Dáil Éireann Debate, Tuesday - 11 March 2014
77. Deputy John Browne asked the Minister for Finance in view of the fact that mortgage arrears issues are presumed to be dealt with on a case by case basis, if special consideration should be given to those who bought property at the peak of the property cycle as these are the most likely to have seriously unsustainable mortgages; and if he will make a statement on the matter. [11645/14]
Amharc ar fhreagra102. Deputy Ann Phelan asked the Minister for Finance if consideration has been given to the application of the Iceland model for addressing mortgage distress, whereby mortgages are reset to 110% of current values; and if he will make a statement on the matter. [11986/14]
Amharc ar fhreagraI propose to take Questions Nos. 77 and 102 together.
The fair resolution of the mortgage arrears problem is a key priority for Government. The Government has developed a comprehensive strategy, in line with the main recommendations of the 2011 Keane Report, and has significantly advanced a number of key measures in this regard, including:
1. An intensification by the Central Bank of its engagement with mortgage lenders to require them, under the Mortgage Arrears Resolution Targets (MART) process, to propose and conclude sustainable and durable alternative arrangements to their customers in mortgage arrears. Targets have, so far, been set for the period to end of June 2014 and by this date the relevant banks covered by the MART process will be required to have proposed sustainable solutions to 75% of mortgages which are more than 90 days in arrears and to have concluded solutions with 35% of such mortgages.
2. Significant reforms to personal insolvency and the establishment of the Insolvency Service of Ireland, to provide more accessible and flexible statutory frameworks for people with unsustainable personal and mortgage debt to address their position.
3. Updating the Code of Conduct on Mortgage Arrears to provide additional safeguards to cooperating borrowers while also promoting and encouraging efforts by both lenders and borrowers to meaningfully address mortgage arrears or pre-arrears.
4. Mortgage to rent which is now available as a social housing response to allow people to remain in their house, where possible; and
5. The provision of an independent mortgage information and advice service.
While the main focus has been on people experiencing genuine difficulty with their mortgage as opposed to those currently experiencing a negative equity situation, the Government is fully committed to helping address the affordability constraints faced by those mortgage holders that bought homes at the height of the property boom between 2004 and 2008. In this regard, I have fulfilled 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 now 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 is, for the tax years 2012 to 2017, now 30 per cent. 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.
It is considered that the necessary framework is in place to enable banks to work with distressed homeowners to reach sustainable solutions for dealing with their personal indebted situations. However, early and effective engagement between borrowers and lenders is key to resolving the cases of mortgage difficulty. Where there is effective and meaningful engagement by all parties regarding a mortgage difficulty, the Central Bank's mortgage arrears and restructures statisics and my Department's monthly mortgage data publications shows that an increasing number of durable long term mortgage restructures are being put in place. However, it is accepted that it will be necessary for lenders and borrowers to continue to build on this.
In relation to the efforts by Iceland to address mortgage debt, I understand that action is still ongoing in this regard and it is unclear how successful the previous efforts on mortgage principal modification have been. The Deputy may wish to to note that the Icelandic Government as recently as last November announced further measures to address the mortgage and indebtedness situation in the country.
