John Perry (Sligo-North Leitrim, Fine Gael)
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Question 39: To ask the Tánaiste and Minister for Finance if he has assessed the level of home repossessions which is occurring; and if there are implications for public policy. [15718/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will appreciate that reports relating to 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 such orders are secured some are not enforced. The number of orders granted by the High Court is a very small proportion — representing less than 0.3% — 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 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 2008 meeting of the Oireachtas Joint Committee on Finance and the Public Service, pointed out that there are no indicators emerging as yet that there is a significant increase in default levels or arrears 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 requirement 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 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 both the Consumer Protection Code and the Minimum Competency Requirements 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.

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. I will remain alert and vigilant to any emerging issues, in particular where there are any implications for public policy.