Dáil Éireann Debate, Thursday - 1 February 2024
109. Deputy Martin Browne asked the Minister for Finance the number of mortgage holders who have switched their mortgage from vulture funds to the mainstream mortgage market since 6 September 2023; and as a consequence, his assessment of the effectiveness of the switching eligibility criteria announced by the banking sector on that date; and if he will make a statement on the matter. [4610/24]
Amharc ar fhreagraThe Government is acutely aware of the changed interest rate environment and the impact this is having on some mortgage borrowers. 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 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.
