Oireachtas Joint and Select Committees

Thursday, 5 May 2016

Committee on Housing and Homelessness

Banking and Payments Federation Ireland

10:30 am

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael) | Oireachtas source

I thank Mr. Brett and his colleagues for coming before the committee and for the useful information they have provided. I am sure the replies to the questions will be even more useful. I should mention that I have had the pleasure of meeting the witnesses' predecessors, their predecessors' predecessors and even the latter's predecessors on the same issue.

My first question concerns the need to accommodate those in arrears who are making a valid and valiant attempt to meet their mortgage repayments and the extent to which the banks are willing to accommodate them in a particularly special way. Given that the banks were accommodated by the taxpayer and shown great compassion during the bailout, would it not be a natural expectation that the members of the public, who continue to participate in the rescue of the banking system, would be treated with some degree of compassion? We all deal with individual cases - I have dealt with scores of these cases as our visitors will know - and it is not always the fault of a borrower who allegedly did not contact his or her bank.

There is a minority of those. There is also a minority who do not wish to pay and want to get a better deal, and eventually it will come to them. There is also a great majority who have made considerable efforts and sacrifices to meet their monthly payments or a portion thereof within their capacity to pay over the past number of years, and I believe that they deserve to be treated fairly and accommodated. My question is to what extent can the banks do that?

I have two or three more questions. On mortgage availability, I am aware the Chairman has dealt with scores of people. I have certainly done so. At present, the availability of mortgages is extremely difficult. Coming at the time we do, after a bubble, a crash and all that goes with it, I can understand that. However, I would have thought that where a person is renting a house and has shown that he or she has been paying the rent for the past five or six years, it should be - this relates to the Central Bank as well - an indication of his or her ability to pay. In any event, if such a person is paying a mortgage-like payment to a landlord or financial institution, I do not see how such a person will be able to raise €35,000 or €40,000 by way of savings. To what extent, in the event of the Central Bank being amenable to this, will the banking system be able to respond?

My other question is a general one on distressed mortgages. I refer to the sale of distressed mortgages to venture or vulture capitalists, whichever way one wants to see them. There is a job for Government here in ensuring that those who acquire such loans, that is, the unregulated third parties, treat the borrowers in the same way as those who are regulated. How would Banking and Payments Federation Ireland view the introduction of legislation to ensure that in the purchasing of distressed mortgages? By distressed mortgages, I mean ones that are unsustainable, not by the bank's definition but as determined by an independent arbitrary body which means that there is no chance of the borrower ever being able to make their payments. Given that only five or six years ago the same lending institutions awarded the loans in question and thought they were all right, the question is, how do we bridge that gap and how do we treat those who find themselves in a difficult position?

On the credit bubble I will wait for official from the Central Bank to appear before the committee. However, I would caution that if the Central Bank decides to open the floodgates, we may have a repeat of the situation at the time that benchmarking was introduced. The reason benchmarking had to be introduced in this country was because workers could no longer afford to pay their mortgage and live.

On the credit ratings, when I was a Member of the House ten years I could still qualify for a local authority loan. I am a Member of the House for many years and I could not now afford the level of mortgage repayments, even with interest rates much lower. I refer to the amount of the repayments expected, for example, €1,500, €1,600 and €1,700, and up to €2,500. From my experience, those ones, beyond €1,400 or €1,500 a month, are the real danger areas. Can I ask what-----

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