asked the Minister for Finance if, in view of the recent reduction in building society mortgage rates, he will grant a corresponding reduction in the interest rates charged for local authority house loans.
Ceisteanna—Questions. Oral Answers. - Mortgage Interest Rates.
18.
I would refer the Deputy to the Minister's reply to his question on this subject on 24th February, 1976.
Unlike building societies and banks lending rates the Exchequer lending rate, on which the rate for the local authority house loans is based, is a long-term fixed interest rate and is not subject to variation during the life of the loan. The market cost of such long-term funds is at present over 14½ per cent which means that the present rate of 12½ per cent charged on local authority house loans already involves a significant subsidy which has to be met from taxation. It would not be appropirate to reduce the rate at the present time.
This is a well placed subsidy in view of the fact that the income eligibility limit for an applicant for an SDA loan is so low at £2,350. These are the people who are entitled to assistance. They are less able to pay high interest rates than people involved in building society loans. Would the Minister consider increasing the subsidy to bring the applicant in line with the building societies?
The subsidy at present is quite substantial; it is 2½ per cent. Therefore, the Exchequer contribution is quite substantial and far in excess of anything that existed some years ago.
The people being hit are that section of the community least able to pay this high interest rate. Surely the Minister can see this problem and would agree to give them some assistance.
The Minister does not accept that they are being hit. As a matter of fact he holds strongly that they are being well subsidised.
Therefore the Minister says he is fully in favour of this high interest rate and does not see that such people should be given any assistance.
The Deputy is engaging in argument.
I am not saying that they are paying a high interest rate. I am saying that the rate they are paying is highly subsidised from the Exchequer.