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TARGETED MEASURES TO help mortgage holders struggling with very high interest rates is set to form part of this year’s budget, it is understood.
Finance Minister Michael McGrath called in the banks, vulture funds and the Central Bank yesterday to discuss what measures the banking industry are rolling out to ensure borrowers are supported at this time of rising interest rates.
With just over a month out to budget day, it is believed the minister was firing a warning shot that the government would step in with interventions due to the banking sector and regulators displaying a lack of urgency.
In a statement after the meeting, the minister said:
“It will now be necessary for the industry to demonstrate that they are delivering for borrowers in difficulty with supports and certainty, and developing long-term sustainable solutions for borrowers.
“I have asked the industry representatives to reflect on the discussion today and to set out their response as a matter of priority.”
In his statement, the minister highlighted the need for customers to be allowed to easily access a mechanism to switch mortgage providers.
As budget talks continue, it is believed that the finance minister has grown increasingly frustrated at the slow pace in which customers have been supported.
Senior government sources state that McGrath is currently working on budget ideas to help mortgage holders, particularly those trapped paying high interest rates to overseas funds.
It is understood the finance minister is working with Social Protection Minister Heather Humphreys on possible measures, which could include targeted measures that are limited to borrowers who tried to switch mortgage providers and have been refused.
Expanding the Mortgage Interest Supplement to provide short-term income support to those who are unable to meet their mortgage interest repayments is under consideration.
Other ideas being worked on included enabling mortgage holders to switch their loans from a vulture fund to state-backed initiatives such as the Local Authority or Rebuilding Ireland home loans scheme.
McGrath also wants banks to make it easier for borrowers whose loans were moved to a vulture fund to switch back to one of the pillar banks.
He welcomed a court decision in May which forced a mortgage servicer, called Pepper, to give a borrower couple a low fixed rate of 2.5% for 25 years.
The minister said at the time that loan owners and mortgage providers should be offering fixed-rate options to their borrowers. Pepper has not been offering fixed-rate product solutions.
The hikes in interest rates have been felt by mortgage holders on variable and tracker rates and by any homeowner who has reached the end of their fixed-rate term.
Some 60,000 mortgage holders whose mortgages are owned by vulture funds are unable to switch to high-street lenders and are stuck on rates as high as 10%.
Vulture funds hold the mortgage contracts of around 85,000 Irish households.
As financial expert Mark Coan recently wrote in The Journal, many assume that the mortgages in this situation have ‘gone bad’, in reality only around 20,000 of them are currently behind in their repayments.
In fact, many people with the vulture funds have never been in any financial trouble, ending up with the funds through sheer bad luck. A sizable group of these customers, over 30,000, are simply with these funds due to the loan sales.
Senior government sources state that McGrath is “genuinely concerned” about the issue and “wants to do something to help those who need it”.
They acknowledged there are wider concerns relating to the rental market if mortgage holders are paying interest rates close to 10% with non-bank entities.
Housing Minister Darragh O’Brien has confirmed tax breaks for landlords are on the table in a bid to keep supply in the rental market.
However, there are now concerns that landlords trapped in high interest mortgage repayments may be forced to sell up, resulting in a further uptick in notices to quit for tenants.
“There is definitely no gain for anyone in repossessions happening in these cases,” said the senior source, who added that it is only renters, mortgage holders, and the government that lose out in such scenarios.
Opposition parties had called for a blanket form of mortgage interest relief but there has been pushback from those within government who fear it could ramp up house prices further.
Sinn Féin spokesperson on Finance Pearse Doherty welcomed the meeting the minister held with the banking sector yesterday, stating that he has been calling for a strategy to be developed to support those facing soaring interest rates.
“Households have faced a massive income shock as a result of soaring interest rates – with 1 in 5 households set to see their annual mortgage costs rise by more than €5,700.
“Households that had their mortgages sold off to vulture funds have seen their interest rates soar to as high as 10%, effectively becoming mortgage prisoners.
“These sales were supported by Fianna Fáil and Fine Gael and were carried out by many of the banks and vulture funds that attended today’s meeting.
“They have a responsibility to right this wrong and to provide a path for these households to return to the mainstream mortgage market,” said Doherty.
He said there has been little evidence of households switching from vulture funds to mainstream banks, stating that today’s meeting must result in real action rather than simply being a box-ticking exercise.
“How many households have tried to switch from vulture funds to mainstream lenders in the past 12 months? How many have been successful and how many have not?
“These are the questions to the Central Bank and Government should be asking and acting upon. It is also incumbent on the Government to support households that are suffering from this income shock,” he said, stating that the government cannot stand idly by.
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As always with FFFG and other right wing parties: empower corporations and the rich, tell everyone else to solve their own problems. Problems they made. For their benefit.
Stop voting for Irish Tories. 100+ years is enough.
Another after midnight story and by the time of high viewership approximately 11 am it will be 8 stories deep because it highlights the current government taking SF advice on the mortgage relief only wording it different
@Shane Doyle: So you agree with this government decision.
@Kilkenny Proud: of course it’s not gonna be the kinda relief SF advocated for but it’s a climb down from them..I’d say they are gutted that they are shamed into acting on greedy vulture funds but true form from these cowboys will show ‘targeted’ been a very narrow cohort
‘very targeted’…. Meaning that very few will benefit for the measure.
@Ryle Conway: why should the state step in at all. not the tax payers fault mortgages were sold
@no no no: please remind us of such wisdom the next time these sleaze riddled banks mess up and we as taxpayers have to step in and bail them out
@no no no: just don’t get it do you.
@Adrian Kehoe: Don’t get what? Tgat people signed up for loans they can’t cover? Individual choice, every time. Because it’s the done thing, ‘I want my own house too’. That’s why everyone now pays through the nose for a roof over their heads. Everyone in the housing industry laughing all the way to the bank. Much more sophisticated countries than this one have way less private ownership. We create this problem ourselves because we want one too.
@Go on Leo, go ahead and try enforced payment durin: you can’t sign up for a loan you can’t cover that’s not how it works. But I expect you knew this already and just wanted to try and be edgy
@Martin Mongan: Not trying to be edgy at all, Martin. Just stating my opinion on how ‘our’ obsession with buying and selling houses has brought about this nightmare scenario.
As long as the Western world treats homes as a commodity who’s primary purpose is profit at the expense of those who wish to have a decent roof over their head , in a system where those who have the power to make the necessary changes but are themselves dizzy from the smell of cash , little will change. A situation which has worsened over the last 2 decades , at a time when inequality is at increasing at breakneck speed . And with perpetual war, population growth , and a refugee crisis not seem since the second world war , it’s only set to worsen until change is demanded . By who ? By those on who’s backs nations are built. By the working people . Demand an end to corruption cromyism , deadwood politicians. Human greed has done enough damage . Change is not impossible
@K H: Wholeheartedly agree. And individuals need to take responsibility, not just follow what Mammy said. Get a state job, get your mortgage early. Rat race.
All the speil from the current ministers with an election looming is quite frankly disgusting.
@Paul Gorry: What election?
@Kilkenny Proud: General election March 2025 litterly just around the corner. That election!!
@Paul Gorry: Oh yeah – a year and five months around the corner.
@Kilkenny Proud: you’re definitely missing the bigger picture aren’t you? Jayus h Christ stop making a fool of kilkenny an absolutely great county.
@Paul Gorry: you’re right Paul, it’d be better if they do nothing. Then you can moan about them doing nothing
There is something very wrong about a system that allows this to happen in the first place. I thought being in the EU strengthened the rights of consumers, but with these vulture funds driving people over the edge and Irish energy providers happily screwing consumers despite costs reducing, I really don’t see any protection for the consumer.
@Tom Leddy: Unfortunately, the vulture funds buying mortgages and hiking interest rates to 10% is a symptom of our unusual mortgage market. The mortgages that ended up being sold would in most countries have ended up with repossession by the original bank. We didn’t allow that to happen, and the price some mortgage holders pay is to get completely shafted by having to pay these rates. In most other housing markets these people would have lost their homes during the last crash though. Hard to know which is worse!
@Tom Leddy: the EU has GREATLY expanded protection for consumer… But they don’t control Ireland. Ireland votes for right wing nutters and gets right wing nutter policies.
Want change? Stop voting for Irish Tories.
Our first world toilet of a Country. Storms are comming, they really need to sort things out. The sh show getting worse.
There are people being charged crazy high mortgage interest rates and people being paid crazy low rates on their savings. I know that risk is an issue that needs to be factored in but surely there are opportunities for non bank apps to make a lot of money by making both sides a lot happier.
Hopefully this will turn into meaningful action. There are real people who need real help. TD clinics must have been busy all across the country with this issue.
Great if it actually happens, we know banks only line their own pockets and everything they do ultimately means a profit for them! What is he doing with the Energy companies as they are as bad as the banks! The price of fuel is decreasing globally but energy prices are still skyrocketing for no reason only to screw people!
@PRdLQWQF: price of oil on the way back up again.
@NotMyIreland: Yes but as the energy companies keep telling us, they buy on futures so we should be seeing a reduction due to the wholesale price being low over the last year (gas especially). Of course this won’t happen and the punter gets done again.
The EU is insisting on competition in the energy sector but that isn’t helping consumers so everyone should change to Electric Ireland (which is owned by the state) as that is our right and destroy the private companies overcharging us. If nothing else it will start a price war as these companies won’t want to fold. The people have the power but would rather moan on sites like this and social media than actually do anything themselves.
Defeating the inflation busting measures of the ECB with foolish Leprechaun economics policies. This is exactly how Ireland will have a crash because the bubble was not allowed to have a soft landing. We have been warned and it can be foreseen, so when in a year or so we see GDP and house prices fall “more than expected”, don’t listen to anyone that says “no one saw it coming”.
Waffle,waffle,waffle and tomorrow more waffle they’re as much use as an ashtray on a motorbike full of ****
Cease their properties in the name of the state or offer 25 cents the dollar as they did. Justify crisis as the reason or don’t justify. Also tax them if they say anything. Get rid of these sucking bugs and their mignons.
After the crash the government FFG couldn’t make the right, hard decision to let houses be repossessed and instead we got the vultures coming in. If those households were in arrears at 2% there is no way in hell they can go up to 8 to 10%.
This should be good!!!!!
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