Mary Upton (Dublin South Central, Labour)
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Question 20: To ask the Tánaiste and Minister for Finance if, in view of recent increasing unemployment, falling house prices and increasing instances of mortgage default, he has considered the establishment of a contingency fund to ensure that home repossessions do not escalate significantly; and if he will make a statement on the matter. [15621/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy may wish to note that while the outlook is for weaker, although still positive, employment growth this year, Ireland's unemployment rate is expected to remain low by international standards, below the European average. In terms of the housing market, affordability in Ireland is supported at the current time by such factors as continued income growth, interest rates that are relatively low in historic terms and increases in mortgage interest relief available in particular to first-time buyers. Improvements in affordability are being achieved, reflecting the adjustment in the housing market and changes that I have made in my December 2007 Budget in relation to Stamp Duty and Mortgage Interest Relief.

The Chief Executive Officer (CEO) of the Financial Regulator (FR), speaking to the 30 January meeting of the Oireachtas Joint Committee on Finance and the Public Service, pointed out that there are no indicators emerging yet that there is a significant increase in mortgage default levels or arrear levels. The Governor of the Central Bank and Financial Services Authority of Ireland pointed out in a recent speech that the level of non-performing loans remains low by historical standards. The FR's Consumer Protection Code (CPC) requires regulated entities to undertake suitability assessments before offering a product or service to consumers. In addition, the CPC sets out the requirements that a regulated entity must contact the consumer as soon as it becomes aware that a mortgage account is in arrears and that it must have in place a procedure for handling accounts in arrears. The CEO, also at the 30 January Joint Committee meeting, pointed out that the FR considers this to include a requirement that lenders agree a remedial action plan with a borrower where it detects arrears starting to emerge and to try to assist the borrower to manage his or her financial commitments and not allow the situation to worsen.

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. 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. 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.

Furthermore, the Mortgage Interest Supplement scheme — which is part of the Supplementary Welfare Allowance (SWA) scheme administered on behalf of the Department of Social and Family Affairs by the Community Welfare Services of the Health Service Executive — provides short-term income support to eligible people who are unable to meet their mortgage interest repayments in respect of a house which is their sole place of residence. While I will remain alert and vigilant to any emerging issues, I do not, given the extent of the arrangements already in place, consider the establishment of a contingency fund to be either necessary or appropriate.