Debt crisis: No magic bullet for mortgages – Minister
Extensive debt forgiveness for those in trouble with their mortgages is simply not a realistic option, Finance Minister Michael Noonan said today. There is no magic bullet or one-size-fits-all solution, he told an Oireachtas Committee meeting.
"Solutions must be found on a case-by-case basis through open and meaningful engagement between the distressed borrower and the lender,” he said.
“While there have been many contributions to the debate including suggestions for the granting of extensive debt forgiveness, this simply is not a realistic option.”
Urging mortgage holders in trouble to approach their lender at the earliest possible opportunity, the Minister pointed out again that Irish banks have been extensively recapitalised and had the option to write off some bad debts.
Earlier this week it was revealed that more than 55,000 mortgages are in arrears of more than 90 days.
"It is true to say that the domestic banks have been capitalised to an extensive degree arising from the Central Bank’s PCAR exercise last March,” he said.
"Some of this capital is available to the banks to write-off bad debts but the banks, of course, must be prudent in their actions and not fritter away their capital base through widespread unwarranted debt write-offs.”
Mr Noonan said the Government will consider what action is warranted to address the 'increasing problem' once it receives a report into the matter at the end of September.
The planned reform of bankruptcy and debt settlement arrangements are key elements in policy options being considered, he said..
He said that growth has returned to the economy and the public finances remain on track. But, he said the deficit remains unsustainably high and that expenditure reductions and revenue increases will be required in future Budgets.