Dáil Éireann Debate, Tuesday - 6 November 2012
222. Deputy Robert Dowds asked the Minister for Finance if he will put in place measures to enable couples where each partner owns a residence and both are in negative equity to allow them both to sell in order to buy a joint residence. [47825/12]
View answerThe Central Bank has advised me that they wrote to all mortgage lenders in 2010 to ascertain whether they were offering, or intended to offer, a mortgage product that would allow home owners to sell their existing home and transfer the negative equity portion of the original loan to the new loan. In order to ensure that proposals in relation to such mortgages were consistent with the Central Bank’s consumer protection and prudential policy objectives, the proposed criteria for any such facility would need to be agreed in advance between mortgage lenders and the Central Bank. In response to the Central Bank’s letter, only a small number of mortgage lenders said that they would consider offering such a facility. A trial period commenced in mid-2011 and was due to be assessed by the Central Bank and the institutions involved before the end of 2011. However the low level of activity made it difficult to conduct a meaningful review.
The Central Bank also advised me that, following the issue of the report of the Inter-Departmental Mortgage Arrears Working Group in September 2011- which included a recommendation on trade down mortgages - several lenders contacted the Central Bank with regard to offering negative equity mortgages. This included trade up, trade down and trade down where the customer was in arrears.
In light of this and of the low level of take up in 2011, the Central Bank revised some of its criteria and communicated this revision to the main lenders. While the provision of negative equity mortgages may facilitate people in moving homes and may generate transactions in the housing market, it is not expected that there will be a large take up of this product. All sales must comply with the affordability and suitability provisions set out in the Consumer Protection Code. I expect that the Central Bank will continue to assess the impact of these measurers as part of their general oversight of the banks’ activities in the mortgage market.
