There was possible good news for those struggling with their mortgages this week when AIB chief executive David Duffy said that the lender would write off unustainable debt for certain borrowers.
Mr Duffy said the bank would look at the “principle of affordability” of borrowers' repayments.
While he said the bank would not engage in “debt forgiveness” where borrowings “magically go away” it is a significant step in the right direction of solving the problem of those seriously in arrears.
This does not mean anyone behind in their repayments could have debt writedowns. Quite the contrary, in fact, with Duffy pointing out that the bank was not capitalised to solve borrowers' negative equity.
There are a few extreme cases though of people having mortgages that would be simply impossible to ever repay. It was revealed during the week that 7 out of 10 distressed mortgage holders at AIB are meeting their agreed interest-only payments.
It will be the remaining three in 10 that will likely be the focus of any possible debt writedown.
Affordability, rather than negative equity, will be the barometer used for assessing situations with loans being restructured into something that the customer can afford.
Bank of Ireland has dismissed a similar deal, pointing out that 86% of its customers who have switched to interest-only or some other form of restructuring are meeting their payments.
Their preference seems to be to focus on “mortgage-to-rent” deals, with 13 cases currently being worked upon.
There is little doubt that all other banks will be keeping an eye on the success or failure of AIB's latest move.
Their action comes soon after the comments of the Central Bank's Fiona Muldoon, who said that some form of debt writedown was needed.
Those comments appear to have been taken on board and we wait now to see how many people or businesses will benefit.
Today we ask your opinion on the matter. Is some form of debt writedown a necessity for certain people or is it unfair on those who continue to meet their monthly repayments? Do you believe many people will benefit from any writedowns? And will other banks follow AIB's lead on this?
Let us know and if your say below...
