Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

The original purpose of the mortgage interest supplement scheme was to provide short-term support to eligible people who were unable to meet their mortgage interest repayments in respect of a house which was their sole place of residence. The most appropriate pathway for customers experiencing mortgage difficulties is through ongoing engagement with their lender, exploring sustainable solutions detailed within the mortgage arrears resolution process under the Central Bank of Ireland's code of mortgage arrears. Section 11 of the Social Welfare and Pensions Act 2013 amended section 198 of the Social Welfare Consolidation Act 2005 to provide for the closure of the mortgage interest supplement scheme to new entrants from January 2014 and the cessation of the scheme by the end of January 2017. Customers availing of this support prior to 1 January 2014 have been able to retain entitlement to the scheme up to 1 January 2018. Approximately 2,200 people are still in receipt of mortgage interest supplement, with an estimated expenditure of €6 million for the scheme in 2016. It is expected that over the remaining period, existing recipients will continue to exit the scheme through sustainable solutions being put in place with their lenders, securing employment or exit strategies sponsored by the Department of Housing, Planning, Community and Local Government, such as the mortgage-to-rent scheme.

A review of all current mortgage interest rate supplement cases is currently being finalised by the Department, which is gathering information on property types and lending institutions involved. As part of the process, the cases will be profiled in order to consider appropriate exit strategies for these customers, with a particular emphasis on activation, where appropriate. Engagement with the dedicated mortgage arrears Money Advice & Budgeting Service, MABS, will also be considered. MABS assists people who are over-indebted and need help and advice in coping with debt problems, in particular those on low incomes and people living on social welfare payments. In addition to its traditional core business, MABS has been developed to provide more targeted services to support mortgage holders in arrears. Since 2015, a dedicated mortgage arrears MABS service has been established across the MABS network of services. The service is focusing on post-mortgage arrears resolution process, MARP, cases and empowers mortgage holders to assess the extent to which the option on offer from the lender is the best and most sustainable one for them and helps them in negotiating an alternative payment arrangement with their lender. There are 30 specialist advisers in place in 25 locations across the country, and almost 2,500 people have benefitted from the service. MABS also has a network of court mentors. More recently, with the Tánaiste, I launched Abhaile, which is a scheme of aids and advice to borrowers in home mortgage arrears. It provides people with vouchers for independent financial and legal advice if they need it. The scheme has only recently got under way.

The difficulty I have with any proposal to reintroduce mortgage interest supplement is that it never really worked. The Department of Social Protection, that is, the taxpayer, paid people's mortgage interest for months and years, which suited the banks down to the ground because they were getting the interest paid on the asset. It would suit them even more now, by the way, because the asset, namely, property, is accumulating in value. The Government pays the interest forever, the banks still own the asset and it creates a trap for the borrower because he or she has no incentive to deal with the problem, namely, the fact that he or she cannot afford the mortgage any more. Other than for the reason of saving money, that is why the scheme was closed down. What we should do, instead of "extend and pretend" at the expense of the taxpayer for ever, is deal with people who will never be able to pay their mortgage again through such measures as mortgage-to-rent, which I know is not working, but it needs to start working, the housing assistance payment, HAP, and other housing solutions.