Only eight families use deal on mortgages

Number of mortgage-holders in arrears continues to increase despite scheme

Minister for Housing Jan O’Sullivan. The Government says the number of people who will benefit from the mortgage to rent scheme will grow over the remainder of the year. Photograph: Frank Miller

Minister for Housing Jan O’Sullivan. The Government says the number of people who will benefit from the mortgage to rent scheme will grow over the remainder of the year. Photograph: Frank Miller

Mon, Apr 8, 2013, 06:00

Just eight families have benefited from a Government “mortgage to rent” initiative launched a year ago, aimed at helping houseowners in serious mortage distress.

The scheme allows mortgage-holders to surrender their homesto a housing agency, who in turn rent it to the original owners.

It was billed by the Government at its launch as a way of providing “certainty and security for families who face the imminent prospection of repossession of their family home”.

Latest figures show that sales have been agreed on 20 properties and eight of these sales have been completed.

In the meantime, the number of people falling behind on their mortgages continues to grow. The Central Bank estimates that about 94,000 householders are three months or more behind on their repayments.


Numbers
The Government insists, however, that the number of people who will benefit from the scheme will grow over the remainder of the year.

“Mortgage to rent or other such interventions cannot be rushed for any party,” a spokesman for Minister for Housing Jan O’Sullivan said.

“For example, the process provides a 60-day decision period and a 28-day cooling off period within the timeframe of the scheme.”

The Department has budgeted for 250 homes taking part in the mortgage to rent scheme during 2013, though it is unlikely this figure will be reached based on current trends.

It now forecasts that in excess of 25 cases will be completed by the end of the first quarter of this year.

The department estimates it will take up to eight months to complete a transaction. It said this compared favourably to other jurisdictions operating similar schemes.

“Now that the scheme has been embraced by all the main banks and has bedded down, we anticipate there should be an improvement in completion times,” the spokesman added.

Social housing
Noeline Blackwell, director general of the Free Legal Advice Centres, said the idea of “mortgage to rent” was a good one, but said the numbers who stand to benefit are very modest. She said a shortage in social housing meant thousands of low incomes families were given mortgages way in excess of what they could afford during the property boom.

“When you think of the numbers of people on low incomes who were lent money and now have no real prospect of paying it back, those numbers are very small,” she said.

“We need more options for people who might not need to own their own home, but they do need a decent, habitable home.”

Central Bank statistics show there is little sign yet that lenders are offering longer term solutions to people in mortgage difficulty.
While thousands have been offered short-term fixes such as interest-only loans, banks have issues a total of 52 split mortgages and just six trade-down mortgages have been authorised.