However depositors have objected to the scheme and say they are being treated unfairly.

They want the High Court to change their status as creditors which could mean they receive 6% in refunds.

One depositor told the court to be offered a 1% refund was ‘an insult’.

Many said they had lost their savings and could no longer qualify for a mortgage. The case is ongoing.

The figures for April from the Central Bank confirm the property market has slowed to a trickle.

It is the first time that repayments on existing mortgages has been greater that new mortgage lending since the Central Bank began this monthly statistics series in 1990.

The figures show that overall, mortgage lending fell by over €100m last month.

The amount of money loaned out in the rest of the economy also fell, reflecting concerns raised by many business groups about accessing credit.

People are also spending less on credit cards. The amount of money spent on credit cards by consumers in April fell by €180million compared to April of last year.

The Bill will set new standards for the operation of management companies and new rules for developers who build apartments.

Fine Gael welcomed the Bill, but said it was long-overdue.

Measures in the Bill include developers having to set up an ‘Owners Management Company’ prior to the sale of apartments.

It means that prices nationally have fallen by almost 5% in the first four months of this year.

The average price paid for a house nationally in April 2009 was €248,640, compared with €261,573 in December and a peak of €311,078 in February 2007.

Houses in the first-time buyer category are falling at the fastest rate, down 7.9% already this year.

Niall O’Grady of Permanent TSB said: ‘This is the fastest rate of decline in national prices that we have seen to date since the index started in 1996.

‘The particularly dramatic reduction in prices for first-time buyers reflects their reluctance to buy in a market that is still declining and where unsold properties are being reduced further’

In the April Budget the tax relief was limited to homeowners in the first seven years of their loans.

Revenue is now asking 134,000 homeowners to clarify when their loans started to establish whether the relief still applies to them.

Before last month’s budget around 560,000 people qualified for mortgage interest relief.

Half of those receiving it had the relief stopped, of these 154,000 have been deemed ineligible.

Homeowners who are in this category are asked to take no action until Revenue contacts them.

Homeowners will be able to update details on www.revenue.ie or through their local tax office.

For more information from Revenue
According to the Revenue Commissioners, as of the end of last year, there were 562,000 people receiving mortgage interest relief.

However the entitlement is to be suspended from 1 May for everyone except first-time buyers.

The move follows the announcement by the Government in it is supplementary Budget to limit mortgage interest relief to seven years.

Last night Opposition parties in the Dáil accused the Government of creating confusion over the issue.

Under the new system the tax relief on monthly mortgage interest payments will only apply for the first seven years after someone buys a property for use as their home.

According to the Revenue Commissioners, the move means mortgage interest relief will be suspended for 321,000 of the 562,000 people currently receiving the entitlement.

Of those, Revenue says 57,000 people will definitely no longer be entitled to it.

It says it is in the process of working with mortgage lenders in establishing who is and who is not entitled to the relief.

Mortgage holders who have the relief suspended but are entitled to continue to receive it will have it reactivated in June, all arrears included.

220,000 first time buyers will not be affected by tomorrow’s move and will continue to receive the entitlement.

The figures were contained in the latest University of Ulster Quarterly house price index, produced in partnership with the Bank of Ireland and the Housing Executive.

The survey showed prices had fallen by just over 28% in 2008.

It also confirmed the continuing low volume of house sales, with 704 transactions recorded in October, November and December, a figure just slightly up on the previous quarter’s report of 670.

The authors said the drop was no surprise and argued that it came with the silver lining that homes were becoming more affordable for first-time buyers.

The sharp decline confirms the downward trend of recent years.

But the drop followed a period when Northern Ireland house prices rocketed over a very short period of time.

The survey, billed as the most broadly-based of those undertaken in Northern Ireland, covers approximately 120 estate agents and records all open-market transactions.

It showed the overall average price of a house in the final quarter of 2008 was £168,185 – a drop of 16.6% on the third quarter.

Some property types saw greater falls than others.

The sharpest drop was in detached bungalows, down almost 35%over the year to an average of £218,216.

Terraced or town houses fell by 28% to an average of £134,905.

In Belfast the average price of housing at £178,399 showed a 20.9% annual decline, indicating that it did better than the overall Northern Ireland market.

The banks have told Government that delaying repossession proceedings for those in arrears on their mortgages for any longer would be viewed negatively by investors.

The issue of mortgage arrears has become more central in the €7bn recapitalisation talks because of rising unemployment levels.

Negotiations continue today and any final agreement may be extended as part of a new regulatory code covering mortgage arrears for the entire home loan sector.

The fine detail of the plan is now expected after markets close on Wednesday evening or early Thursday.

The Government had wanted delays in repossession proceedings for two years compared to the current six-month rule.

However, banks raise new funds by issuing bonds against using their mortgage books as security. The banks pay interest on those borrowings.

Carrying mortgage arrears for up to 24 months would make the quality of mortgage-backed securities less attractive to international investors.

It now appears banks are offering not to pursue mortgage arrears for six months and have offered not to repossess homes until 12 months has elapsed.

The compromise has regard to the distressed financial situation arising for many losing their jobs.

Other talking points have centred on executive pay.

Future bad debts

Meanwhile, it appears a firm Government guarantee of AIB and Bank of Ireland’s exposure to future bad debts on property development loans is unlikely at this juncture.

The €7bn injection may not be enough to cover future bad debts arising in the property sector, and markets are sensitive to this weakness.

Fine Gael says the Government’s bank recapitalisation plans may leave taxpayers dangerously exposed to massive bad debts.

In a statement, the party’s finance spokesman Richard Bruton said the Government should urgently consider other options, including the creation of ‘good banks’ with clean balance sheets.

Mr Bruton said Fine Gael has huge concerns that the taxpayer is being asked to put money into existing banks without knowing the full extent of the hole in their balance sheet.

He said there was a real risk that the only result will be to allow the banks to nurse along their dodgy property lending while continuing to starve viable businesses of access to the credit
they so badly need.

The House Price Index, published by the ESRI and Permanent TSB, indicates that the biggest prices drops were in commuter counties surrounding Dublin.

House prices were down 16.8% in these regions in 2008.

  Permanent TSB says houses prices now are where they were in the middle of 2005 and it is thought houses prices in 2009 will fall by a further 10%.

It says the market will not recover until the economic situation in Ireland significantly improves.

David Duffy of the ESRI says that is unlikely to happen until 2010.

The fall in Dublin commuter counties was the largest fall recorded – with houses in Dublin down almost 12% and just over 10% for houses outside Dublin.

The national average house price for first time buyers was down 14% last year; that is more than double the decline seen in 2007.

Niall O’Grady of Permanent TSB says the last two years have seen a rate of decline as high as 17%.

He says that trend is likely to continue for at least the remainder of the year.

The Permanent TSB/ESRI index is based on actual transaction prices and not market valuations and other indicators.

The organisations say it is more reflective of the reality of the housing market.

This compares with an average monthly increase of over €850m between January and September of this year.

It also compares with an average monthly increase of almost €2bn at the height of the housing boom in 2006.

The annual rate of increase in residential mortgages slowed to 6.7% last month from 7.6% in October – the lowest annual rate of increase since 1986.

Overall, private sector credit growth slowed to 8.4% in November from a figure of 8.9% the previous month.

The figures from the Central Bank also show that new credit card spending was slightly over €1bn in November, the lowest level since April 2006