Fidelma Healy Eames (Fine Gael)

This matter relates to the need for the Minister for Finance to use his influence with the banks by asking them to allow hard-pressed mortgage holders who entered fixed rate home loan agreements within the past two years to renegotiate new rates at current variable or fixed mortgage rates. Some of the people in question are in danger of losing their homes.

My aim is to enable people to retain their homes and avoid foreclosure. As matters stand, every household to which a mortgage applies is under threat because no one's job is safe. Even if people are not currently affected in this regard, uncertainty will arise at some future date. As a result, a psychological weight has been placed on the entire population. I wish to propose one way to alleviate this pressure in respect of those who took out fixed rate mortgages in recent years.

Some couples are finding their circumstances especially difficult. The current European Central Bank, ECB, rate is 2%. This is due to be further reduced on Thursday next. It is likely that bank interest rates will follow and will drop by perhaps 0.5%. A number of the couples and individuals I represent in Galway — I accept that this matter is of national significance — entered into fixed rate mortgages to which rates of between 5.3% to 7% apply in the past two years. They did so because their loans are for a 30-year period. These people may have negotiated a fixed rate for three or five years. In the interim, people have lost their jobs and there may now be only one income earner in a family. As a result, a new form of pressure is being exerted upon them.

I ask that the Minister for Finance use his considerable leverage with and authority over the banks in order that couples and home owners in general might be allowed to break their fixed rate mortgages without incurring a subsequent penalty. Fixed rate agreements can be broken but this results in a penalty of six months' worth of payments. I know a couple with a mortgage of €400,000 to be repaid over 30 years. It would cost these people €15,000 to break their fixed rate agreement. If they could renegotiate that agreement and have the current variable rate applied to their mortgage, they would save €400 per month or €100 per week. One of these people has been obliged to pay the new pension levy, which is a further charge on them. If they were allowed to break their fixed rate agreement, the savings made would at least cover the cost of that levy.

It appears what I am suggesting is a no-brainer. Each day we discuss issues relating to the real economy. The matters to which I refer come into that category. The Lower House has shown considerable leniency towards the banks and, despite the mistakes they made, given them a great deal of latitude. The Minister of State, Deputy Barry Andrews, is in a position to influence the Minister for Finance and should urge him to use his authority over and leverage with the banks to ensure some of the latitude afforded to them might be passed on to home owners who are under considerable pressure as a result of having taken out fixed rate mortgages.

I am aware of another case in respect of which a real double whammy applies. The case in question relates to a 35 year old man who bought an affordable house from Galway County Council and who is making repayments of €890 per month. The man in question lost his job as a scaffolder in January 2008 but has been able, through the social welfare system, to avail of a mortgage interest supplement for the past 12 months. However, the latter, which provided him with additional income of approximately €400, has expired. I was approached by this individual and his parents yesterday. He asked whether I would make representations on his behalf to the council in order that he might rent out his home and move back in with his parents. As already stated, this man is 35 years of age and he feels he must take the latter course of action. As the Minister of State will be aware, if one owns an affordable house, one cannot rent it out in its entirety and one is only allowed to rent out a room. The second issue that arises in this case is that the man in question is locked into a fixed rate mortgage. I am not concerned about the first difficulty that has arisen for this individual but I am concerned with regard to the second.

I look forward to hearing the Minister of State's reply in respect of this matter. It is time taxpayers and home owners were afforded some latitude by the banks. The Minister for Finance should see to it that this happens.