Minister for Housing Jan O'Sullivan has said a new mortgage-to-rent scheme launched by the Government will give certain low-income families "a way out of an impossible situation".

The scheme applies only to those families whose mortgage situations are deemed unsustainable and who have no prospect of a change in their circumstances.

It is only available to those who would qualify for social housing. The scheme ensures that the family remains in the home paying rent, while ownership is transferred to an approved housing body.

Speaking on RTÉ's News at One, Ms O'Sullivan said a voluntary housing body will buy the house from the bank at the current market rate.

But she was unable to say whether the borrower would remain liable for the outstanding negative equity portion of the loan or if the banks would write-off the debt.

She said it was a matter between the lender and the individuals concerned.

Ms O'Sullivan said the scheme was for a very defined section of the population and will apply to around 100 families in its first year.

The maximum value of the property involved is €220,000 in the Dublin region and €180,000 in other parts of the country.

The minister said it was just one part of a wider strategy to deal with the mortgage crisis.

No extension on mortgage interest relief

Earlier, Minister for Finance Michael Noonan warned that mortgage interest relief, introduced to stimulate the property market in the Budget, will not be extended at the end of the year.

The incentive means first-time home buyers receive mortgage interest relief at 25% and non-first-time home buyers receive relief at 15%.

Mr Noonan has warned potential purchasers that they should make sure there is sufficient time between purchase and mortgage drawdown in order to qualify.

He was speaking at the Property Industry Ireland conference in Dublin.

Meanwhile, the Department of Finance is to hold talks with banks about allowing people with tracker mortgages to take their trackers with them when they move home.

The head of the department, John Moran, said that the department needs to work with the banks and the regulator on the issue.

He said he understood the issue was stopping people from trading up.