Brian Hayes (Dublin South West, Fine Gael)

I thank Deputy Martin Ferris for raising this important matter and giving me the opportunity to respond. It is not an exaggeration to say Irish people value the ownership of their own home. It is a deeply rooted cultural tradition and characteristic. Unfortunately, the financial crisis has created conditions in which many home owners through no fault of their own now find themselves in arrears with their mortgage repayments and at risk of losing their homes. It is time, therefore, that society through the agencies of State, should seek to assist mortgage holders in arrears in a measured and proportionate way. This is happening. There are supports available to assist mortgage holders who are in arrears with their repayments in respect of their principal private residence.

However, before considering some of the aspects of that support, I would like to point out that the level of repossessions in Ireland has been very low. The Central Bank's quarterly data series on residential mortgage arrears and repossessions show that the level of repossession activity in the courts, with respect to the primary residence of borrowers, is not high when compared with the scale of mortgage arrears pertaining.

For example, the level of home repossessions per 100,000 mortgages in the UK is more than five times greater than the Irish rate. It can also be observed that the majority of repossessions taking place are not by way of a court order but rather via voluntary surrenders and abandonments.

The supports available to assist people in arrears with their mortgage repayments in respect of their principal private residences can be grouped under four headings. The first is the mortgage interest supplement scheme. The second is the availability of advice through the Money Advice and Budgeting Service. The third is the protection to mortgage holders provided by the Central Bank's code of conduct on mortgage arrears and the fourth is lender forbearance.

The mortgage interest supplement scheme managed by the Department of Social Protection provides assistance where the mortgage relates to a person's principal private residence. It currently supports approximately 18,000 mortgage holders. The Money Advice and Budgeting Service provides a national, free, confidential and independent service operating from 53 offices nationwide. The House will be familiar with these schemes and how they operate. Rather than recount them in detail, I wish to look more closely at the code of conduct on mortgage arrears.

The code of conduct on mortgage arrears sets out how mortgage lenders must treat borrowers in or facing mortgage arrears with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. The code sets out the framework that lenders must use when dealing with borrowers in mortgage arrears or in pre-arrears. For the purposes of the code, a pre-arrears case arises where the borrower contacts the lender stating that he or she is in danger of going into financial difficulties and-or is concerned about going into mortgage arrears.

The code has been amended twice since it was first introduced in 2009 to provide additional protections for mortgage holders. The most recent revision of the code was published on 6 December 2010 and came into effect on 1 January 2011. Lenders are required to comply with the revised code as a matter of law but have been given a period of six months grace, ending on 30 June 2011, to put in place some of the provisions of the code. The revised code contains a new provision on arrears charges. Lenders have been directed not to impose arrears charges or surcharge interest on borrowers who are in arrears and who are co-operating with the new mortgage arrears resolution process with effect from 1 January 2011.

The revised code also includes more detailed requirements for lenders when dealing with borrowers arrears and financial difficulties. I have provided the Deputy with the main aspects of the code in place since 1 January 2011 and I will not rehearse them here. Many of these changes follow on from the work of the expert group on mortgage arrears and personal debt. This group produced two reports - an interim report published in July last year and a final report published in November last year. The expert group, which was chaired by Mr. Hugh Cooney, included Mr. Matthew Elderfield, head of Financial Regulation at the Central Bank, as well as other external experts and senior officials from Departments.

One of the main recommendations of the expert group on mortgage arrears and personal debt was that a deferred interest scheme should be put in place. This was intended to allow borrowers to pay at least 66% of their mortgage interest but less than 100% and defer payment of the balance for up to five years. Mortgage lenders have been requested to commit to the scheme. Lenders representing the majority of the market have already indicated their willingness to implement the expert group's proposals for a deferred interest scheme or a variation of it. These are AIB, EBS, Bank of Ireland, Irish Life & Permanent, Irish Nationwide Building Society, Springboard and Start. While the deferred interest scheme is voluntary for all lenders, those who have signed up in support of the scheme will be monitored by the Central Bank to ensure compliance.

I welcome AIB's announcement that it is examining new ways to assist those in mortgage arrears.

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