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

I do not propose to accept the amendment. The original purpose of the mortgage interest supplement scheme was to provide a short-term support to eligible people who were unable to meet their mortgage interest repayments in respect of their home. Section 11 of the Social Welfare and Pensions Act 2013 provided for the closure of the scheme to new entrants from January 2014 and the cessation of the scheme by the end of December 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. There are currently approximately 2,200 people in receipt of mortgage interest supplement, with an estimated expenditure of approximately €6 million for the scheme in 2016 and €4 million in 2017.

I appreciate that the Deputy is not advocating that the State should pay a person's mortgage interest indefinitely and the supplement should be paid for a short period, perhaps where a person has become ill or experiences unemployment. I understand, therefore, that the proposal to reinstate the payment is not in respect of people in long-term arrears. A number of groups, including Community Law & Mediation, have recommended the reintroduction of the scheme as a temporary measure to pay the mortgage interest of persons who get into temporary difficulties for a number of months or perhaps one year.

My difficulty with the proposal is that it would essentially subsidise the banks because the interest payments would be made directly to the banks. They would be the major beneficiary of the scheme because the interest would be paid and the loan would continue to be performing. In such circumstances, we can be certain that banks would not take any steps to assist the mortgage holder, whereas they should provide a mortgage holiday, extend the term of the mortgage by several months or a year or increase the payments marginally when the person gets back on his or her feet. The banks would be delighted if the Government reinstated the scheme as a short-term measure because they would not need to take any of these steps and could instead simply take the money. They would also benefit from being able to hold on to the performing loan for longer. The scheme would operate purely as a subsidy for the banking sector.

It is a red herring to link the reinstatement of this scheme to the housing and homelessness crisis. No homes are being repossessed in cases where a householder does not pay a mortgage for a few months. If this is a short-term measure, it is not connected in any way to housing and homelessness because people have to be in arrears for years before repossession proceedings begin. The scheme would be a gift to the banks by essentially putting them in a position of not having to do anything to assist the mortgage holder, for example, extending the loan term or providing a repayment holiday, in the knowledge that the taxpayer would intervene and pay the mortgage interest.

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