Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes that:

— the European Central Bank (ECB) is independent in the formulation of monetary policy for the Eurozone Area;

— the ECB's objective is to maintain price stability and wishes to ensure a timely return of inflation to its 2 per cent medium-term target; and

— since last summer, the ECB has increased official interest rates on five occasions by a total of 3 percentage points;

acknowledges that:

— the current inflationary dynamic and general increase in interest rates will present increasing challenges for many individuals;

— interest rates are the primary tool to tackle inflation; and

— the increase in official interest rates will have an impact on the level of retail mortgage and other loan interest rates here in Ireland and in other countries across the Eurozone Area;

recognises that:

— the changed interest rate environment will not have a uniform impact on all borrowers and, depending on particular situations, such as the terms of individual contracts, some borrowers will experience a higher increase in interest rates than other borrowers; and

— in addition to the general increase in the cost of living, an increase in interest rates will pose difficulties for many borrowers;

further notes that the reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered, not on an ad hoc basis, but in the context of a range of other cost of living measures being provided;

recalls that:

— Budget 2023 was a Cost of Living Budget, incorporating a total package of €11 billion, focused on easing the burden of inflation on households and businesses;

— an overall budgetary package of €6.9 billion has been provided for this year, including adjustments to income tax bands, increases in tax credits and increases in transfer payments, such as social welfare and pension rates;

— in addition, a set of one-off cost of living measures, amounting to over €4.1 billion, took effect from the final quarter of last year, including an extension of the reduction in excise duties and Value-Added Tax on electricity and gas to end-February, three €200 electricity credits and other social welfare and expenditure measures; and

— this built on some €3 billion in support provided in advance of Budget 2023;

furthermore, notes that:

— there is a strong consumer protection framework in place for borrowers who may experience repayment difficulty due to rising interest rates or the cost of living more generally;

— all Central Bank of Ireland regulated lenders and credit servicers, both banks and 'non-banks', are required to follow the provisions of the relevant statutory consumer protection codes, including the Consumer Protection Code and the Code of Conduct on Mortgage Arrears;

— in particular, all cases of mortgage repayment difficulty have to be handled positively and sympathetically by a lender or servicer with the objective at all times of assisting the borrower to meet his or her mortgage obligations, and regulated entities must work with co-operating borrowers to, if possible, put in place a suitable alternative repayment arrangement;

— the Governor of the Central Bank of Ireland has recently indicated that the Central Bank expects firms to be prepared and to be proactive in supporting their customers to navigate the changing economic environment; and

— there are a number of public initiatives to assist people who are in mortgage or other debt difficulty, such as the Abhaile service, which is made up of the Insolvency Service of Ireland, the Legal Aid Board, the Money Advice and Budgeting Service and the Citizens Information Board, which provides free financial advice and, where appropriate also, legal advice to people experiencing difficulty with their mortgage; and

therefore:

— supports the Central Bank of Ireland as it continues to supervise and engage with regulated firms to ensure that such firms use all their range of forbearance for borrowers facing repayment difficulty;

— in particular, encourages the Central Bank of Ireland to continue its engagement with 'non-bank' regulated firms, to ensure that the suite of products provided to their customers who are experiencing difficulty is in line with the Bank's expectations;

— calls on the Central Bank of Ireland to ensure that all lenders assess all switching applications in a prudent and fair manner, regardless of the borrower's current mortgage provider; and

— notes that much progress has been made in recent years in reducing the level of mortgage arrears, including during the Covid-19 period, and calls on mortgage creditors and relevant public bodies to continue their efforts to further tackle existing mortgage arrears cases.

I thank Deputy Doherty and his colleagues for tabling this motion and enabling a debate on what is an important issue. There is no doubt the changes we are witnessing in monetary policy are having a very significant impact on households all over Ireland and, indeed, on many businesses as well. Of course, in recent times we have also seen the cost of borrowing for governments increase. Like the Deputies opposite me, I too receive the emails and phone calls from mortgage holders who are directly impacted by ECB rate changes. In some cases, they are impacted more or less immediately, for example, those on tracker mortgages. More recently, we have begun to see changes in variable mortgage pricing by banks as a result of changes at ECB level. Many mortgage holders have fixed their interest rate in recent times and are not directly impacted, though, of course, when they come off that fixed rate they will have to make a decision in a different environment from the one in which they perhaps fixed their rate initially.

It is worth making the point that when the Government brought forward a budget last September, neither the Government nor the Opposition made the case at that stage for mortgage interest relief, even though we had already experienced increases in interest rates from the ECB. The path it was going to follow in the direction of travel of monetary policy was pretty well flagged at that stage. It is also worth making the point that this issue cannot be considered in isolation from all of the other decisions Government has to make. As colleagues across the House will be well aware, we have decisions to make in the next couple of weeks at the latest relating to major taxation and expenditure measures that are due to expire at the end of February. Depending on the decisions the Government makes, there will be a significant fiscal impact from those decisions. Therefore, we have to consider it in the round and consider the decisions the Government is going to make. Looking at the track record we have so far in bringing forward in the budget €11 billion of new measures, about €4 billion of which were once-off and exceptional in nature and around €7 billion of which were core permanent recurring changes, again the focus has been on addressing the cost-of-living pressures households are facing and on supporting businesses get through what is a very difficult time.

I say to all lenders, whether they are mainstream bank lenders, non-bank lenders or service providers, that I expect all of them to treat customers fairly and to be sympathetic to the individual circumstances households are facing. Many such households are facing significant increases in their monthly repayments, which will be a burden, and it will be difficult for many of them to repay. I expect lenders to fulfil, both in word and in sprit, the code of conduct on mortgage arrears, CCMA, and the consumer protection code. That involves proactively working with those borrowers to ensure they do not fall into arrears. The point has to be made that we now have the lowest level of mortgage arrears in Ireland since 2010. Just over 4% of principal dwelling home mortgages are in arrears of 90 days or more. That is testament to the work of the lenders with the borrowers and the support of Government at different stages in helping people to stay afloat. It is remarkable that during the whole economic downturn and the consequences of Covid, we did not see an uptake in the level of mortgage arrears. It is because of the collective work of everyone, including the regulator, the lenders, borrowers making conscious decisions to prioritise mortgage repayments, and indeed the support of Government.

I want everyone, particularly those who have statutory responsibilities, to step up and support mortgage holders who are going to come under pressure. There is no doubt whatsoever about that. Government will, as always, consider what is the most appropriate response to deal with the cost-of-living pressures people are facing. In the next couple of weeks we have decisions to make in that regard. What we cannot do is make it up as we go along and come in on an ad hocbasis every week or second week with new taxation and spending proposals without setting out the overall fiscal plan for the country. It is important we have regard to that when we are making decisions. When we are making proposals, we have to make sure we know exactly how much they are going to cost. We do not have a costing for the proposal that has been put forward here. We now have more than 716,000 primary dwelling mortgage accounts, as of the end of September. Of these, approximately 35% were on tracker mortgages and 26% were on another type of variable rate. If all of these mortgage accounts were to receive a subsidy of €1,500 it would cost in the region of €655 million per annum. Sinn Féin will make the case that is not what is being proposed, but we need to have a costing for any proposal that is put to the House that has a direct fiscal impact on the Exchequer. The sums involved are very large. I know the Deputies have said the measure is temporary. We do not know what temporary means in the context of what is being proposed.

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