Report is welcomed but urgent action is needed now

Ireland’s largest housing charity welcomes the report by the Joint Oireachtas Committee on Social and Family Affairs into the high levels of debt in Ireland but calls for immediate action to assist homeowners in difficulty. Respond! Housing Association asks that the Government seriously considers the report and acts on its key recommendations immediately.

According to Respond! Housing Association spokesperson Aoife Walsh the high level of mortgage and other debt in Ireland is extremely alarming.
“In the past decade annual increases in personal debt was as high as 30% as borrowing and purchasing on credit reached unsustainable levels. By 2007, personal debt was equivalent to 175% of personal income and Ireland had become the third most indebted country in the OECD after the Netherlands and Spain. It is a relief to see that personal indebtedness is finally being recognised as the massive problem it is. However, it is important that there is no delay in implementing some of the key recommendations made yesterday by the Joint Oireachtas Committee on Social and Family Affairs. The recession and the rising unemployment levels have seriously affected people’s ability to repay debts and this issue must be addressed now.”

Respond! Housing Association agrees with many of the recommendations contained in the report including an overhaul of the Mortgage Interest Supplement, the banning of penalty interest on arrears and the acknowledgement that where reckless lending occurred, financial institutions and mortgage brokers should be apportioned some debt responsibility.
“One of the key recommendations in the report relates to the Financial Regulator’s Code of Conduct being established as a Statutory Instrument in its own right. This would mean consumers could take legal action against financial institutions in breach of the code and would force lenders to obey by its terms” said Walsh. “While the report recommends extending the moratorium on house repossessions to 24 months, the Financial Regulator today ordered that the moratorium is extended to 12 months. This is to apply to all lenders, mainstream institutions and subprime lenders. This is a welcomed development but in itself is not enough. For many that is simply delaying the inevitable and allowing arrears, interest and penalties to accumulate for a longer period. It is important that many of the recommendations of the report are examined closely and acted upon quickly in order to offer assistance to those struggling with substantial levels of personal debt.”

The housing charity also welcomes the recommendation that an alternative system for managing debt outside of the courts is developed. This will help borrowers reduce the high costs associated with dispute resolution in the court system.