Joanna Tuffy (Dublin Mid West, Labour)
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Question 26: To ask the Minister for Finance if his attention has been drawn to the fact that the private sector debt here is proportionately higher than any other country in the EU and that at the end of August 2008 Ireland collectively owed the banks €392,885,000,000, which breaks down to €95,000 for every person here; if his attention has further been drawn to the fact that 63.4% of this private debt is owed by the construction, real estate and mortgage sectors and that another 16.4% has been borrowed by financial intermediaries such as pension funds that deal in property assets; his views on whether repayments on this high level of private debt will be unsupportable in view of the speed of decline in the money supply; the interventions he proposes to make to prevent bad debts spiralling out of control; and if he will make a statement on the matter. [38834/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Within the implementation of the overall legislative framework, private sector credit growth and debt levels are, in the first instance, a matter for the Central Bank and Financial Services Authority of Ireland. This follows from its role as part of the European System of Central Banks and its functions, as the Financial Regulator, in relation to the prudential supervision of financial institutions and the protection of the consumers of those firms.

The Central Bank publishes a quarterly note on the sectoral developments in credit. In June 2008, outstanding private-sector credit stood at €392.9 billion. While property-related lending accounted for 62 per cent of this, this measure includes residential mortgages, and securitised residential mortgages. During 2006 when all credit was increasing at a rapid pace, lending to households was also increasing rapidly. This has moderated slowly since then and increased annually by 9 per cent in June 2008. I am informed by the Central Bank that lending to insurance corporations and pension funds only account for a small proportion of private sector credit, around 1 per cent.

It is worth noting that lending to households for house purchase is continuing despite tighter lending standards, albeit at a slower, steadier pace than before. I also note from the latest EBS/DKM Affordability Index published on 4th November that affordability for first time buyers continues to improve and that this trend is set to continue over the coming months.

Unfortunately, a small minority of borrowers develop debt problems. 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, works with people in order to assist them with their financial planning and budgeting for the future. The Department of Social and Family Affairs also funds the demand-led Mortgage Interest Supplement scheme which provides short-term income support to those eligible who are unable to meet their mortgage interest repayments in respect of a house which is their sole place of residence.

Non-financial supports in place include the Financial Regulator's Consumer Protection Code (the CPC) and the Irish Banking Federation's (IBF) Code of Practice on Mortgage Arrears. The Deputy may wish to note that the provisions of the Scheme made under the Credit Institutions (Financial Support) Act, 2008, requires institutions covered by the guarantee in Ireland to confirm their compliance not only with the CPC but also with the IBF's Code of Practice.