Across-the-board mortgage interest relief ruled out in Budget – but Government considering aid for people facing losing their homes

Speaking in Mayo, Mr Varadkar said: “Anything we do would be very targeted to people who are in financial distress, who are struggling to pay their mortgage and may potentially lose their home. Nobody wants that to happen.”

“The difficulty with across-the-board mortgage interest relief is the one that was there before — it actually had the effect of increasing house prices.

“It also increased the amount of mortgages people would get from their banks, therefore increasing their debt. So there is that risk and so anything we do would be very targeted.”

He stressed that what the Government was considering was aid for people who are facing financial distress and struggling to pay their mortgage, facing losing their home.

“That’s the space in which we’re giving consideration to some help. But I want to be careful not to raise expectations,” he said.

“We had across-the-board mortgage interest rates before. The effect was to increase house prices, and increase the amount of debt people are able to take on. That’s that’s not something I want to repeat.”

The Taoiseach said there are things people can do already to address their mortgage cost which were important to bear in mind now that variable rates have topped 4pc.

“If you have equity in the home, you can switch — and that’s one way you could potentially reduce your mortgage payments. Another option is to go interest only.

“I would encourage people certainly to engage with their lender — or if that doesn’t work, to engage with the Government service called Abhaile, which is there to help people who are facing mortgage arrears.”

Ireland and across Europe for a very long period had known very low interest rates, Mr Varadkar said. But now “we’re probably seeing interest rates re-setting to a level of between 3pc and 5pc.

“That would have been historically around the average, at least before we joined the Euro,” he said, but the return to such norms was going to have an impact.

“It’s going to make it more expensive for people to pay their mortgages and will also impact on on the cost of housing — it may even help the cost of housing because it will level off or even fall back a bit.

“We haven’t ruled that doing anything at all on mortgage interest relief, but anything we do will be targeted to people in financial distress.”

He explained: Ultimately, anything you do that’s universal and across-the-board is easy to design, but extremely expensive.

“On the other hand, anything you do that’s targeted is not so expensive, but can be difficult to to design.

“That’s the kind of work that we need to do between now and Budget Day — and that’s what we’re doing here.”