John Lyons (Dublin North West, Labour)
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Question 98: To ask the Minister for Finance his views on negative equity mortgages; and if he will make a statement on the matter. [15841/11]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware of the work of the Expert Group on Mortgage Arrears and Personal Debt. This Group published its final Report in November 2010. All of the Expert Group's recommendations are listed in Chapter 2 of the Report which can be accessed at www.finance.gov.ie. The Group's Report contained the following recommendation:

"The Group notes that, for some mortgage holders, who are in negative equity, trading down would produce a reduction in the 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 made 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 homeowners while reducing their level of repayments. It may also help mortgage holders who are in negative equity and who 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 for 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 are taken and proper controls are put in place. The Central Bank must be satisfied that such a product meets relevant prudential standards and does not lead to consumers being over exposed.