The original purpose of the mortgage interest supplement scheme was to provide short term support to eligible people who are unable to meet their mortgage interest repayments in respect of a house which is their sole place of residence. The supplement assists with the interest portion of the mortgage repayments only. There are currently approximately 10,000 people in receipt of mortgage interest supplement for which the Government has provided €17.9 million for the scheme in 2014.
The Government wants to provide an environment where mortgage holders can pay for and stay in their home but, where people have a genuine difficulty in meeting their financial commitments, they will have a framework to address and resolve that difficulty in an appropriate and fair way having regard to the particular circumstances of the case. The Government’s strategy to assist those in mortgage difficulty is built around the following measures, as recommended in the 2011 Interdepartmental Mortgage Arrears Working Group (Keane Group), in four main distinct areas: lenders providing sustainable and durable resolution options to their borrowers; a social housing response (Mortgage to Rent); comprehensive advice to borrowers; personal insolvency reform.
In the context of the overall strategy, the continued payment of mortgage interest supplement does little to assist recipients in improving the long term difficulty in addressing their mortgage problem and provides little incentive for the lender to provide sustainable solutions. The Keane Group’s over-arching theme was that the mortgage interest supplement scheme is not an appropriate long term support and should become a time bound payment with an appropriate exit strategy to be formulated for the recipient.
Under the Code of Conduct on Mortgage Arrears, lenders are obliged to put in place Arrears Support Units to deal with borrowers under the MARP. The most appropriate way in which customers experiencing short term mortgage difficulties can be supported is through engagement with their lender under this process. Lenders must explore all options for repayment arrangements in order to determine which options are viable for each particular case. These options include interest only arrangements and deferring payment of all or part of the instalment repayment for a period.
As part of the fiscal adjustment required for Budget 2014, provision was made for the discontinuation of entitlement to mortgage interest supplement for all new applicants from 1 January 2014. Existing customers are not affected by this measure and may retain entitlement to the scheme over the next four year period. However, it would be expected that during this four year period, existing customers would no longer require this support through sustainable solutions being put in place, securing employment or exit strategies sponsored by the Department of Environment, Community and Local Government, namely the Mortgage to Rent scheme.
I have no plans to reverse this decision as I am satisfied that the range of supports implemented by this Government, including the range of information and guidance resources available, are appropriate in assisting those facing mortgage difficulties.