Aims to get a banking system that works
FINE GAEL, in government, will increase mortgage interest relief for the negative equity generation, promises party finance spokesperson, Michael Noonan.
Measures will include an increase of 30% in interest relief for first time buyers in 2004-2008, from the current sliding scale of 20 to 25%,
depending on when the mortgage was taken out, and which will be financed in part by bringing forward the abolition of relief for new buyers from June 2011.
“We will cap the interest charged by lenders benefiting from the mortgage interest supplement scheme at the European Central Bank base rate, plus one per cent or the contracted mortgage rate, whichever is lower,” says Mr Noonan.
He also wants new legislation if it is required to stop mortgage lenders charging penalty interest rates, or forcing families to give up their low cost tracker mortgage rates or mortgages that have been rescheduled – the payment term lengthened – and where the borrower has co-operated with the lender in agreeing a new sustainable repayment plan.
The Fine Gael Policy Document entitled ‘Credit Where Credit Is Due,” added Mr Noonan, is geared to restore a banking system which works and, in particular, works for ordinary people with mortgages, as well as for business people
Fine Gael is also proposing the introduction of a Universal Mortgage Indemnity Insurance (negative equity insurance) which would be compulsory for all new borrowers with a loan to value ratio in excess of certain levels.
“Mortgage lenders would be required to offer distressed homeowners a deferred interest scheme that enables borrowers who can pay at least 66% of their mortgage interest (but less than the full interest) to defer payment of the unpaid interest for up to five years,” he continued.
The party also proposes to amend legislation to allow defined contribution pension savers to access funds early, subject to reasonable limits to meet their current business and personal responsibilities (while taxing the draw downs).
“We will work with the Financial Regulator and the Industry to facilitate trading down and ‘negative equity mortgages’ by borrowers in this situation.
“In addition, the new Universal Mortgage Indemnity Insurance would provide for adequate security for prudent lenders and borrowers against future risks of negative equity
“In the event that a family was forced to sell their home due to adverse economic circumstances, any difference between the loan value and sale proceeds would be paid for by the insurance scheme”.
