Tuesday, 27 May 2014

Questions (138)

Terence Flanagan


138. Deputy Terence Flanagan asked the Minister for Finance the assistance that is being provided to those in negative equity who have large mortgages; and if he will make a statement on the matter. [22928/14]

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Written answers (Question to Finance)

The Government understands the concern of people who are experiencing negative equity on their homes. However the primary focus at the moment is to deal with the problem of people who are experiencing difficulty with the repayments on their mortgage. The focus of Government and Central Bank actions relates in particular to personal insolvency reform and the Central Bank engagement with banks to require them to propose sustainable solutions to their customers in mortgage distress.

The Central Bank's Mortgage Arrears Resolution Targets (MART) process, as announced in March 2013, sets time bound and measurable targets for the main banks requiring them to systematically address their arrears book. Under this rolling process, quarterly performance targets have so far been set to the end of June 2014 to require the banks to propose and put in place durable long term solutions to address individual cases of mortgages in difficulty where the mortgage is more than 90 days in arrears. The Deputy will be aware that the Central Bank has now concluded its audit and assessment of a sample of the banks' end 2013 target returns. Based on the information submitted, the Central Bank has advised that the banks have indicated they have met the targets of proposing solutions to 50% and concluding solutions for 15% of those in arrears greater than 90 days.

The monthly mortgage restructures and arrears data published by my Department also provides an impetus for those MART banks to increase the pace of provision of mortgage restructures. The latest publication, in respect of the end of March, shows that some progress has been made in putting permanent mortgage restructures in place. For example, the total number of permanent restructures of principal dwelling houses (PDH) mortgages has risen from around 51,000 in December to around 62,000 in March 2014. This data, as well as the Central Bank quarterly mortgage arrears publications, would appear to demonstrate some success by the lenders in addressing the accounts in arrears as well as measures to prevent borrowers from going into arrears.

While the main focus has been on people experiencing repayment difficulty with their mortgage as opposed to those currently experiencing a negative equity situation, the Government is fully committed to helping address the affordability constraints faced by those mortgage holders who bought homes at the height of the property boom between 2004 and 2008. In this regard, I have fulfilled the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period. A document which illustrates the maximum gains for eligible individuals is available on the Department of Finance's tax policy website at http://taxpolicy.gov.ie/wp-content/uploads/2011/12/Mortgage-Interest-Relief.pdf.

In general, the Government is of the view that it is the regeneration of the economy, the restoration of employment levels and real growth that will most effectively and efficiently address the problem of negative equity and that is why the overall approach of Government, through its many initiatives, is to generate and support economic growth.