 per cent which marked the end of the property boom in the UK in the late 1980s.
Interest rates are on the way up here and it is even conceivable they could double from their lows, but that would bring them to interbank rates of around 6 per cent, not 15 per cent.
One of the latest reasons being given is excess credit but, according to Dr McLaughlin, this does not bear much scrutiny.
But there is another side to the story. EBS Building Society has recently issued its strongest warning yet about overheating in the housing market and has called on the Government to put planning and affordability at the top of its agenda to avert a crisis.
EBS chief executive Pat O'Reilly said the building society is gravely concerned about the level of indebtedness within the economy.
"The position is becoming more precarious as time is going on. And while the proposed increased supply of housing should resolve problems over the next three to four years, our concern is about what will happen in the intervening period."
According to Mr O'Reilly, there is now an urgent need for the Government to tackle the problem. Indeed there are obviously problems as the lack of likely supply into the Dublin housing market shows. Decisions by An Bord Pleanala are certainly not helping an already difficult situation.
And the warnings are not just coming from EBS. The Central Bank has warned that money poured into the hotel sector may prove very speculative. And William Slattery, the former deputy head of banking supervision at the Central Bank, has warned that property prices could fall by 30 per cent to 50 per cent if the huge growth in lending was not curbed. "A substantial decline in property prices is inevitable. The cost of building houses is substantially less than the current sales prices, reflective of very high profit margins for buildings and inflated site costs," he said.
According to Mr O'Reilly the "feel good factor" being enjoyed by homeowners at the moment is stifling meaningful debate. "When you make these statements you are almost accused of spoiling the party. All homeowners are enjoying the wonderful feeling of owning an appreciating asset. But the reality is that young people are being completely excluded from the market."
The EBS is also concerned about the sheer amounts of money that people are borrowing. The one statistic that calms most commentaries is that the average new loan is still for less than 80 per cent of the value of the home. That should mean that the banks do not get into extreme bad debt problems. However, according to the EBS most first time buyers usually will top up their mortgage with funds borrowed from other sources which raises long-term issues in terms of their capacity to service those debts.
It is undoubtedly sensible to make sure that you are not paying the absolute maximum of what you can afford. After all, interest rates are on the way back up.
