1,000 homeowners refused mortgage interest aid each month

STRUGGLING homeowners facing huge debt are being refused mortgage interest aid at a rate of 1,000 a month, according to the country’s leading housing agency.

Faced with soaring bank mortgage interest rates and the threat of homes being repossessed, many debt-ridden families are being turned away from the state-aid scheme.

Housing agency Respond has called for a complete overhaul of the Mortgage Interest Supplement scheme, claiming its criteria are too strict and not realistic for frustrated borrowers.

Respond’s national officer Aoife Walsh said: “Applicants need to be able to show they did not overpay for their home. In reality the vast majority of people who bought property in the past five years paid too much because of an overinflated housing market.

“No one wanted to call a halt to rising property prices as it benefited several sectors of Irish society. However, many people are now juggling excessive mortgage repayments with shrinking incomes.”

The Department of Social and Family Affairs, which oversees the supplement scheme, says a review will be finished by Easter, after a year’s delay. The review will include the amount of money being allocated to borrowers as well as a possible requirement on home owners to negotiate the terms of their loan with lenders before they apply for state aid.

Applicants for mortgage interest supplements must satisfy a number of conditions including working less than 29 hours a week individually and having a mortgage interest rate that is considered “reasonable”. They must also prove they could afford the mortgage when it began and they are not now facing arrears that are considered “excessive”.

“One of the criterion is that the amount of mortgage interest payable does not exceed an amount the Health Service Executive considers reasonable. This automatically disqualifies those with sub-prime mortgages but could also exclude thousands of more families in the future as banks and the European Central Bank will almost certainly increase interest rates this year,” added Ms Walsh.

Respond says it estimates that over 1,000 individuals a month are being refused the supplement but the reasons are unclear as to why.

The department said yesterday it had no conclusive figures on refusals and that the HSE’s community welfare officers – who administer the supplement – did not record the number of rejections.

But Respond says many decisions are at the discretion of community welfare officers. “We need to tackle some of the faults with the scheme, including not awarding the supplement to families deemed to have disproportionate arrears or where only one member of the household has been made unemployed.”

Some 15,100 homeowners received mortgage interest supplements at the end of last year, four times more than 2007 (the height of the property boom), at a cost of €60 million to the taxpayer.