Central Bank Governor Patrick Honohan has told an Oireachtas Committee that he wants to ensure a credit driven property bubble does not take hold and that a new generation does not become over indebted. 
 
Addressing the joint committee on Finance, Public Expenditure and Reform, Professor Honohan pointed out that Dublin house prices have risen sharply in recent months.

They have soared about 42% in 18 months. 

Governor Honohan said "a thin market, not yet eliciting a sufficient supply response, could sow the seeds of trouble for the future".

He said the Central Bank wanted to shorten the period of uncertainty as much as possible. 

The Professor also said the reduction of the ECB rates had a complicated influence on Ireland but the positives had outweighed the negatives, adding that tracker borrowers were benefiting from "ultra low rates". 

Asked by Fianna Fáil finance spokesman Michael McGrath if he thought variable rates here were too high, Mr Honohan said the rates were on the high side but it had to be noted that banks can not fund themselves at ECB rates. 

He also said the Central Bank did not have the power to intervene. 

Mr McGrath also asked if the new rules on borrowing could deny a whole generation of young people the chance of buying a home. 

Mr Honohan said he would caution against seeing mortgage credit as a way of resolving inequality in society. He said the opposite is the effect as we had seen in the US.

He also said the bank was not attempting social engineering, but was instead trying to fulfill its mandate to maintain financial stability.

Mr Honohan said he wanted to see the new rules in place as early as possible in the New Year.

He also told the committee he would like to see large, international banks take a greater presence in Ireland, which would help to break the link between sovereign and bank risk.

However he acknowledged that this was unlikely to happen soon.

"The appetite for international banks getting involved in peripheral countries, or indeed in any cross-border activities, has been dampened by their own problems," Mr Honohan said.

"I've no problem with Irish-owned banks, but I would like to see a backbone in the Irish system having strong international banks. This is a long-term vision but I'm sure that, when they start to invest in the periphery again, Ireland will be first."

ECB members unlikely to partake in banking inquiry

Mr Honohan told the committee he would be happy to tell his European Central Bank colleagues to appear before the Oireachtas' banking inquiry, but his view was that it would be unlikely to make any difference. 

He said he did not think they were minded to come and while he was happy to pass on the committee's request for them to do so, it would likely have no effect.

When asked if he could put a motion down at the ECB for them to attend, Mr Honohan said he could but he was just one vote of 24.

The governor said he would give a full account of what he knew about the bank crisis, which is a lot.