Mortgage Income Relief Has Become Another Subsidy to Banks, Says Burton

Daily Mail (London), November 8, 2011 | Go to article overview

Mortgage Income Relief Has Become Another Subsidy to Banks, Says Burton


Byline: Eva Marie Gibney

MORTGAGE interest relief payments have become an unintended subsidy to the banks, the Social Protection Minister has warned.

Income support from the Government helps thousands of families stay above the breadline, but Joan Burton said the scheme is costing the State far too much.

Payments so far this year have topped [euro]77million. Mrs Burton explained that as the Troika piles on the pressure to slash department budgets, such high payouts are no longer sustainable.

She was speaking at a conference to discuss the recent Keane Report on mortgage arrears.

Representatives from AIB and Ulster Bank, budgetary advisory group MABS, the Bar Council, the Society of St Vincent de Paul and the National Consumer Agency were among those who attended. The event was chaired by report author Declan Keane.

Mrs Burton said: 'Obviously the Department is under ferocious pressure in relation to finding the savings that were agreed with the IMF.

'But the critical thing with the mortgage income supplement is that it needs to be a help to people in difficulty with their mortgage, not simply a subsidy to the banks.

'To some extent, that's what it's becoming now because some people are on mortgage income supplement for around three years and we saw the figures presented by the department whereas the idea behind it was to be a shortterm help.' Proposals discussed at the conference included the introduction of 'mortgage-to-rent' social housing schemes that would see approved housing agencies taking ownership of homes in specific circumstances.

The second proposal would see the leasing of houses by banks to local authorities, which would in turn rent them to former owners.

It was also recommended to curtail the mortgage interest supplement and to provide an independent mortgage advice body to support mortgage holders.

The minister welcomed the ideas, as more than 18,500 struggling borrowers are receiving mortgage interest relief.

'We are picking up the tab for a share of those borrowers' debt burden, and the money we pay goes directly to the banks,' she told the conference.

'We also spend more than [euro]500million a year on rent supplements for 100,000 people who cannot afford to house themselves.

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