Pearse Doherty (Donegal South West, Sinn Fein)

There has been considerable media and political interest in the issue of distressed mortgages in recent weeks. However, this problem is not new. The number of families struggling to repay mortgages bought at the height of the boom has been steadily growing for the past two years. Wage cuts, tax increases and increasing unemployment have forced more and more people into mortgage arrears.

As of December 2010, almost 45,000 households were in mortgage arrears for more than three months, of which 70% had been in arrears for more than six months. When households in receipt of MIS are taken into account, the total number of people in mortgage distress reaches a staggering 80,000. This represents a 50% increase in families unable to pay their mortgage since the end of 2009. In turn, the number of repossessed homes in mortgage arrears almost doubled from 397 in 2009 to 585 in 2010. These figures hide the reality of the tens of thousands of families who are not in mortgage arrears but who are paying an increasing proportion of their income to service boom time mortgages. Over the coming 12 months, we can all agree that more of them will cross over into serious mortgage distress.

In addition to the enormous human cost to individuals, families and communities, there is a massive economic cost in the increasing vulnerability of our banking system and the undermining of consumer spending. According to the documents released last week by the Minister for Finance and recent Exchequer returns, it is clear that consumer spending is at an all-time low and the Government has had to revise the yield downwards under some tax headings. This is not only a housing policy issue, as it directly impacts on job creation and the financial stability of the State. Considering the scale of the problem, it is incredible that the outgoing Government was unable to come up with a set of proposals aimed at addressing it. It was a little surreal to listen to the contribution of the previous speaker, who was a Minister only eight weeks ago. Usually, on this side of the House, we say what we would do when we get into government but after 17 years in government, former Ministers are outlining what they wanted to do or what they intended to do. It is a strange turnabout and perhaps that is the new strategy of these former Government members.

While the expert group on mortgage arrears and personal debt acknowledged the scale of the problem, it failed to provide sustainable and affordable long-term solutions. The Fine Gael-Labour Party programme for Government promises little more than longer moratoria, which simply pushes the problem further down the road, and bankruptcy legislation, the date and detail of which is not yet known. That the Government parties main proposal is to increase mortgage interest relief from 5% and 10% for first-time buyers shows they do not understand the full extent of the problem. The Government has signalled its intent to increase the financial hardship of tens of thousands of families across the State. The updated memorandum of understanding with the EU and the IMF copperfastens that position. The plan outlined in the programme for Government and the memorandum of understanding is to reduce tax credits, increase tax bands and introduce stealth taxes such as water charges and property charges at the same time as cutting the wages of low and middle earners and reducing social welfare benefits. All this will push even more families into mortgage arrears and distress.

In the coming period, Sinn Féin will launch detailed proposals on tackling mortgage distress and the guiding principles underpinning them will be threefold. First, we will provide a mechanism for people to retain their family home where that option is in their long-term personal and financial interest. This needs to be achieved with a minimum cost to the taxpayer and both the lender and the borrower will share the cost of the total loss of the value of the asset. Second, where remaining in the family home is not a viable option, we propose to enable mortgage holders to trade down to a home and mortgage more suitable to their changed financial circumstances.

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