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Mortgage Interest Rates Issues

Dáil Éireann Debate, Tuesday - 16 October 2012

Tuesday, 16 October 2012

Questions (169)

Róisín Shortall

Question:

169. Deputy Róisín Shortall asked the Minister for Finance his views on the recent decision by Allied Irish Bank to increase the interest rates on their variable rate mortgages; if he has had any contact with the bank since the decision was made; and his views on whether this decision will further add to the problem of mortgage arrears. [44171/12]

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Written answers

The Deputy will be aware that the Bank’s policy in relation to interest rates is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, the Government is aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. In this regard, the Government is now actively implementing the main recommendations contained in the report of the Inter-Departmental Working Group on Mortgage Arrears.

A number of significant milestones have now been achieved: The Personal Insolvency Bill was approved by Government and published last June and the Committee stage of the Bill was passed by the Dáil last month; the Minister for Housing and Planning has formally launched the “mortgage to rent” scheme on a nationwide basis; lenders have now provided details to the Central Bank on their proposed forbearance and loan modification options and some forbearance measures have been introduced on a pilot basis with a further roll out later in the year; also an extensive independent mortgage advice framework has now been put in place by the Minister for Social Protection comprising (i) an enhanced website www.keepingyourhome.ie (ii) a Mortgage Arrears information helpline, and (iii) the provision of free independent ‘one-to-one’ professional financial advice to borrowers when considering a long term forbearance/resolution offer from their lender. The list of accountants providing this service is located on the www.keepingyourhome.ie website.

The Government remains very committed to progressing these measures, which are in addition to existing supports such as the protections afforded by the Central Bank Code of Conduct on Mortgage Arrears, to assist genuine mortgage holders in difficulty and the Government sub-committee on mortgage arrears, which is chaired by An Taoiseach, continues to meet to ensure this receives priority attention across relevant Departments and agencies.

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