Dáil Question on MABS’ report on split mortgages

To ask the Minister for Finance his views on the Money Advice and Budgeting Service report outlining its concerns that split mortgages will not be a solution for the bulk of homeowners in distress as its findings revealed that the majority of homeowners in distress are between 41 and 65; and if he will make a statement on the matter.

Reply from Minister for Finance Michael Noonan T.D.

The Report referred to by the Deputy was prepared by MABS NDL (National Development Limited). The stated aim of the Report is to provide an analysis of the experience of MABS clients with mortgage difficulties, often in addition to other debts and other issues, as well as the experience of MABS money advice staff working with those clients to come to a resolution that is “mutually acceptable, affordable and sustainable.”

Regarding the particular issue of split mortgage, the Deputy will be aware that split mortgage was one of a number of possible arrangements suggested by the 2011 Inter-Departmental Mortgage Arrears Working Group (Keane Group) report to address significant mortgage difficulty. Other options such as trade down mortgages, mortgage to rent scheme and negative equity mortgages were also referenced in the Keane report. The split mortgage concept involves splitting a distressed mortgage into an affordable mortgage and warehousing the balance. The Central Bank has advised that the majority of lenders have introduced, or are in the process of introducing a split mortgage arrangement. While lenders have taken the broad approach set out in the Keane report, the particular split mortgage details can vary from lender to lender.

However the sustainability of a split mortgage, like all other forbearance and modification arrangements, is based on affordability and other relevant factors having regard to the specific circumstances of the individual case and the legitimate long term interests of both borrower and lender.