Written answers

Tuesday, 3 March 2015

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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183. To ask the Minister for Finance his plans for a mortgage insurance scheme; and his views on the Central Bank of Ireland's comments on the issue. [8729/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Construction 2020 committed the Government to examining the concept of a mortgage insurance scheme, to ensure sustainable levels of mortgage lending in the medium term.

In October I wrote to the Oireachtas Committee on Finance, Public Expenditure and Reform requesting that the committee consider the matter of mortgage insurance in an Irish context and, drawing on the experiences of other countries, prepare a report on the issue. The Committee has concluded its deliberations and has given me and the Governor of the Central Bank a copy of the report. As noted in the report, the full implications of a mortgage insurance scheme can only be examined once the new Central Bank Macro Prudential regulations for residential mortgage lending are in place and the effects they have on mortgage lending can be examined. As the Deputy is aware, the Central Bank also considered the issue of mortgage insurance in the context of the new macro prudential framework and it concluded that an exception for suitably insured mortgages was not an effective practical amendment at this time.

An overriding primary public policy concern is to deliver an affordable and sustainable housing and credit market over the course of the economic cycle and the avoidance of boom and bust cycles which we have experienced in the recent past. The new Central Bank macro prudential measures are intended to help achieve that objective. Mortgage insurance could have a contributory role to play in the achievement of that objective at a future point. However, as suggested by the Central Bank, it is likely to have such a role only if it effectively transfers risk away from the banking system and from the State in a cost effective way. This is a matter, therefore, that will need to be kept under review by my Department and by the Central Bank. However, due to the need to transfer risk I would not see the State playing a role in underwriting or guaranteeing the provision of mortgage indemnity insurance.

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