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TARGETED MEASURES TO help mortgage holders struggling with very high interest rates is set to form part of this year’s budget, it is understood.
Finance Minister Michael McGrath called in the banks, vulture funds and the Central Bank yesterday to discuss what measures the banking industry are rolling out to ensure borrowers are supported at this time of rising interest rates.
With just over a month out to budget day, it is believed the minister was firing a warning shot that the government would step in with interventions due to the banking sector and regulators displaying a lack of urgency.
In a statement after the meeting, the minister said:
“It will now be necessary for the industry to demonstrate that they are delivering for borrowers in difficulty with supports and certainty, and developing long-term sustainable solutions for borrowers.
“I have asked the industry representatives to reflect on the discussion today and to set out their response as a matter of priority.”
In his statement, the minister highlighted the need for customers to be allowed to easily access a mechanism to switch mortgage providers.
As budget talks continue, it is believed that the finance minister has grown increasingly frustrated at the slow pace in which customers have been supported.
Senior government sources state that McGrath is currently working on budget ideas to help mortgage holders, particularly those trapped paying high interest rates to overseas funds.
It is understood the finance minister is working with Social Protection Minister Heather Humphreys on possible measures, which could include targeted measures that are limited to borrowers who tried to switch mortgage providers and have been refused.
Expanding the Mortgage Interest Supplement to provide short-term income support to those who are unable to meet their mortgage interest repayments is under consideration.
Other ideas being worked on included enabling mortgage holders to switch their loans from a vulture fund to state-backed initiatives such as the Local Authority or Rebuilding Ireland home loans scheme.
McGrath also wants banks to make it easier for borrowers whose loans were moved to a vulture fund to switch back to one of the pillar banks.
He welcomed a court decision in May which forced a mortgage servicer, called Pepper, to give a borrower couple a low fixed rate of 2.5% for 25 years.
The minister said at the time that loan owners and mortgage providers should be offering fixed-rate options to their borrowers. Pepper has not been offering fixed-rate product solutions.
The hikes in interest rates have been felt by mortgage holders on variable and tracker rates and by any homeowner who has reached the end of their fixed-rate term.
Some 60,000 mortgage holders whose mortgages are owned by vulture funds are unable to switch to high-street lenders and are stuck on rates as high as 10%.
Vulture funds hold the mortgage contracts of around 85,000 Irish households.
As financial expert Mark Coan recently wrote in The Journal, many assume that the mortgages in this situation have ‘gone bad’, in reality only around 20,000 of them are currently behind in their repayments.
In fact, many people with the vulture funds have never been in any financial trouble, ending up with the funds through sheer bad luck. A sizable group of these customers, over 30,000, are simply with these funds due to the loan sales.
Senior government sources state that McGrath is “genuinely concerned” about the issue and “wants to do something to help those who need it”.
They acknowledged there are wider concerns relating to the rental market if mortgage holders are paying interest rates close to 10% with non-bank entities.
Housing Minister Darragh O’Brien has confirmed tax breaks for landlords are on the table in a bid to keep supply in the rental market.
However, there are now concerns that landlords trapped in high interest mortgage repayments may be forced to sell up, resulting in a further uptick in notices to quit for tenants.
“There is definitely no gain for anyone in repossessions happening in these cases,” said the senior source, who added that it is only renters, mortgage holders, and the government that lose out in such scenarios.
Opposition parties had called for a blanket form of mortgage interest relief but there has been pushback from those within government who fear it could ramp up house prices further.
Sinn Féin spokesperson on Finance Pearse Doherty welcomed the meeting the minister held with the banking sector yesterday, stating that he has been calling for a strategy to be developed to support those facing soaring interest rates.
“Households have faced a massive income shock as a result of soaring interest rates – with 1 in 5 households set to see their annual mortgage costs rise by more than €5,700.
“Households that had their mortgages sold off to vulture funds have seen their interest rates soar to as high as 10%, effectively becoming mortgage prisoners.
“These sales were supported by Fianna Fáil and Fine Gael and were carried out by many of the banks and vulture funds that attended today’s meeting.
“They have a responsibility to right this wrong and to provide a path for these households to return to the mainstream mortgage market,” said Doherty.
He said there has been little evidence of households switching from vulture funds to mainstream banks, stating that today’s meeting must result in real action rather than simply being a box-ticking exercise.
“How many households have tried to switch from vulture funds to mainstream lenders in the past 12 months? How many have been successful and how many have not?
“These are the questions to the Central Bank and Government should be asking and acting upon. It is also incumbent on the Government to support households that are suffering from this income shock,” he said, stating that the government cannot stand idly by.
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The trough just keeps getting bigger.
@Mel Fitzpatrick: not nearly as big as the social welfare entitlement trough.
@John Terry: Lol, silly comment
With less population per TD now, are they up for a paycut? Seems only fair.
They’re the least of our concerns at the moment going week to week watching those gombeans talk nonsense in the dail year in year out they’ve certainly done a fantastic job with the housing crisis over the last 10 years the future looks great if you can live in a house the size of a kennel
Now we have to listen to more waffle, pay more to hear it , this country is going down the swamp, since these crowd have taken over , we need a new party for the Irish taxpayers, not the European Puppet masters.
Netherlands 15 million has 150
Wixford lol
@Modern Irish Dad: Where’s that?? Lol
Gombeens, party comes first, then the pinsion, then the unvouched expenses, then the subsistence for turning up to do your job, What a great little country.
Lucky for Josepha Madigan but less lucky for others.
Swings and roundabouts!
@Nestor:
Definitely.
Senator Malcom Byrne FF will be counting his lucky stars, he’s based in gorey which will probably be the biggest town in the new constituency. I’d say one SF, one FF and anyones guess for the last.
Which Wexford TD will lose out?
If I was Paul Kehoe I would be worried as would the Green TD in Wicklow
@P.J. Nolan: I’m in Gorey and I’d absolutely vote for the Green TD in Wicklow over Snr Malcolm Byrne.
Unlikely you will get the chance, Steven Matthews is based in Bray.
It’s about time we had more TD’s to make us feel safe in our homes…
Is wixford a new constituity.
@Terry Mckenna: don’t give them ideas they might actually try it wouldn’t surprise us
@Terry Mckenna: ya, not to be confused with Wexlow
I read all these comments and I think, if you think you can do better then get elected. But ye won’t because you prefer to belly ache. Get over yourselves, it’s Democracy
Amazing how they adhere to the constitution when it suits them.
Anyone who votes for any one of this crowd in government who have lied consistently to their own people with regard to illegal migrants, fake Ukrainian refugees, their anti farmer stance, the price gouging by the banks and ultility companies, their attack on our freedoms during the Covid scam, the climate emergency BS etc etc etc should hang their head in shame. They are working for the WEF/EU/UN not the Irish people. They were able to get beautiful modular homes ready in jig time for military aged men from around the globe while Irish families struggle to put a roof over their heads. Please stop voting for these EU shills. The only reason we don’t have more youth homelessness is many of our graduates have left the country thinking they’ll be fine when they come back with their UAE tax free money, come back to what. Ireland in another decade of the current demographic change being implemented by our so called government won’t exist. Elections have serious consequences.
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