Tuesday 21 November 2017

Stephen Donnelly: Government must act now to create a sustainable mortgage arrears strategy

Insolvency legislation could yield far better solutions to overstretched borrowers than existing bank deals.

Stephen Donnelly

LAST week we met the bankers. Our job: to find out if and how they were hitting their mortgage arrears targets. I took three things from the meetings. First, if the banks continue to do what they're doing, it will hugely damage Ireland's recovery.

Second, some useful things are happening. If these are improved and expanded across the sector, they will boost economic growth and job creation. Third, for this to happen, the Government must get far more involved and prescriptive in terms of the solutions used. And it must do so urgently.

One couple who contacted me last week provide an excellent example of both the problem and opportunity. A man we'll call David phoned my office. He and his wife (we'll call her Anne) have a mortgage with Permanent TSB. David is in the second year of a degree course, which is being funded by the credit union. Their income has reduced, and they can meet all of the interest and some of the capital payments on their mortgage. PTSB has offered them a split mortgage – a portion of the mortgage would be put on a shelf, at zero per cent interest, while they pay capital and interest on the remainder.

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