Noonan: No 'Magic Bullet' For Mortgage Arrears

A series of meetings kicked off today with the Mininster of Finance, Michael Noonan, meeting with a committee to discuss issues facing the Irish economy.

The Oireachtas Committee on Finance and Public Service has secured a series of meetings with the main players in the field of domestic and European finance. The purpose of these sessions is to give the members of the Joint Committee an overview of the major issues that are facing the Irish economy and the banking sector.

First to speak in front of the committee today, the Finance Minister, reiterated that problems with mortgage arrears and said they would not be easily fixed.

The Minister said the issue is complex and said it is clear that there is no 'magic bullet' or 'one-size-fits-all' solution. He said resolutions must be found on a case-by-case basis through open engagement between the distressed borrower and the lender.

This follows figures earlier this week from the Central Bank which revealed that more than 55,000 mortgages are in arrears. This is 7.2% of the total amount of mortgages. It is also an increase on the figures for March, which had only 6.3% in arrears.

The Finance Minister has insisted that the capital is in the banks to allow the write off of some residential mortgage loans, following the recapitalisation of the nationalised banks in July of this year.

Mr Noonan said the Government will consider what action is warranted to address the 'increasing problem' once it receives a report into the matter at the end of September.

Meanwhile Mr Noonan revealed to the committee that two Irish banks recently returned to the global money markets and borrowed money at "reasonable rates", two years ahead of schedule. However, the Minister also warned that Ireland would not be immune if the global recovery were to stall but he said while volatility remained, there were many positive signs in the economy.

The Minster outlined that there were still hard times ahead for Ireland. With tough budgets looming and it being all too it early to be sure the worst is over.

The deficit remains unsustainably high and that expenditure reductions and revenue increases will be required in future Budgets.

The minister also ruled out bringing forward the date of the Budget and said the stated scale of adjustment of €3.6bn might "stretch out a bit".

He said the growth forecast of 2.5% for 2012 might have to be revised downward as a result of international factors, but he said at the moment it is too soon to call.

Mr Noonan said taxes will have to be increased in December's Budget, but said there was a commitment not to raise income tax.He said the Government did not want to increases taxes that would cause further unemployment problems.

Over the coming weeks, the Committee will be conducting more of these meetings. It has secured the agreement from the heads of NAMA, the NTMA, BOI and AIB to attend the Committee. The Minister for Public Expenditure and Reform, Brendan Howlin TD and EU Commissioner for Economic and Monetary Affairs.

(LB/CD)