Seán Sherlock (Cork East, Labour)
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Question 111: To ask the Tánaiste and Minister for Finance his views on the effect that the relentless pace of interest rate increases over the past 15 months may be having on families with high debt; if his Department is monitoring court cases for repossession of family homes due to inability to meet mortgages; if there are plans to increase the resources of MABS in view of the difficulties that families are having in meeting existing debts in view of the eight successive interest rate rises since December 2005; and if he will make a statement on the matter. [29590/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The level of interest rates is determined by the independent European Central Bank, ECB, in fulfilment of its mandate to secure price stability for the Euro area as a whole. The impact of ECB interest rate changes on household incomes in Ireland is an important element of the context for the Government's overall economic and fiscal strategy.

This strategy has successfully delivered sustained economic growth, record levels of employment, low unemployment and rising incomes. It has also underpinned the achievement of a strong and responsible fiscal position within which significant tax and expenditure priorities have been achieved. It enables us to plan the delivery of a major programme of investment in our economic and social infrastructure under the National Development Plan 2007-2013.

Households currently experiencing higher mortgage repayments on account of rising interest rates benefit significantly from a range of supportive economic and financial factors, including, for example, low income tax rates and a relatively high savings rate in respect of which savers are increasingly benefiting from higher retail interest rates. The Finance Act 2007 gave effect to measures that are designed to sustain our economic performance and improve both take-home pay and the affordability of housing. These measures include a doubling in the ceiling for mortgage interest relief for first-time buyers as well as increases in relief for other mortgage holders. The Finance (No. 2) Act 2007 introduced a full exemption from stamp duty for first-time buyers in accordance with the commitments made in the Programme for Government.

I have consistently highlighted the need for responsible behaviour by both borrowers and lenders and in particular the need to factor into their financial decision making the effects of potential future changes in the economic and financial conditions.

The Financial Regulator's Consumer Director provides extensive information to help consumers make informed choices regarding mortgage products. The Consumer Director's cost surveys, consumer guides and fact sheets assist consumers in shopping around for the best available mortgage deal. Against the backdrop of the rising trend in interest rates, the Financial Regulator has published information for consumers on the potential impact of these increases on different mortgage products.

Mortgage interest rates in Ireland remain low by historic standards. This reflects both the current level of ECB rates, which are lower than those prevailing in either the United States or the United Kingdom, and the increasingly competitive nature of the Irish mortgage market which ensures that margins on mortgage lending remain low. I am confident the economic and fiscal framework now in place is properly aligned to the current requirements of the economy and can adjust to potential changes in the financial environment over time.

The Financial Stability Report 2007 recently published by the Central Bank and Financial Services Authority of Ireland (CBFSAI) points out that there are no firm indications of a significantly higher level of mortgage arrears in the banking system. The report notes that although the rate of non-performing assets on mortgage credit has picked up slightly over the last year or so, this increase has occurred from historical lows over recent years and the level remains relatively low in overall terms.

In this context, reports of a higher level of court proceedings for home repossessions need to be interpreted with caution, given the variety of circumstances that give rise to such cases and the very small proportion of housing loans involved.

In relation to MABS' resources I would point to the fact that the provisional outturn figure for 2007 is €4.1m higher than the corresponding figure for 2006 and that the recently published Pre Budget Outlook (estimate) contains a figure of €17.7m for MABS for 2008. The Programme for Government supports further development and enhancement of the Money, Advice and Budgeting Service.