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Dáil Éireann debate -
Thursday, 20 Mar 1969

Vol. 239 No. 5

Adjournment Debate: Mortgage Interest Rates.

I gave notice today that I would raise the following matter on the Adjournment:

The action being taken by the Government to offset the latest (proposed) increase in mortgage interest rates by building societies.

I with some other Deputies had questions on today's Order Paper regarding this matter which we had addressed to the Minister for Industry and Commerce as we understood that it was his function to decide price increases. For very good reasons, the Minister for Industry and Commerce was not present at Question Time and I understand that the Minister for Local Government was in the Seanad and was unavoidably absent.

I was present for questions. I answered my questions.

These questions were addressed to the Minister for Industry and Commerce, as we thought was proper. The Minister answering for the Minister for Industry and Commerce said that it was now the function of the Minister for Local Government. Despite several supplementary questions by various Deputies as to the change and as to why the questions had not been treated in the normal courteous manner by being transferred to the appropriate Department, the Minister, who was deputising for the Minister for Industry and Commerce, was unable to give clear information. Perhaps, the Minister for Local Government will be able to enlighten us on this matter.

I raise this matter because in my opinion it is of vital importance to many thousands of people in this country and, in particular, to many people in the city of Dublin. The persons concerned endeavoured some years ago through their own initiative and at great sacrifice to buy their own homes. If they had so desired they could have relied on Dublin Corporation to house them. They had the courage and the initiative to take upon themselves the provision of their own homes. At great sacrifice they obtained the necessary deposit through their own exertions, by working overtime and so on. Then they sought loans from building societies.

The Minister will appreciate that it is after marriage that the greatest number of people seek to buy their own homes. After about ten or 12 years, when the loans have been out for five or ten years or more, the people concerned may find themselves with a family of two or three children and their expenses increasing daily. In some cases the children may be attending school and the parents have to pay the extra cost of school books. Everybody knows the amount of wear and tear and the expense involved in the exercise of normal, healthy children. In addition, these people are faced every year with the increasing cost of rates. There is no need to remind the House of this because this matter has been referred to frequently in the last few days on the Estimate for Health.

Now these people learn that building societies intend to apply for an increase in the interest rate on mortgages. The people concerned have budgetted very carefully, in some cases down to the last penny, their annual expenditure. Many of them would feel that they would need a reduction in their expenditure, whereas they are faced with an increase in family expenses and in rates and, to cap it all, an increase in the rate of repayments.

In case it might be thought that this is a gimmick that we have raised for the purpose of getting political kudos, this being an election year, I should like to remind the House and the Minister that it is not today or yesterday that Fine Gael became conscious of the hardship involved in mortgage interest rates. I would refer the Minister to today's Order Paper, page 282, item No. 10 under "Notices of Motions." That motion, in the names of four Fine Gael Deputies reads:

"That Dáil Éireann calls on the Government to hold a public inquiry for the following purposes:—

(1) to examine the causes giving rise to the increase by building societies in mortgage interest rates for existing borrowers;

(2) to report on the need for the increases proposed in present circumstances and whether and when such increases can be reduced to the present level;

(3) to recommend the measures necessary to be taken to reduce interest rates or otherwise to ease the burden for existing borrowers if the increased rates are necessary;

(4) to examine and report on the adequacy of the present methods of financing house purchase by building societies, insurance companies and other sources, and recommend what steps should be taken to increase the flow of private funds for housing purposes; and that the inquiry be concluded on items (1) to (3) in six months and on item (4) within 12 months from its inception;

and Dáil Éireann is of opinion that, pending the inquiry, mortgage interest rates must be maintained at their present level."

This notice of motion was circulated as far back as 2nd October, 1967, so Fine Gael were then conscious of the burden that this increased rate of interest was imposing on people with existing loans. Those building societies perform a very useful and essential function. They have been of tremendous use to people, particularly over the past eight or ten years. Four or five years ago Dublin Corporation, for a short period, I agree, ceased to give any loans for house purchase; and at the moment Dublin Corporation will not give a loan for a previously occupied dwelling except in the case of an existing corporation tenant or a person on the approved waiting list. The ordinary purchaser who is not an existing corporation tenant and who is not on the approved waiting list, if he wishes to buy a house that has already been occupied, cannot get a loan from Dublin Corporation. He must, therefore, try to get the loan from a building society, an insurance company or wherever else he may find it possible to get it. We acknowledge the very important part played by those societies. They have helped many a person to buy his own home.

We will be told, I am sure, the bank rate of interest has increased and that, as from 18th March, the Local Loans Fund rate of interest has been increased to 8½ per cent. The Local Loans Fund is the pool from which the local authorities borrow money, and if there is to be a charge of 8½ per cent, surely the local authorities must add on some little amount for administration costs? The minimum would possibly be one-half per cent and many local authorities claim that this one-half per cent is not sufficient to cover the administration costs. Therefore, the Minister may tell us that the local authority loans will be put at 9 per cent and that, if that is the case, we should not have a crib because the building societies' rate of interest is increased.

If the building societies have a justifiable case for putting up their rate of interest, I suppose they are entitled to their increase the same as everyone else. What I claim is entirely wrong is that they should be allowed to put this increase on the existing loans. If you get a loan, say, from Dublin Corporation at 5, 6 or 10 per cent, that is what you pay for the duration of the loan. With the building societies, if the loan is given at 6, 7 or 8 per cent and there is an increase to 9 per cent, all existing loans are put up to 9 per cent. This is unfair and an unjust imposition on people with existing loans.

I do not raise this matter just for the sake of raising it, I have received several letters on this matter and many of my colleagues in the Fine Gael Party have received such letters. I also happen to know that some members of the Labour Party—and possibly some members of the Fianna Fáil Party, I do not know—have received letters of complaint on this subject. I should like to read just one letter which is typical of those I have received. It reads:

Dear Deputy,

As you are aware the building societies intend to increase the interest rate on housing loans. You will agree that this is entirely unfair particularly in the case of existing loans. Many people like myself made a great sacrifice some years ago to buy their own houses. The rate of interest then applying made it a great sacrifice on us to meet our repayments. You will therefore appreciate our position now that we are to be obliged to make higher repayments in addition to our ever-increasing rates burden.

I earnestly ask you and your Party to do everything in your power on our behalf in this matter.

We as public representatives must appreciate the great sacrifice many of those people made to try to get their own homes. In very many cases it represents many years of saving on the part of both husband and wife, thereby releasing the local authority from the responsibility of housing them, because very many of them come within the scope of being housed by the local authority. They had the dignity and the courage to make this necessary sacrifice to get their own homes at their own expense and not to be dependent on anyone else. By doing this they made the way clear for many unfortunate people who are not able to do this, and they reduced the numbers on the housing waiting list. After all this sacrifice the gratitude they get is to have increased rates and increased repayments imposed on them when they need every penny and when it is putting them to the pin of their collar to meet their existing commitments.

I want to tell the Minister that there is a great danger that many of those people will find themselves completely unable to meet their repayments, and in the event of their being unable to meet their repayments, what is the alternative facing them? They are faced with the possibility of seeing their years of labour and sacrifice coming to nothing. Their houses, of which they were once very proud and in which they took such pleasure, will be taken over and they will have to forfeit them. They will be faced again with the prospect of waiting very, very many years before they can have even a hope of getting a home together again or they will wait in the hope that the local authority—in this case the Dublin Corporation—or someone else will come to their aid and help to rehouse them.

The Minister is now entitled to ten minutes in which to reply.

The first thing I want to make clear is that neither I nor any other Minister has any statutory function in this matter but the Government have, in fact, in the past, through the Minister for Industry and Commerce, taken an interest in this matter. It is now intended to transfer the whole question of building societies to the Minister for Local Government as the Minister more directly interested in the question of the provision of houses.

May I ask a question?

May I ask just one question?

I am aware of the fact that Deputy Dr. O'Connell was sent in here to prevent me replying——

I want to ask when this decision was made.

——but, unlike Deputy Dr. O'Connell, who has not got this question down——

I had it down. This is my question.

——and Deputy Harte——


I am asking the Ceann Comhairle to allow me to reply and not to allow Deputy Dr. O'Connell to prevent me replying to Deputy Belton.


The Minister is refusing to answer. No one is stopping him.

I am asking a simple question.

If Deputy Dr. O'Connell cannot control himself I will have to ask him to leave the House.

A Cheann Comhairle, very respectfully, I have asked the Minister would he——

I ask you to allow me the ten minutes to which I am entitled to reply, without this disorderly interruption by Deputy Dr. O'Connell, who was sent in here specifically, who ran in to disrupt the debate and I want——

I was not sent in. It is my question.

That is a scurrilous insinuation.

It is a scandalous remark and typical of the Minister.

If this is the attitude I shall just have to refuse to reply.

I want to ask one single question.

The Deputy is not entitled to ask a question.

I did not get satisfaction today as to why the function was transferred and when.

If Deputy Dr. O'Connell will not restrain himself I will have to ask him to leave the House.

It is a reasonable question.

In view of the fact that Deputy L'Estrange has also come in to interrupt and, since I will not be allowed to reply, then I will not reply.

The Dáil adjourned at 5.25 p.m. until 3 p.m. on Tuesday, 25th March, 1969.