In terms of significant mortgage arrears and difficulty, the Government has significantly advanced a number of key measures, including:
(i) An intensification by the Central Bank of its engagement with mortgage lenders to require them to propose sustainable and durable alternative arrangements to their customers in mortgage arrears;
(ii) Significant reforms to personal insolvency to make it more accessible for people with unsustainable personal and mortgage debt to address their position;
(iii) Reviewing the Code of Conduct on Mortgage Arrears to provide additional safeguards to borrowers while also promoting and encouraging efforts by both lenders and borrowers to meaningfully address mortgage arrears or pre-arrears;
(iv) Mortgage to rent which is now available as a social housing response to allow people to remain in their house, where possible; and
(v) The provision of an independent mortgage information and advice service.
Regarding other measures to assist people in positions of negative equity, the Central Bank has engaged with mortgage lenders in relation to negative equity mortgages to develop 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 need to be agreed in advance between mortgage lenders and the Central Bank.
While the provision of negative equity mortgages will facilitate people moving homes and generate transactions in the housing market, it is not expected that there will be a large take up of this product, as all sales must comply with the affordability and suitability provisions set out in the Consumer Protection Code. It should however be noted that a decision to introduce a negative equity type product is a matter for each mortgage lender and is based on commercial and policy considerations. At present some lenders are offering this product, while others are considering making such a product available.
As the Deputy is aware, the Government has also put in place a number of taxation measures to assist people with mortgages on their homes. In the Finance Act 2010, mortgage interest relief was extended up to the end of 2017 for those whose entitlement to relief was due to end in 2010 or after (i.e. those who purchased in 2004 or after). Accordingly, individuals who took out qualifying loans in the period 2004 to 2012 will continue to be entitled to mortgage interest relief up until the end of 2017.
Furthermore, as you are aware, this Government is fully committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. In this regard, in Budget 2012, I announced my intention to fulfill the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period.
First time buyers will qualify for the increased rate if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in that period. The rate of tax relief on the interest paid on such loans will, for the tax years 2012 to 2017, be 30%. A document which illustrates the maximum gains for such individuals is available on the Department of Finance’s tax policy website at http://taxpolicy.gov.ie/wp-content/uploads/2011/12/Mortgage-Interest-Relief.pdf .
