Written answers

Thursday, 27 May 2010

Department of Finance

Financial Services Regulation

5:00 pm

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Question 73: To ask the Minister for Finance if he has considered any initiative that would forestall the risk that rising mortgage rates might put more people into difficulties with repayments such as, for example, making euro bonds more widely available to banks that could underpin mortgages which tracked the European interest rates; and if he will make a statement on the matter. [22517/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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Any additional bonds regardless of the currency they are issued in would have to be issued by the NTMA and as with all bonds issued by them would add to our General Government debt. In light of the current Government deficit situation, the Deputy's suggestion would not be an appropriate solution for counteracting the risk of rising mortgage interest rates.

The Deputy will be aware that in February I informed the Government of my proposals regarding expanding the membership of the Interdepartmental Mortgage Arrears Group, under the Chairmanship of Mr. Hugh Cooney. The Group is initially exploring the feasibility of a range of possible options and initiatives for improving the level of mortgage support to homeowners in difficulty. I expect that a final report on this phase of the review will be ready by end June 2010.

It is important that a balance is achieved by Government between influencing private banks through the bank guarantee scheme and other financial support incentives while at the same time being seen to have a hands-off approach to the day to day running of these institutions which must operate on a strictly commercial basis. I have regularly referred to the measures available for those homeowners who find themselves in difficulty. In my Budget speech in December, I refocused mortgage interest relief on those who bought their homes at the peak of the market. Where a homeowner's entitlement to mortgage interest relief would expire in 2010 or after, they will now continue to receive it up to the end of 2017.

The Mortgage Interest Subsidy Scheme under the Supplementary Welfare Allowance system provides money, subject to a means test, towards the interest payments on a home mortgage. This scheme, which is administered by the Community Welfare Service of the HSE on behalf of the Department of Social Protection provides short term support to help pay mortgage interest repayments where the mortgage relates to a person's principal private residence. The number of people now benefiting from the Scheme stands in the region of 15,000. The Scheme is currently under review by the Department of Social Protection to examine ways of improving the operation of the Scheme.

The Deputy will be familiar with the other supports available to homeowners, including the services provided by the Money Advice Budgeting Services (MABS) and the moratorium in the Code of Conduct on Mortgage Arrears. After my Budget speech in December, I wrote to the Financial Regulator requesting that consideration be given to extending the then 6 month moratorium out to 12 months to ease the burden on mortgage borrowers in arrears. The Financial Regulator, after careful consideration and consultations decided to extend the moratorium to 12 months in line with my request.

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