Tuesday, 18 May 2021

Questions (68)

Denis Naughten


68. Deputy Denis Naughten asked the Minister for Social Protection if she will reintroduce the mortgage interest supplement; and if she will make a statement on the matter. [26490/21]

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Oral answers (6 contributions) (Question to Social)

The primary objectives of all measures across the housing sector should be to increase supply of accommodation and keep people in their current homes, be those rented or owned, where those homes meet their needs. While State support is available to those who are renting and cannot meet their housing costs, the State has, since 2014, turned its back on those who have a mortgage and have lost their jobs. This is unfair.

I thank the Deputy for raising this issue. The original purpose of the mortgage interest supplement scheme was to provide short-term support to eligible people who, due to temporary unemployment or loss of earnings, were unable to meet their mortgage interest repayments in respect of a house that was their sole place of residence.

The 2011 interdepartmental mortgage arrears working group report, known as the Keane report, identified mortgage interest supplement as an inappropriate long-term support. The central tenet of the report's findings was that mortgage interest supplement did little to assist families in improving the long-term difficulty in addressing their mortgage problem.

The scheme was discontinued because it did not address the long-term challenges for people in serious mortgage arrears. While it covered the interest payments on a mortgage, it did not reduce the value of the outstanding mortgage debt and it acted, in effect, as a subsidy to the lending institution while creating a potential welfare trap for the customer.

The scheme was discontinued for new entrants from 1 January 2014 on the basis, as I said, that the ongoing payment of mortgage interest supplement did not address the long-term housing challenges for people in serious mortgage arrears. There are currently 492 households receiving mortgage interest supplement from my Department, down from 9,768 when the scheme closed in 2014. The Central Bank's code of conduct on mortgage arrears, CCMA, provides a more appropriate framework for customers, with the responsibility of forbearance for mortgage difficulties resting with the mortgage service provider. In accordance with the CCMA, lending institutions are encouraging customers to contact them at the earliest opportunity regarding their concerns and any particular circumstances that may impact on the customer's financial well-being.

Additional information not given on the floor of the House

The Money Advice & Budgeting Service, MABS, under the aegis of the Citizens Information Board, continues to provide assistance to people, in particular those on low incomes or living on social welfare payments who are over-indebted and need help and advice with debt problems. As part of its free services, MABS provides help and advice to those in mortgage arrears.

I accept that mortgage interest supplement should be a short-term measure. The problem is that there is no short-term measure in place at this time. Three years after the scheme closed for existing recipients, there were still 1,700 people receiving payment. After intensive support being provided by the Minister's Department and direct engagement with the financial institutions, 1,700 people were still getting payment under the scheme. Clearly, the other supports that are in place are not working. If 1,700 people were still on the scheme three years after it closed and 400 are still on it today, seven years after it closed, and given that the Minister has had the weight of her Department available to her and has had direct engagement with the financial institutions, it is obvious that the existing alternative mechanisms are not working.

Abhaile is the national mortgage arrears resolution service. It is provided free of charge to insolvent borrowers who are at risk of losing their home due to mortgage arrears. Abhaile is focused on providing expert financial and legal advice and assistance to borrowers to identify and put in place solutions to their arrears and, wherever possible, enable them to remain in their home.

From the inception of Abhaile in mid-2016 through to December 2019, 17,640 individual borrowers in mortgage arrears, or almost 15,000 households, received independent expert financial advice and negotiation support from Abhaile aimed at getting a solution in place. More than 8,000 borrowers facing repossession proceedings have received advice and assistance at court from an Abhaile duty solicitor. Almost 1,900 borrowers received legal advice from Abhaile consultation solicitors.

I note what the Minister is saying and I do not dispute it. In fairness, Abhaile is a great service. However, there are people falling through the cracks. Her Department has accepted that, given there are 400 families still in receipt of mortgage interest supplement seven years after the closure of the scheme and following intensive engagement with them. I want to focus on the unfortunate families who in the weeks and months ahead, as the pandemic unemployment payment, PUP, ceases and they try to go back to work, will find there is no job available for them. The current mechanism is only kicking the can down the road. Those people need a short-term supplement to ease the mortgage pressure they are under, rather than just loading more debt on them until they get new employment. As a temporary measure, we should allow the payment of mortgage interest supplement in those circumstances.

The Abhaile programme has worked well. At the end of December 2019, nearly 35% of the 17,640 borrowers who engaged with Abhaile financial advice either had a solution in place or were on trial. A further 47%, or 8,317 borrowers, were still in their homes and receiving ongoing support from their Abhaile financial adviser to get a solution in place. I know the Deputy will agree with me that anybody in any financial difficulty should go to MABS. It provides a wonderful service in giving people support and helping them to plan for and figure out how to deal with the challenges they may have. I encourage anybody in difficulty to avail of the supports available through the MABS offices.