Tom Barry (Cork East, Fine Gael) | Oireachtas source

I welcome the opportunity to speak in this debate tonight. The matter of mortgage arrears is essentially the fall-out from bad governance and we are coming to the end of what would be a standard curve in that respect. People were loaned money at low rates. The principal was even a stretch at a time when the country was in full employment. There were long loan terms with 30 plus years but not everyone will have health and wealth for such a long time. I have encountered some people whose loans were in distress quite a while ago. They got mortgages when they were on State benefits. The banks in those cases must bear some responsibility because there was no chance these mortgages could be repaid. The anxiety that people in these situations feel is terrible. There is runaway debt with interest payments and many banks did not have the skills to deal with this early on.

I welcome the guidelines on deposits from the Central Bank which has brought a little bit of sense to the area. I appreciate in Dublin where house prices are high that this is a bit of a challenge. There might be other ways of looking at this to see if there are innovative ways of dealing with this. At the finance committee, members learned how a 5% change on the equity to borrowing ratio can lead to a 10% change in the property value which is quite high.

The borrowing culture was all wrong and very few of us at the time escaped. The 250,000 to 300,000 people in the private sector who lost their jobs were in a terrible position because they did not qualify for social welfare payments. This discussion needs to start and I hope that Members will fill up the survey for the campaign to support small businesses. We need to remember that we cannot allow the mistakes of the past to be repeated.

It is up to all Members to solve this and it is up to the banks to engage constructively, as well as individually and sympathetically. I wrote a policy document about a parked percentage mortgage plan which essentially was subsequently replicated to some degree in the Keane report. We must establish what people can pay in interest and principal with the parked balance left there. One would expect and demand that interest would not be charged on this, especially when we are in an era of 30-year loans having an interest rate of 1%. We need to give more options to the people in question. Down the road, these properties can be sold or transferred with only a small mortgage on the property relative to the value it has. It would ensure people do not worry that they will lose their homes.

We cannot leave these situations to the courts. I have been in the courts to see what has gone on. One has to have some degree of sympathy for the judges lumbered with an issue which should have been dealt with in this House. I know the level of skills in the banks has improved. From running a business back then and having non-core debt, I know it was just a nightmare. However, better communications still need to occur. People are sometimes not aware of their rights. We have had the banks at the finance committee explaining what they have done over the last while but they need to explain more clearly as to how the engagement process works. Restructuring needs to be a two-way process where people are dealt with and they do not have to bear all the costs of it.

I welcome this debate. Increasing employment to the 2 million mark will certainly help in this regard and I get people out of distressed mortgages.

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