asked the Minister for the Environment if, in view of the recent increase of over 21 per cent in the mortgage interest rate for building society loans, he will, as a matter of urgency, consider the introduction of a subsidy or other measures to alleviate the burden of this major increase on house purchasers.
Ceisteanna—Questions . Oral Answers . - Mortgage Interest Rates .
24.
: I have no such proposals in mind.
: Might I ask the Minister if he appreciates that the very substantial recent increase in mortgage interest rates comes on top of a number of other increases home purchasers have had to experience over the last number of months and if his absolute and categoric refusal to consider any proposal is anything else but being extremely hard on such people? Would the Minister not reconsider this matter?
: I have no proposals at present. The mortgage rate at present, 11½ per cent, is identical with the mortgage rate in July 1977. I would point out to the Deputy that the mortgage rate peaked in 1976, at 13.95 per cent, and, in fairness, there was no mention of pressure for a subsidy at that time by the then Government.
: There was.
: Is the Minister falling down on his job?
: No, subsidies were done away with in 1976.
: This question is not exclusively about subsidies; I say in my question "or other measures". I have no hang-up about a subsidy. Might I ask the Minister is it not very likely that we will shortly experience, subject to Government sanction, another very substantial increase in mortgage interest rates and that that must be taken into consideration in his attitude to the whole problem?
: Following the increase in the bank deposit rates, in order to maintain the flow of money, through deposits, to the building societies it was necessary to increase the interest rates by 1½ per cent on deposits and by 2 per cent in the case of mortgages.
: In that case might I ask the Minister if the same rationale is to apply in forthcoming weeks? Is he saying now with certainty that we are shortly to experience another very major increase in mortgage rates and also—similar to his attitude of today —he proposes to do not one thing about the enormous burden it is on young people?
: With regard to the first part of the Deputy's question about facing an increase in the next four weeks, I have no knowledge of that at present. In regard to doing something, as I have said, I have no proposals at present. It is not the highest mortgage interest rate that has obtained in recent years. It is identical with the rate that obtained in July 1977.
(Interruptions.)
: Order, please, Deputy Quinn.
: If the Minister does not envisage implementing some form of subsidy at this stage, in the event of an application for an increase in the interest rate coming from the building societies, might I ask him to encourage them to increase their deposit rate but not to increase their lending rate, in view of the fact that both their deposit and lending rates have recently gone up? Would the Minister favourably consider this alternative course if the Government are incapable of introducing a form of subsidy?
: With regard to encouraging them, I am not the Minister directly involved; it is the Minister for Finance.
: I accept that the Minister is not directly involved but I believe, as Minister for the Environment, he has some slight interest, to say the least?
: Yes, I agree.
: I presume his colleague, the Minister for Finance, will consult him on it. On the basis of that interest would the present Minister consider making that proposal to his colleague, the Minister for Finance?
: We did have a discussion before this recent rise, that is true, and we would have a discussion again in the future. But the increases were unavoidable.
: The remaining questions will appear on tomorrow's Order Paper.
: Do I take it then that the attitude of the Government would be to let the market ride up to its norm? If he is not considering subsidies, is he not considering making representations——
: Discussions took place with the building societies prior to this. With regard to the Deputy's point about letting the market ride up, the market did do an about-turn for most of last year and the beginning of this year when interest rates came down. The Deputy is assuming that they are going to continue to go up.
: I would point out that Question Time is now over. This extension of time is becoming rather frequent.
: In view of the inflation rate obtaining, might I point out to the Minister that most ordinary houses are now costing over £20,000 and that the interest payable annually is over £2,000, which is the maximum which the Minister for Finance allows one to claim against income tax. Will he make representations to his colleague, the Minister for Finance, to increase the interest limit for claims against income tax in respect of mortgage repayments?
: That is a matter for the Minister for Finance.
: With the permission of the Ceann Comhairle, I should like to raise on the Adjournment the serious security implications resulting from the drastic overtime cut-backs in the Garda Síochána.
: I will communicate with the Deputy during the afternoon. The remaining questions will appear on tomorrow's Order Paper.