TAOISEACH MICHEÁL MARTIN has said the banks are “still rooted in the last war” and said he has called on them to lend more to Irish builders to boost housing supply.

Speaking to The Journal this week in Japan, where the Taoiseach visited Tokyo, Osaka and Hiroshima, the Taoiseach said the “psychology” of the Irish banks “needs to change”.

Martin said he has spoken to the Banking Federation of Ireland about the matter, stating he told them banks should be lending more to Irish builders and developers. 

The Business Post reported earlier this year that there had been a fall-off in lending this year to developers by the two main pillar banks, AIB and Bank of Ireland.

While Bank of Ireland’s loans to developers increased from €540 million to €608 million, the value of development loans issued by AIB for residential and commercial building fell from €992 million in 2023 to €809 million last year, the newspaper reported. 

The Central Bank has also stated the banks are well capitalised and can lend out more. 

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It is believed that such a level of lending is deemed to be significantly lower than what is required to meet housing demand.

“The cost of financing is a problem and it needs to lend more into the domestic construction industry, it’s not lending enough, and much of its lending is towards schemes that have a state backing already in terms of affordable housing,” said Martin. 

“Given the huge demand for housing in the market, to me, they’re still rooted in the last war and the psychology needs to change,” he added.