Plan to help homeowners relocating for work
Junior Finance Minister Brian Hayes again yesterday played down calls for a multi-billion euro bailout for troubled mortgage holders but outlined other measures being examined.
Mr Hayes said it was “crazy” that borrowers seeking to move homes for work reasons were trapped with negative equity mortgages.
“We are looking at whether it would be possible for people to carry their mortgages with them and their negative equity with them as they move from home to home for employment reasons. If you take the UK for instance, they have negotiated this,” he told Reuters.
Such a move could allow borrowers who are unable to pay off loans now more than the value of their home, to carry the excess amounts into a new mortgage. The measure could also boost property market sales, a move Mr Hayes has previously said could help economic recovery.
Mr Hayes also yesterday outlined reasons for the radical plan to Newstalk 106fm. “I’ve come across this case in particular where if people want to move from one part of the country to the next because a job opportunity emerges, they can’t do it at the moment because they find themselves locked into this impossible mortgage repayment that they just can’t make. That’s absolutely crazy and that is something that we’re looking at.”
Almost 90,000 mortgages are either in arrears or have been restructured, some 11% of the residential mortgage market, according to the latest Central Bank figures. Many mortgage-holders are stuck with huge loans as house price falls of around 50% in some areas, prevent them from selling the property to pay off the debt.
A Government-appointed working group, chaired by accountant Declan Keane, is examining how to ease pressure on mortgage-holders and is set to report in September. Decisions on ways to help borrowers will be made in the autumn, Mr Hayes said.
But he again shot down calls for a state-wide debt relief scheme for borrowers.
“I don’t see it as radical as some economists have suggested. The cost of it would be prohibitive,” he said, referring to a proposal by economist Morgan Kelly, who last week called for a blanket forgiveness scheme of between €5 billion and €6bn.
The fact that half of Irish mortgages are held by foreign banks would also make it impractical, he said.
“The banks have allowed mortgage-holders to put aside payments for the guts of a year. We are looking at whether that could be extended to two years,” he said about other measures under review.
His comments came as presidential hopeful Seán Gallagher backed calls for a debt forgiveness scheme for borrowers. “I sincerely hope that the Government can find a way to create debt forgiveness for many people, because many individuals and families are heavily burdened, and I would very much support that as an approach to help ease their suffering and their current pain and concerns,” he said.
