John Moloney (Laois-Offaly, Fianna Fail)

I have heard Deputy Wall raise this issue on many occasions and I know how committed he is to see change here.

I thank the Deputy again for raising this important matter. As has been made clear by our swift response in immediately accepting all of the recommendations made by the mortgage arrears and personal debt review group in its interim report published yesterday, the Government is extremely conscious of the high value Irish people place on home ownership. Indeed, long before the setting up of the review group, we have already brought forward a range of measures to support and protect families having difficulties with their home mortgage payments.

The single most important advice for any borrower facing difficulties in meeting repayments - whether their mortgage is with a local authority or private institution - is to engage early, proactively and constructively with their lender to seek to achieve an agreed solution. To date there is no evidence to suggest that wider economic circumstances are creating problems specifically for local authority borrowers in meeting mortgage repayments. The most recent published data available to me are the service indicators 2008, published in June 2009. This shows local authority mortgage arrears levels running at 11.7%, a marginal increase on the level in 2007, which stood at 11.6%. Similarly, despite worsening economic conditions generally, repossession remains extremely rare for local authority borrowers with only 66 repossessions across all local authorities carried out in the five year period 2005-09.

Local authority borrowers have received considerable protection from the worst effects of the downturn in terms of their borrowing costs. The effective rate for borrowers has come down by 3% since end November 2008 and now stands at just 2.25%. These rates represent exceptional value by comparison to rates charged by commercial lenders; as of now, the local authority rate is more than 0.9% lower than the average market variable rate.

Provisions regarding lending by local authorities for the purposes of house purchase are set out in section 11 of the Housing (Miscellaneous Provisions) Act 1992. Where a loan stands in default, section 11(10), and more recently section 34 of the Housing (Miscellaneous Provisions) Act 2009, provide that a local authority may make such monetary arrangements with a borrower as the authority considers equitable to take account of the particular circumstances. Local authorities can and do exercise the powers available to them under this section and endeavour, in all arrears cases, to engage proactively and constructively with a distressed borrower with the aim of enabling a household to regain its home. The available data strongly bears this out and suggests that repossession, where it occurs, is always a last resort.

In addition, and to support consistency of approach and ensure best practice across all local authority areas, the Department of the Environment, Heritage and Local Government recently circulated guidance, based on the regulator's code of conduct on mortgage arrears. This guidance will ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household while also protecting the position of the local authority concerned and ensuring that distressed local authority borrowers enjoy the same protections as borrowers from other institutions.

The Minister welcomes the commitment given yesterday by the Financial Regulator to bring forward changes to the code of conduct to reflect the recommendations of the mortgage arrears and personal debt review group. He is also committed to ensuring that the guidance to local authorities fully reflects any changes made to the code of conduct.

I assure Deputy Wall that I will pass on the issues he has raised to the Minister, and I apologise that he could not be here this evening.

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