[Article] Welfare supplements for mortgages and rent may be restricted

Victor

http://www.irishtimes.com/newspaper/ireland/2010/0204/1224263734713.html

Welfare supplements for mortgages and rent may be restricted
JAMIE SMYTH Social Affairs Correspondent

THE GOVERNMENT may introduce new restrictions on payments made under the mortgage interest and rent supplement welfare schemes to save money.

Minister for Social and Family Affairs Mary Hanafin said yesterday she would publish a review of the mortgage scheme before Easter following a four-fold increase in the number of people receiving the emergency payment.

The number of people receiving mortgage interest supplements at the end of December 2009 was 15,100, compared with 4,000 at the end of 2008. The scheme cost the exchequer €60 million in 2009 and this figure is expected to rise as the number of homeowners losing their jobs is forecast to increase this year.

The scheme operates to provide financial support to people who are unable to meet their mortgage repayments due to a change in circumstances, such as loss of a job.

It is designed to be a short-term payment covering the interest portion of a home loan.

Ms Hanafin said she was considering making homeowners who get into trouble with their repayments go to their bank or financial institution to agree a repayment deal before becoming eligible to make an application for any mortgage supplement payments.

She said we are probably the only government paying out that amount of interest for people and the first port of call probably should be the bank or if they are not able to do that then the Monetary Advice and Budget Service should be asked to act on their behalf with the bank.

Ms Hanafin said the €60 million paid out under the scheme was “dead money” because banks had no incentive to renegotiate terms with clients when they got the relief.

She said her department was looking at whether this money could be used in a better way while still ensuring that people’s homes were protected from repossession.

The Government’s review may also remove the current 30-hour work limit and replace it with a means test.

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Ms Hanafin said the €60 million paid out under the scheme was “dead money” because banks had no incentive to renegotiate terms with clients when they got the relief.

So paying rent is no longer dead money, paying the banks interest is dead money.