Olivia Mitchell (Dublin South, Fine Gael)
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Question 87: To ask the Tánaiste and Minister for Finance if he has assessed the level of home repossessions which are occurring; and if there are implication for public policy. [2145/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will appreciate that reports of a higher level of court proceedings for property repossessions need to be interpreted with caution, given the variety of circumstances that give rise to such cases and the fact that not all of the proceedings relate to residential property. It should also be noted that even where the orders are secured some are not enforced. The number of orders granted by the High Court are a very small proportion — representing less than 0.2% — of the number of new mortgages issued in the same year. As such care needs to be exercised in drawing any particular conclusions regarding the property market or public policy overall.

In this context, the Financial Stability Report 2007 published last November 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. This trend also seems to be reflected in statistics on re-possessions made available by the Courts Service.

In overall terms, housing affordability in Ireland is supported by relatively low loan-to-value ratios, income growth, interest rates that are relatively low in historic terms and increases in mortgage interest relief available in particular to first-time buyers.

Unfortunately, a small minority of borrowers develop debt problems but house repossession is generally a last resort for lenders. I understand that member institutions of the Irish Banking Federation (IBF) have voluntarily adopted a Code of Practice on Mortgage Arrears and a Code of Practice for Personal Customers. These include provisions for helping customers in financial difficulty.

The Financial Regulator's Consumer Protection Code requires financial service providers to undertake suitability assessments before offering a product or service to consumers. In addition, the Code sets out the requirement that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears and that they must have in place a procedure for handling accounts in arrears. In addition, from 1 January 2007 staff providing advice or selling mortgage loans must meet minimum competency requirements, laid down by the Financial Regulator.

As the Deputy will be aware, Section 19 of the Markets in Financial Instruments and Miscellaneous Provisions Act 2007 introduced a system of regulation of non-deposit taking lenders including specialist or so-called sub-prime lenders with a view to extending the Consumer Protection Code to their activities. This system is currently being rolled out by the Financial Regulator.

As Minister for Finance, 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 economic and financial conditions.

Anyone experiencing difficulty in repaying a mortgage or other loan should discuss the matter with the loan provider and seek appropriate advice without delay. The Money Advice and Budgeting Service (MABS) which falls under the remit of my colleague, the Minister for Social and Family Affairs, is a national, free, confidential and independent service for people in debt, or in danger of getting into debt. MABS offices, throughout the country, work with people in order to assist them with their financial planning and budgeting for the future.