Dáil Éireann Debate, Tuesday - 13 February 2024
233. Deputy Fergus O'Dowd asked the Minister for Finance the measures and supports that are being considered to help alleviate the devastating pressure being exerted on homeowners who have been moved or are tied to vulture fund lenders, where in some cases they are paying over 10% interest; and if he will make a statement on the matter. [6282/24]
View answerThe Government is acutely aware of the changed interest rate environment and the impact this is having on some mortgage borrowers.
In response, I met with the mortgage industry including the Banking and Payments Federation Ireland (BPFI), CEOs and senior representatives of all the main mortgage lenders and servicers on 31 August 2023.
At that meeting I emphasised that banks and all other mortgage entities should be fully aware of the significant challenges that some of their customers are facing at this time and that lenders and servicers should respond by assisting their customers who are experiencing difficulty.
I also highlighted that greater clarity should be provided to customers on the possibility of switching provider and that this option should be fully supported by all mortgage entities, including the existing mortgage creditor.
Arising from that meeting, on 6 September 2023 the Banking Payments Federation Ireland (BPFI) announced a number of further measures by the mortgage industry to assist their customers, including:
• 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.
These new measures are additional to those provided for in the existing regulatory framework for mortgage borrowers regardless of the type of regulated entity with whom they are dealing, such as a bank, a retail credit firm or a credit servicing firm.
Credit servicing firms have committed to working with these criteria to support customers switching and to ensure they are aware that they may have options to switch their mortgage. In addition, the main mortgage broker representative bodies, Brokers Ireland and the Association of Irish Mortgage Advisors, have also agreed to communicate these criteria to borrowers seeking to switch their home loans.
In order to be eligible to switch under these guidelines, customers need to be making full capital and interest repayments on their mortgage. In addition, customers must have no arrears on their home mortgage or any other lending in the past two years.
Once customers meet these and other initial criteria, applications will be assessed on a case-by-case basis in line with individual lender credit policy. The decision on whether or not to provide credit in any particular case, or the amount of credit to provide, remains a commercial matter for an individual lender.
The BPFI has set up a process to monitor the level of switching under this initiative. The BPFI will provide an update when it has data for a number of months to hand.
The Central Bank will also continue to engage with regulated firms to ensure that they have sufficient operational capacity to manage applications by borrowers to switch their mortgage or mortgage provider and that industry participants are extending themselves to support consumers and support switching.
More generally any person who is experiencing difficulty in relation to their mortgage should seek the assistance of the Money Advice and Budgeting Service (MABS). This is a State funded service for people whose home is in mortgage arrears or in mortgage difficulty and it can provide free legal and financial advice where necessary to borrowers.
Separately, as the Deputy will know Budget 2024 provided for a temporary 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 are now 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 (20%), capped at €1,250 per property.
