Áine Collins (Cork North West, Fine Gael)

I welcome the opportunity to speak on this motion. One year ago the banking system had all but collapsed. Since then this Government has restructured and recapitalised the banking sector despite the restrictions. Under the terms of the EU-IMF programme, the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the banks. Permanent TSB had a particular problem because of the number of tracker mortgages on its books which forced or encouraged it to increase its variable rates without any corresponding increase in the ECB rate. This has resulted in the standard variable rate charged by PTSB being substantially out of line with that charged by other State controlled providers such as AIB.

The Government in conjunction with the troika is currently looking at a way to deal with the tracker mortgages, in particular those held by PTSB. In the event of tracker mortgages being transferred from PTSB and other State controlled banks the argument for maintaining a high variable rate in PTSB would no longer be justified. If, as the Minister said, the Government is pursuing this course of action, part of the deal should be a reduction in PTSB's variable rate to the same level as AIB.

With this new approach being considered for tracker mortgages, the Government should also look at taking advantage of the changes to boost the housing market. There are many young couples who purchased apartments or starter homes four or five years ago whose families have expanded since. These couples wish to up-size their homes but they are afraid to make a move because they are afraid of losing their tracker mortgage. When the Government is considering and, hopefully, completing the removal of tracker mortgages to holding banks, then it should take the opportunity to build in a system that would allow those people on tracker mortgages to up-size without the fear of losing their tracker mortgage.

The whole question of arrears is closely related to the fact that Ireland has the highest percentage of personal debt in the OECD. In the past number of years our personal debt increased by 245%. It is no wonder that there are increasing issues regarding debt. There are now many instances where mortgages taken out by some borrowers are no longer repayable as they currently stand.

Having said this, lending institutions and customers will have to co-operate to try to resolve the situation. There is responsibility on both sides. Until now the banks had the upper hand in these negotiations but the introduction of the new personal insolvency law should put negotiations on a more even playing pitch. This is a very difficult path for families but the new legislation would introduce some reality into the situation.

The Government is putting a number of things in place in the regard to the SME sector, some of which my colleagues spoke about such a microfinance loan, the temporary partial guarantee, the lending targets by the banks and the credit review board. Interestingly, it is worth noting that a survey was done last year on the SME sector and lending. Only 36% SME businesses looked for loans. Of that 36%, 70% of those applications were approved. Of the 30% which were not approved, 55% were approved by the Credit Review Office.

I support the Government amendment. The Government recognises that there are enormous challenges in the financial, economic and banking sector and the importance of resolving them with a sense of urgency.

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