The Central Bank has advised me that they wrote to all mortgage lenders in 2010 to ascertain whether they were offering, or intended to offer, a mortgage product that would allow home owners to sell their existing home and transfer the negative equity portion of the original loan to the new loan. In order to ensure that proposals in relation to such mortgages are consistent with the Central Bank's consumer protection and prudential policy objectives, the proposed criteria for any such facility would need to be agreed in advance between mortgage lenders and the Central Bank. In response to the Central Bank's letter, only a small number of mortgage lenders said that they would consider offering such a facility.
The Central Bank has also advised me that following the issue of the report of the Inter-Departmental Mortgage Arrears Working Group in September 2011, which included a recommendation on trade down mortgages, several lenders have contacted the Bank with regard to offering negative equity mortgages. This includes trade-up, trade-down and trade-down where the customer is in arrears.
In light of this and the initial low level of take up in 2011, the Central Bank has reviewed some of its criteria for negative equity mortgages and recently communicated this revision to the main lenders. It still remains that any institution offering such a mortgage facility may do so only in accordance with criteria set out by and with the prior approval of the Central Bank.
