Taoiseach Leo Varadkar has said that any potential measures aimed at helping struggling mortgage holders following interest rate hikes would be very targeted.
Speaking this afternoon in Mayo, Mr Varadkar said the Government had not ruled out doing something to help struggling mortgage holders, but added that he did not want to raise expectations.
It comes after Fine Gael Senator Barry Ward said earlier that the Government is putting together a package of Budget measures that will help people with the cost-of-living, but it will not include mortgage interest relief.
Figures from the Central Bank yesterday show that the average interest rate on new mortgages rose from 3.84% in May to 4.04% in June, pushing Ireland back towards the middle of the league table for mortgage pricing in the euro zone.
“Anything we do will be very targeted to people who are in financial distress, who are struggling to pay their mortgage and may potentially lose their home because nobody wants that to happen,” Mr Varadkar said.
“The difficulty with an across-the-board mortgage interest relief is that when it was there before, it actually had the effect of increasing house prices and increasing the amount of mortgages people would get from their banks and therefore increasing their debt.
“So there is a risk there and anything we do would be very targeted to those who need it the most”.
We need your consent to load this comcast-player contentWe use comcast-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
The Taoiseach said there had been very low interest rates in Ireland and across Europe for a long period and that rates were now “resetting to a level of between 3% and 5%”
“That would have been historically around the average at least before we joined the euro. And these increases are going to have an impact. It’s going to make it more expensive for people to pay their mortgages and will also impact on the cost of housing. It may even help the cost of housing to level off or fall back a bit.”
The Taoiseach rejected proposals put forward by Sinn Féin for a “temporary and targeted” mortgage interest relief scheme.
“Anything you do that’s universal and across the board is easy to design but extremely expensive. And anything you do that’s targeted is not so expensive, but can be difficult to design. And that’s the kind of work that we need to do between now and Budget Day and that work is under way.”
Sinn Féin’s housing spokesperson Eoin Ó Broin said mortgage interest relief would put money back into people’s pockets on a temporary basis and ease some of the pressure of rising interest rates.
Speaking on RTÉ’s Today with Philip Boucher-Hayes, he said that for many of the people concerned, the cash impact of both the current and potential future increases is over €5,000 a year.
He said there is also a significant number of mortgage holders whose mortgages have been sold without consent to funds and they are being charged even higher rates.
In response, Mr Ward said another point to consider is that Ireland has had historically low interest rates for a long time and although 4% is significant and not everyone is paying that rate, he does not dispute that the increases have put pressure on people.
He said he believes mortgage interest relief should not be part of the Budget because it will have knock-on consequences elsewhere.
“Eoin is always talking about making housing more affordable, in fact the OECD and other research has shown that it won’t do that, it will actually increase pressure on house prices,” Mr Ward said.
He said it will provide more money for people who already have mortgages, but it will make it more difficult for people who are buying homes to get mortgages.
“We phased out mortgage interest relief because of the cost of it and because it disproportionately affects people on higher incomes, it gives them more money than it does on lower incomes,” Mr Ward said.
Eoin Ó Broin said his party colleague Pearse Doherty will be launching Sinn Féin’s alternative Budget in a number of weeks, which will set out an updated proposition.
“This is a time limited proposal, it’s to put money back in hard pressed working families’ pockets now for a period of time, and as I say capped at 30% of the increase to the value of €1,500.
“This is an emergency measure at an emergency time and I have to say that I’m scratching my head in disbelief that the Government has refused to act on this for such a long period of time, particularly given the fact that we are talking about thousands and thousands of euros that many hard-pressed mortgage payers simply don’t have,” Mr Ó Broin said.
