Dáil Éireann Debate, Friday - 16 December 2016
132. Deputy Michael McGrath asked the Minister for Finance the number of households in negative equity; his views on the implications of this for the wider economy; and if he will make a statement on the matter. [40664/16]
View answerNegative equity occurs when the price of a property falls below the value of the outstanding mortgage secured on that property. I have been informed by the Central Bank of Ireland that it does not publish a regular series of data on mortgages in negative equity. Neither do officials in my own Department collect such data. The Central Bank's latest Household Credit Market Report, at www.centralbank.ie/publications/Documents/Household%20Credit%20Market%20Report%202016H2.pdf, presents the percentage of loans in negative equity split by default status (Table 7, HCMR H2 2016). These data are for 2015 and do not reflect changes to loan balances and house prices since December 2015. The Central Bank estimates that 15 per cent of PDH loans and 26 per cent of BTL loans were in negative equity at end December 2015 of which 10 per cent of PDH and 14 per cent of BTL loans in negative equity were deemed to be performing. This represents a decline of 5 per cent in respect of PDH loans and 9 per cent in respect of BTL loans in negative equity since December 2014.
The numbers in negative equity have been reducing and this has important implications for the wider economy such as improving mobility amongst those affected, potential greater spend on home improvements and maintenance, and increased consumption via the wealth effect.
