Dramatic solution for mortgage arrears ‘vital’

More dramatic solutions to the mortgage arrears problem, including debt write-off, will have to form part of the banks’ strategy in the future, the Secretary General of the Department of Finance, John Moran, told the Irish Banking Federation conference yesterday.

Irish banks had to develop a three-prong strategy to dealing with the debt crisis, said Mr Moran. First the sector has to come up with appropriate lending policies for viable households.

“The savings rate is 14%. The pre-crisis savings rate was 8%. If there was a 4% decrease in the savings rate, it would lead to 1% GDP growth.”