Terence Flanagan (Dublin North East, Fine Gael)
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Question 98: To ask the Minister for Finance his views on a matter regarding negative equity mortgages (details supplied); and if he will make a statement on the matter. [8580/11]

Michael Noonan (Limerick City, Fine Gael)
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The Final Report of the Expert Group on Mortgage Arrears and Personal Debt contained the following recommendation: "The Group notes that, for some mortgage holders who are in negative equity, trading down would produce a reduction in mortgage debt and more affordable monthly payments. The Group recommends that further consideration should be given by lenders to facilitating trading down by borrowers in this situation. Such options would have to meet relevant prudential standards, with appropriate controls in place, and be in the customers' best interest."

Trading down means selling a current property and buying a cheaper one. Trading down may be an option to reduce the level of mortgage repayments, resulting in more affordable monthly repayments. This recommendation is aimed at helping mortgage holders remain as home owners while reducing their level of repayments. There will also be situations where mortgage holders in negative equity may wish to move home, for example, to take up new employment opportunities. There is merit in facilitating house moves by those in negative equity in certain situations and subject to certain criteria set down by the Central Bank.

Ultimately, these are matters for lenders and the Central Bank to decide upon. Any lender planning to provide a negative equity type product must notify the Central Bank in advance to ensure that appropriate measures and controls are taken as the Central Bank must be satisfied that such a product meets relevant prudential standards and does not lead to consumers being over exposed.