The Central Bank has advised me that some lenders are already offering this product, or about to, but to date none are actively marketing it. Other lenders have committed to reconsidering the issuing of such products. The decision to introduce a negative equity type product is a matter for each mortgage lender. However any institution offering such a mortgage facility may do so only in accordance with criteria set out by and with the prior approval of the Central Bank. 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. While the provision of negative equity mortgages may facilitate people moving homes and 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 Central Bank’s Consumer Protection Code.
I expect that the Central Bank will continue to assess the impact of these measures as part of their general oversight of the banks’ activities in the mortgage market.