The programme will be published in detail later this week but the Irish Examiner understands that the terms of the agreement will be more far-reaching than many believe.
The document calls on the Central Bank to commission an independent assessment of arrears on the loan books of the lenders with the purpose of reducing once and for all the level of arrears in Irish banks to more normal levels.
The Independent Alliance also has a commitment — as has Fianna Fáil under its separate accord to support but not join the Fine Gael-minority-led administration — to lower the high levels of standard variable mortgage rates charged by lenders.
Yesterday, shares in Permanent TSB fell sharply, by 3.5%, for the second trading day after AIB and KBC announced mortgage rate cuts because PTSB is seen as the least likely easily to afford mortgage rate cuts.
Bank of Ireland fell 2% to 23 cent —matching its 52-week low — on belief that it may have to cut its standard variable rates too.
The fall in Irish bank shares was particularly marked because the Iseq index of all Dublin shares was up on the day.
The Independent Alliance agreement for a court and debt resolution and mortgage arrears agency aims to create “a framework that removes fear and brings predictability to the process”, according to a source.
It intends to create an environment to encourage those who have felt unable to engage to seek with their lender and be helped by a process offering empathy and certainty.
The agreement aims to provide more tailored mortgage arrears deals and write-downs of debt that avoid repossessions, if that is possible.
Senior policy analyst Paul Joyce at Flac — the Free Legal Advice Centres — gave a broad welcome to the Independent Alliance programme.
“For a long time we have called for a system outside the courts to deal with mortgage arrears,” he said, noting that it already happens in labour disputes.
Any new court or resolution agency may facilitate the provision of legal and financial advisory representation.
Mr Joyce said he was also concerned about agreements which borrowers agree to roll up or capitalise the mortgage debt.
“What is disturbing” is the ease with which capitalisation of mortgages is being offered to borrowers, he said.
The lender will still decide which of the solutions should apply and there is little evidence of many borrowers being offered a writedown of the mortgage debt.
The most recently available Central Bank figures for the end of 2015 show that 88,292 — almost 12% of all mortgage accounts — remain in arrears, without a agreement over any new restructuring between lender and borrower. A huge total of 120,739 accounts have been “restructured”.
Yesterday, Central Bank figures showed that despite “significant” falls since the depth of the crash that Irish households continued to be the third most indebted in the EU behind Denmark and the Netherlands.