Dáil Éireann Debate, Thursday - 23 November 2023
123. Deputy Brendan Griffin asked the Minister for Finance if he is concerned with the increases in mortgage interest rates being demanded of customers by financial lenders; to provide an update on his recent engagements with such lenders and the Central Bank; and if he will make a statement on the matter. [51580/23]
View answerThe Government fully recognises the difficulties that increasing interest rates, and the rise in the cost of living more generally, is causing for some mortgage borrowers.
In view of this, on 31 August 2023 I met with the mortgage industry including the Banking and Payments Federation Ireland, CEOs and senior representatives of all the main mortgage lenders and servicers. The Central Bank of Ireland, Citizens Information Board (and its Money Advice and Budgeting Service) and the Insolvency Service of Ireland also attended the meeting.
I made it clear that banks and all other mortgage entities should be fully aware of the significant challenges that some of their customers are facing and, therefore, lenders and servicers should respond by assisting their customers who are experiencing difficulty. In relation to customers’ ability to switch to another provider to avail of a more advantageous mortgage interest rate, I also indicated that greater clarity should be provided to customers on the possibility of switching provider. The option of switching provider should be fully supported by all mortgage entities, including the existing mortgage creditor.
Furthermore, I supported the steps taken by the Central Bank to ensure that firms proactively deal with emerging difficulties for their customers since the increase in interest rates. The Central Bank requires firms to enhance the range of supports available to borrowers in or facing arrears and to have sufficient operational capacity to manage applications by borrowers to switch their mortgage or mortgage provider.
Arising from that meeting, on 6 September the Banking and Payments Federation of Ireland announced a number of further initiatives by the mortgage industry. This included:-
• a second phase of a ‘Dealing with Debt’ campaign to highlight new and existing supports for concerned mortgage customers;
• mortgage servicing firms and MABS to collaborate on an expansion of streamlined customer engagement framework; and
• the provision of initial eligibility criteria by the main lenders to provide clear guidelines for home mortgage customers of credit servicing firms who are seeking to switch their mortgage.
This means that, for the first time there is now an agreed industry wide set of initial eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank. All of the banks and some other lenders have signed on to that set of criteria which is a significant change and brings welcome clarity to mortgage holders.
These new measures are additional to those provided for in the existing regulatory framework. However, the criteria to switch would be subject to an individual credit assessment by lenders and there are other criteria that will need to be considered.
Regulated firms are also keeping the range of supports they already had available for their customers in or facing mortgage arrears under review and additional alternative repayment arrangements (ARAs), including a fixed interest rate option, are now coming on stream from non-banks. In particular, Pepper has introduced a new discounted 2-year fixed rate ARA option for borrowers in arrears, which increases the range of options for Pepper customers entering into an ARA.
Therefore, while acknowledging that the consumer protection framework to assist mortgage borrowers in genuine difficulty remains strong, it remains a priority for me that consumers are supported and I will continue to monitor the implementation of these commitments provided by industry following our recent meeting.
In addition, as the Deputy is aware, Budget 2024 provided for a one-year mortgage interest tax relief scheme for homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax, capped at €1,250 per property.
