Darragh O'Brien (Fianna Fail) | Oireachtas source

Cuirim fáilte roimh an Aire Stáit go dtí an Teach arís. I thank Senator Barrett for introducing this Bill. We are all agreed an immense amount of work has been put into this Bill. This is the first Bill I have seen where the explanatory memorandum probably needs an explanatory memorandum of its own. I have been reading through it and trying to make a good fist of it.

All potential solutions and all aspects of them need to be considered in the light of day. I support the thrust of the Bill, but the issues need to be teased out. This is not the first Bill we have had on the issue of mortgages. Senator Barrett already produced the Fiscal Responsibility Bill on which the Government is moving separately and Senator MacSharry mentioned the Family Home Protection Bill 2011. There has been significant concern, across parties and among Independent Members with regard to how we can grapple with the banking problem and mortgage debt. The figures given by Fiona Muldoon that we raise all the time with regard to the mortgage arrears crisis are probably another day's work, but they indicate the fact that the banks are kicking the can down the road and are not dealing with the real issue. They are not dealing with the ¤6 billion or ¤7 billion figure given with regard to potential future write-downs.

The banks have not even dealt with aspects such as zeroisation of interest. It is all very well giving people a moratorium for 12 months, but interest still piles up. The banks are not looking at the extension of mortgage terms for those who are in their 30s or 20s with 25 year mortgages who have the capacity to extend the mortgage term out further.

If one asks our pillar banks for such a mechanism - this is the crux of the issue of freeing money into the economy - one is asked to rewrite the mortgage and to underwrite the mortgage again at its original value. In other words, one will not get it. If we were to allow the terms of mortgages to be extended by five years, with full medical underwriting being done again, we would reduce people's current repayments by between 15% and 20%. People are struggling under mortgage debt. There is no question about that. Senator Barrett's Bill looks towards the future by trying to enable the banks to alter the way they do their jobs. The strict loan-to-value ratios that are provided for and set out clearly in this Bill are very important. That is the way it is. If someone wants to borrow through this mechanism, he or she will know what the situation is. I think that would help the people and the banks.

When the Minister for Finance replied to a question tabled by my colleague, Deputy Michael McGrath, we learned that one third of all mortgage applications made in the last 12 months - the ones that reached application stage - were refused. The market is simply not going to move if that pattern continues. We have seen an increase in rental yields because professionals and other people who can afford to do so are renting rather than stepping into the market to buy. To be frank, I would not step into the market if I had any money to do so, which I do not. I do not believe this is a good time for people to purchase. The NAMA scheme that was announced in this House, which aims to provide protection from future falls in property values, is under-subscribed. Approximately 35% of the houses in question have been sold. The take-up of the incentives offered by the Minister for Finance in the last budget, such as the increase in mortgage interest relief for first-time buyers, has been minimal. The reason for that is people's lack of cash.

The banks do not have money. Senator Michael D'Arcy covered it very well when he said we are asking the banks to show forbearance to people. I think that should happen because the banks shoulder much of the blame for where people are at. I know about it because I worked in the sector. I did not work in a bank, but in a role that was directly related to mortgages and pensions. Normal people went in to look for a 92% loan, but by the time they left they had been given a 110% loan. Those who did not understand what that meant were asked whether they wanted a new car, a holiday or an opportunity to throw all their other loans in with their mortgage and were told everything would be grand. People might not have had guns held to their heads, but they were pushed in a certain direction as I have outlined, particularly by banks that were led by sales bonuses.

The mechanism included in this legislation is part of the solution. It needs to be teased out. It would apply strict structures to what can and cannot be loaned in the case of a certain type of property or development, or in the case of agricultural land. It goes through all aspects of the matter. It really needs to be looked at. I assume and hope the Government will take this Bill seriously. I have referred to two other Bills that have been proposed. Senator MacSharry came into the Chamber about a minute after I mentioned his Bill, which would have established an independent debt settlement office. I put it to the Minister that such an office is still required. Perhaps an independent appeals mechanism can be provided for in the Personal Insolvency Bill 2012. We cannot give the banks the final say on how mortgage arrears are dealt with.

I wish to ask the Minister for Finance a question while he is here. Perhaps he or his officials might be able to answer it. The Minister, Deputy Noonan, and the Minister of State, Deputy Brian Hayes, both said that mortgage resolution schemes would be submitted by the banks to the Central Bank by 30 September 2012. I would love to know where they are. Have they actually done that? Are they being considered? The Personal Insolvency Bill 2012 is the nuclear button. It is not a solution for people. The mortgage-to-rent scheme is not being taken up by most local authorities, including my own local authority in Fingal. They are telling people they are not operating it. Lenders are also saying they are not operating it. People in my own area of Fingal do not want to know about it. Neither the Oireachtas nor the Government will solve this overnight. Some aspects of Senator Barrett's Bill should be part of the solution. We need to be serious about getting stuck into the banks and the local authorities, where possible. What is the point of the Minister of State with responsibility for housing coming to this House to announce a mortgage-to-rent scheme when most local authorities will not even participate in it?

I will conclude by thanking and congratulating Senator Barrett on the work he has done. If he can work on a new explanatory memorandum for me, I will be happy to circulate it. We know we are in the midst of a mortgage crisis that is getting worse. Mortgage arrears have increased by 50% year on year. I will not even talk about the buy-to-let market, which the banks have failed to deal with. Many of the loans in question are about to reach their capital repayment terms. The mortgage crisis will get worse if action is not taken. The Bill proposed by Senator Barrett would force the banks to engage in new lending and to look at things differently. That is needed as part of the solution. I ask the Government to allow this Bill to be passed on Second Stage.