asked the Minister for Local Government if, as requested by ACRA, he will agree to the subsidisation of mortgage interest rates so that fixed interest rates can be guaranteed at the time of signing of the house purchase contract.
Ceisteanna—Questions. Oral Answers. - Mortgage Interest Rates.
24.
I presume that the Deputy is referring to mortgage interest on loans advanced by building societies.
Building societies must pay a competitive rate of interest on investment in order to attract and retain funds for housing purposes. The interest rate which the societies offer on shares and deposits is reflected in the mortgage interest rate they charge on house purchase loans and for this reason, they must include, and borrowers accept, a variable interest rate clause in the conditions attached to the making of a loan.
As a result of the introduction by the Government in May last of a temporary subvention for building societies shares' and deposits, it has been possible for the societies, in present circumstances, to offer an 8 per cent rate of interest on investment while limiting house purchase loan interest rates to a maximum of 11¼ per cent. An investment rate of 8 per cent would normally require a mortgage rate of 12½ per cent. Increases in mortgage rates have, therefore, been effectively limited as a result of the Government's action and it is not proposed to provide for subsidisation on the lines suggested.
If the Minister says the interest rates have been restricted, what is the reason for the present conflict involving thousands of families? This has been dragging on for the last few months without any intervention by the Minister. I call on him now to intervene in the conflict between the members of ACRA and the building societies, to bring both parties together and start negotiations so that some solution can be found to this conflict.
I am aware that a dispute occurred between certain members of ACRA and certain building societies but I am not aware it is as widespread as Deputy Burke suggests. I am also aware that, in their White Paper on housing, the previous Government said that the rates of building societies should follow the market trends——
I am concerned about what is happening today.
If the Deputy asks a question I expect him to listen to the answer. In present circumstances if this were allowed to happen borrowers would have to pay 12½ per cent. The only thing I can see is that certain people are trying to encourage those who have borrowed from building societies to kick up a row under the impression that they may be able to get a higher subsidy from the Government, although ACRA have told me personally they do not want a subsidy.
Arising from the Minister's non-reply to my question, it would be better if the Minister governed instead of talking about what happened in the past——
I would ask the Deputy to put a brief supplementary question.
It is time there was some serious thinking by the Government with a view to taking the financing of houses and house purchase from the present world money market. A revolutionary scheme should be considered by the Government, at least to do something to help the unfortunate house buyers.
That is a completely separate matter.
It is very interesting to hear Deputy Burke talking about people who have to pay high prices for houses.
The Minister did not answer my question. All he did was to make snide remarks. Is he capable of doing anything other than making snide remarks?
The Minister is capable of dealing with his own business. The Deputy is damn good at doing that for himself, not for the House.
I did not get an answer to my question.
Would the Minister agree that interest rates have not yet reached their highest point?
Not having the Deputy's crystal ball I cannot say.
It is obvious.
I am calling Question No. 25.