This motion started eight minutes late. Is it the intention of the House to finish the motion tonight?
Private Members' Business: - Mortgage Interest Rates: Motion (Resumed).
The following motion was moved by Deputy T.J. Fitzpatrick (Cavan-Monaghan) on Tuesday, 27 February 1979:
That Dáil Éireann deplores the brutal increase in house mortgage interest rates, particularly having regard to the steep increase in house purchase prices, and calls on the Government to take immediate action to alleviate its effects on house purchasers.
Debate resumed on the following amendment:
To delete all the words after "Dáil Éireann" and substitute the following:—
"takes note of the fact that building societies were obliged to increase their mortgage interest rate from 11.5 per cent to 14.15 per cent with effect from 1 December, 1978 in consequence of the increased interest rates on deposits adopted by other commercial lending institutions, particularly associated banks, and shares the general hope that money market conditions will soon enable this high rate to be reduced."
—(Minister for the Environment.)
(Cavan-Monaghan): Will that mean that there will still be 15 minutes for the closing speech?
The Chair will try to ensure that. It is agreed that we will finish tonight.
(Cavan-Monaghan): During the course of his contribution yesterday evening the Minister for the Environment emphasised that the cost of houses had risen substantially between 1973 and 1976. Of course that is a fact but everything else rose substantially during that period due to an international recession brought on by the oil crisis and there is no necessity for me to labour that. Interest rates also increased during the same period but they never reached 14 per cent, not to mention the record figure of 14.15 per cent that they have reached at present. The Minister also stated that the Government backbenchers at that time did not demand Government action. The fact is that the Government backbenchers of the time did not have to call for Government action because the National Coalition Government took action and subsidised interest rates when they reached 13.95 per cent. They subsidised them to the tune of 1 per cent and kept them down for as long as it was necessary to keep them down. So much for the period 1973 to 1976. There seems to be some doubt on the Government's side as to whether we subsidised the interest rates when they reached 13.95 per cent. There is no doubt about it; we subsidised interest rates for an extensive period during our term of office and during the recession to the tune of 1 per cent.
I want to look at what happened since the Minister for the Environment took over the Department of Local Government, because that is what we are concerned with here. The Minister took over that Department and came into office with a policy of making it easier to buy a house. He told us last night that immediately he came into office he took steps to curtail the escalation in house prices. If he did he was not very successful, because the net result of the Minister's operations and of the Minister's policy was to increase the cost of the cheaper type of house in this city in the private sector by £3,500 in just over 12 months. That is what happened in round figures and leaving out percentages and everything else and talking in figures that people easily understand at this stage. The price of houses increased by £3,500 in little over 12 months. The Minister's free grant, as he called it, of £1,000 was gobbled up three-and-a-half times and the new house purchaser was that much worse off. The £1,000 and the further £2,500 which the house buyer had to find to pay for his house found its way into the pockets of the building contractors and the land barons who had land banks around the city. They are the people who reaped the benefit of the Minister's free grant of £1,000 and the other £2,500 which the unfortunate house purchaser had to put to it.
In his contribution the Minister also stated that there was a slowing down in the rate of increase of house prices in the first nine months of last year. He anticipated that there would be a further slight slowing down towards the end of the year. That is probably so. Nevertheless, the price of a semidetached house in December 1978 was still between £3,500 and £4,000 dearer than it was when the Minister came into office with his policy and his promise to make it easier to buy a house and cheaper to keep it.
The Minister dealt with the position for the first nine months of last year and up to the end of the year by implication. The Minister of course was speaking about housing prices. But housing prices are governed by house building costs. I am very concerned and alarmed to note that since October 1978 the cost of house building which had slowed down up to that has again resumed its upward trend. In the month of January, according to figures supplied by the Minister to me today, there was a steep increase over the average in the previous quarter. In fact, in the last quarter of 1978 the house building cost index showed that the average monthly increase was 1 per cent. In the month of January 1979 it had risen to 2.07 per cent. My information is that it is still increasing. It is worthy to note that the trend in the house building cost index since September 1978 has shown a steady increase and the figures month by month in the house building cost index since September is as follows: September, 1978, 163.1; October 1978, 163.8; November 1978, a steep increase to 166.6; December 1978, 167.4; January 1979, 168.7 and February 1978, 172.2. That does not look well for the future and it certainly does not look well for young people who want to buy a house in the coming months.
The average monthly increase in the house cost building index for the past two years was .91 per cent, but from October 1978 to January 1979 it has risen to 1.39 per cent. If the January increase were to continue for the year the index would show an increase of 24 per cent in the coming 12 months. That figure is very far removed from the 5 per cent talked about by the Minister for Finance, who, incidentally, I have not seen here today.
The Minister has stated that he is taking steps to keep down housing costs. I should like the Minister of State, who apparently is to speak next, to comment on the trend in the housing cost index since September 1978 and to deal particularly with the increase from 1 per cent on average for the last quarter of 1978 to an increase of 2.7 per cent for the month of January. Is the Minister as alarmed about those figures as I am and what are his proposals for dealing with the situation?
The Minister boasted considerably about the increase in the SDA loans operated by local authorities. The maximum loan available by way of this scheme is £9,000 and the qualifying income is £3,500 per annum. I fail to understand how a person on an income of that level can be expected to service a loan of £9,000. However, even if he could service it and thereby acquire a house, the Minister could say he was providing that person with some service. But, the fact is that a person borrowing to the maximum under the SDA loans scheme would have to find about £7,000 more before being able to purchase an average house in this city. In other words, he would need to have saved in full his salary for two years, and we all know that that is not practicable.
In the short time remaining to me I propose telling the Minister what I think he should do. There is no point in his talking about 1973 or 1978. He is the man who came into power on a policy and on a promise to make it easier for people to buy houses and cheaper to keep them. The only way the Minister can make it possible for people to buy houses is to increase substantially and dramatically the SDA loan of £9,000 in order to bring it to a realistic figure. There is no point in talking about what was the level of the loan in any other year. The Minister is being told how ineffective the present level is. As well as increasing the maximum loan to a realistic figure it will be necessary to increase substantially the qualifying income ceiling of £3,500 so that people will be able to avail of the increased loans.
Next, the Minister should subsidise interest rates, as we subsidised them, until such time as they are reduced to a realistic figure. It is pointless for the Minister merely to table an amendment to our motion expressing the hope, in common with the general public, that the interest rates will decrease. Until such time as they are reduced to a realistic figure it is the duty of the Government to subsidise them and thereby to act in accordance with their promise to make it easier for people to buy houses and cheaper to keep them.
I support the amendment which the Minister moved to this motion yesterday. The case in favour of the amendment was so effectively and comprehensively made by the Minister that there is little need for me to repeat the facts and figures which he placed before the House. It is necessary, however, for me to take issue with some of the statements made in the course of the debate by Deputies Keating and Fitzpatrick and to place the facts on the record.
Deputy Keating followed the pattern which he set for himself in the several debates here on housing matters last year. He laid on a barrage of inaccuracies, irrelevancies and various opinions—such as his objection to wives working after marriage—and unfounded and unprincipled allegations, abusing the privilege of the House, which, quite properly, the Leas-Cheann Comhairle did not allow him to develop.
The statistics and the facts are readily available in my Department's Quarterly Bulletins, in replies to Dáil questions and any other statements made by the Minister and myself in this House.
Not for the first time, Deputy Keating alleged that house prices had been rising more rapidly than ever before. This is pure bunkum. The rate of increase of house prices was brought well under control during the past year by Government action and prices had levelled off by the last quarter of that year. During the full 12 months my Department's Quarterly Bulletins recorded increases in new house prices of 24.8 per cent. The prices of previously occupied houses increased by 17.8 per cent. This was small stuff compared with the increase of 36 per cent during the first year of the late unlamented National Coalition Government. That is one record which the present Government will not emulate.
If the Deputy had thought before rushing in to criticise the proportion of expenditure under the public capital programme devoted to housing he would hardly have been brash enough to raise the subject. The fact of the matter is that the percentage of the PCP related to housing dropped from 19.2 per cent in 1976 to 15.1 per cent in the Coalition's last budget in 1977. The corresponding percentage this year at 17 per cent is higher than the 1977 figure.
The Deputy was selective in his use of statistics in a way which was calculated to mislead. He did not say, for example, that the number of new house completions increased from 24,000 three years ago to 24,548 in 1977 and to 25,444 in 1978. Naturally he omitted also to refer to the substantial boost given by the Government to public capital expenditure in other important sectors of the building industry such as roads, sanitary services and telecommunications.
(Cavan-Monaghan): The Minister should not say to much about telecommunications.
Deputy Keating had the gall to suggest that the building industry badly needs a boost. Where has Deputy Keating been since 1973? Output in the building industry dropped by more than 1 per cent in 1974 and by a further 7.4 per cent in 1975. Output increased by 4.4 per cent in 1976 and by a further 2.5 per cent in 1977, largely as a result of the job-creation measures announced within three weeks of the change of Government in July 1977.
Last year the Government gave a major boost to the building industry by increasing the public capital expenditure affecting the industry by 27 per cent. As a result, output in the industry increased by about 11 per cent and reached an all-time record. Provision has been made this year for a further increase of 27 per cent in the public capital expenditure affecting the industry. This should result in a further significant increase in output.
Since July 1977 direct employment in the industry has increased by about 7 per cent. Nobody, apart from the Deputy, is suggesting that there is a need for a further boost to the industry. Any such boost could only aggrevate the present shortage of skilled workers in certain sectors of the industry and push up unduly housing and other costs.
House prices have been rising not only because the costs of materials and wages and land have increased, but also as a direct consequence of growing national prosperity which encourages people to aim at higher standards of construction, accommodation and environmental amenities than they would have accepted even a few short years ago. While the Government have effectively tackled the problem of unreasonable levels of house price increases, they have ensured that these actions will not discourage this trend towards overall improvements in housing standards. This trend is common both to the private and local authority programmes.
The results of this desirable and commendable development have been analysed by An Foras Forbartha in the case of private housing estates being built in the eastern region, Dublin, Meath, Kildare and Wicklow, comparing the position in 1976 with that in December 1978. The survey was based on an investigation of 11,580 houses being constructed in the region in 1976 and 10,197 in 1978 and showed that over the two-year period the following important changes had taken place:
(a) substantial increase in floor areas of houses;
(b) increase in detached two-storey houses;
(c) increase in four-bedroom houses and decrease in three-bedroom houses;
(d) increase in garages and decrease in carports;
(e) almost no houses without central heating of some type compared with 40 per cent in 1976.
(f) increase in timber ground floors with reduction in concrete floors;
(g) increased usage of brick facing;
(h) increase in tarmac roads and decrease in concrete roads.
Indicative of the trend towards higher standards was the fact that in the eastern region the percentage of all houses constituted by detached two-storey dwellings rose from 6 per cent in 1976 to 34 per cent in 1978. The number of four-bedroomed houses in the area rose from 27 per cent to 54 per cent of the total, the proportion with individual garages rose from 20 per cent to 49 per cent and the number with central heating increased from 60 per cent in 1976 to 99 per cent in 1978.
Deputy Keating made the case that there is a severe shortage of mortgage finance. The facts are that in 1978 almost 27,000 loans for the purchase of houses were approved by the major lending agencies. This was a greater number than was ever approved before in any one year and was almost 2,000 higher than in 1976, the last full year for which the Coalition was in power. Furthermore, a total of £223 million was paid out in house purchase loans in 1978. This amount was £50 million more than in the previous year and financed the purchase of almost 23,000 houses. At the beginning of 1979 the lending agencies had approved applications for over 22,000 houses and the expectation is that over £300 million will be paid out in loans this year.
Deputy Keating made the case that a fund should be set up to provide finance for 99 per cent and 100 per cent mortgages. For the record, I should like to draw attention to the fact that, subject to the loan limits, local authorities can make 98 per cent loans to tenants who want to purchase a house. Furthermore, under the low rise mortgage scheme applicants who are allocated a house by a local authority can be given a subsidised 98 per cent loan to purchase that house without regard to any loan limit.
Deputy Fitzpatrick referred to the £1,000 new house grant which, he admitted, some people have got, but many who expected to get it did not. Since the grant was introduced in July 1977 over 15,000 of the grants have been allocated and more than 8,000 have actually been paid. Thirteen million pounds will be spent on new house grants in 1979. This compares with only £2.38 million in 1977 when the income restrictions on eligibility for the grants, imposed by the Coalition Government, were threatening to eliminate that scheme altogether.
Deputy Keating said that the £1,000 grant discriminates against the person who wants to purchase a new house in Dublin city on the grounds that no new houses are being built in the city. This statement, like many more of his assertions, was not in accordance with the facts. Over the past three years more than 8,000 new houses were built in the city, including 3,700 private houses. Six hundred new house grants of £1,000 have been allocated by my Department for houses in the city area and 518 of these have been paid.
Both Deputies Keating and Fitzpatrick spoke about the drop in the output of new houses by local authorities. This has rather a remote connection with the subject matter of the motion but, since the Deputies saw fit to raise it, it is necessary for me to set the record right. Before the change of Government in 1977 there was a deliberate policy to downgrade the housing programme. New house and reconstruction grants were effectively being phased out. The SDA loan and income limits had remained unchanged for years. At a time of rising costs the Public Capital Programme provision for housing had been cut back—from £115 million in 1975 to £105 million in 1976 and to a mere £99 million in 1977. In particular, the local authorities' housing programmes were being wound down, with completions falling from 8,794 in 1975, to 7,263 in 1976 and 6,333 in 1977. That downward trend could not be reversed overnight, but I am glad to say that the measures taken by the Government are now beginning to show results. In particular, the huge increase in the PCP provision for housing—from £99 million in 1977 to £140 million in 1978 and to £165 million in the present year—is bound to have a telling effect.
The level of output on new local authority housing in 1979 will be about the same order as in 1978. The most reliable measures of activity are the numbers of dwellings in progress taken in conjunction with the average number of men employed on the programme. The average number of dwellings in progress at the end of each month in 1978 was 8,611, compared to 8,702 in 1977 and only 8,195 in 1976. The average monthly employment in 1978 was about 6,400 which exceeded the 1977 average level of 6,295 and was well above the 1976 average figure of 5,634. Work at the planning stage is also well up on the average 1977 figure—18,241 at 31 December 1978 compared to a 1977 monthly average of 16,861.
The 1,386 new completions in Dublin city in 1978 was disappointing, but there were exceptional reasons for it. Even with this low figure, the corporation have been able to offer alternative accommodation to over 2,800 families in new dwellings or arising from vacancies in their existing housing stock. In the last two years a total of 5,872 dwellings became available for letting by Dublin Corporation compared with 5,273 in the 1975-76 two-year period. It is likely that the total number of dwellings becoming available for letting by the corporation in 1979 will be around the 3,000 mark. At this level a two-year period would clear the vast majority of the current approved waiting list.
Deputy Keating and Deputy Fitzpatrick pointed to the fact that the Coalition Government had subsidised building societies' interest rates and they called on the Government to introduce a similar form of assistance now. As the Minister explained last night, the subsidy by the Coalition Government was introduced at a time when the inflow of funds into societies was particularly low and decreasing so that the societies were unable to finance the private housing programme of the day. In order to enable the societies to pay a more attractive rate of interest to investors and so generate inflow without increasing the mortgage rate, the Government introduced a temporary subsidy. The objective of the subsidy was, I must emphasise, to improve the intake of money by the societies, not to assist mortgagees. This is borne out by the fact that when the 1 per cent subsidy was introduced in May, 1973 the mortgage rate was 10 per cent. When the subsidy was reduced to ¾ per cent in August 1975 the mortgage rate had risen to 11¼ per cent and when the subsidy was abolished the mortgage rate was 12½ per cent.
When the interest rate on building society loans was at 13.95 per cent from 1 November, 1976 until 18 April, 1977, the Coalition Government made no move to reintroduce the subsidy. In view of the anguish which Deputy Keating and Deputy Fitzpatrick expressed about the "brutal" increase in building society interest rates, it is only right to put the position into proper perspective and to remind Deputies opposite that the present admittedly high interest rate is only 0.2 per cent, or a fraction of two-thousanths, higher than the level which applied just before the Coalition Government were removed from office.
I mention that, as an exercise, calculations were made of the cost of public funding of a subsidy which would enable building societies to offer a 9 per cent interest rate to investors while at the same time keeping the mortgage rate at a pre-December 1978 level. Such a subsidy would cost almost £15 million a year. There is no question that a sum of this size could be provided for this purpose from State funds. In any event, it is my personal conviction that all the money that is available from Government sources for housing should, as far as possible, be applied to help persons genuinely in need of adequate housing. While there are still numbers of our people in need of proper accommodation there can be no question of applying millions of pounds of public funds to assist building society mortgagees, most of whom are already adequately housed.
This is the second time in the course of a week that I have spoken on a motion on housing and housing finance. We must bear in mind the fact that this Government have done far more than the previous administration did to encourage house building in both the private and public sectors. We have rescued the national housing programme from the decline which had set in before the Coalition left office, when housing output was dropping by nearly 3,000 units between one year and another.
The £1,000 new house grant has been criticised by Fine Gael. Why do they not say openly that they are against it and would abolish it if they had their way? Although they speak against it they will not say openly what they would do. It appears they would definitely abolish it. Contrast the position in relation to that grant and the position which existed during the period 1 January 1976 to mid-June, 1977, in particular when the Coalition were in office, and it was virtually impossible for the ordinary working man to get a new house grant. Without any prior announcement and with effect from 1 January 1976 an income limit was imposed on all applicants for new house grants. This made it virtually impossible for the ordinary person to get a grant. Compare that with the present position in relation to the £1,000 new house grant. In 1976, only 6,388 new house grants were allocated whereas approximately 14,000 of the £1,000 grants, without any means test, were sanctioned in 1978.
The removal of rates on houses both private and public must have an effect on the general housing position and on the prospects for persons who intend to provide their own houses. People seeking mortgages had to be concerned with the ever-increasing rates on private houses, particularly when they had to pay full rates after ten years when family expenses were starting to increase. The Coalition parties, especially Fine Gael, seem to have completely forgotten about the removal of rates from houses and its effect on persons seeking houses.
Again contrast the situation in regard to SDA loans with the present position. The SDA loans limit has been increased twice and is now double the June, 1977 limit. The income limit was also increased by practically 50 per cent. Between September 1973 and June 1977 the Coalition failed to make any changes in these limits. They sat on the fence and ignored increases in costs, prices and earnings and allowed expenditure under this scheme to continue to drop. This is reflected in the fact that payments under the scheme were less than £17 million in 1977. Payments increased to £26 million last year and provision has been made for an expenditure of £43.5 million this year.
Subsidies on private housing sites provided by local authorities increased by 66 per cent. During the period 1973-June 1977, the price of houses was increasing rapidly and there was a downturn in the number being built——
That is not true. There was no downturn in the number of houses being built—25,000 a year.
It was virtually impossible for the ordinary working man to get a new house grant.
The Fianna Fáil Government have not reached that figure yet.
I remember speaking here at that time. We all know what happened. House improvement grants were static for a great number of years. There was no improvement whatsoever in these grants under the Coalition Government. We increased these grants from £200 to £600 without any means test. In addition, we increased from £75 to £350 the grant payable for the provision of water supplies, sewerage facilities and septic tanks for private dwellings. In other words, the house improvement grant plus the sanitary grant, is almost equivalent to the £1,000 new house grant. Proof of the popularity of that scheme is the fact that about 38,500 applications were received last year. The fact that applications for home improvement grants are coming in at that rate means that there will be no great deterioration of existing housing stock. The existing stock will be maintained, if at all possible, as a result of this incentive of up to £950 in rural areas and £600 in towns and other areas.
The Minister is getting into another area now. We have very often departed, both last night and tonight, from the motion before the House.
I should like to remind the party opposite and to put on the record of the House that at least 5,000 additional houses per annum could be regarded as being added to the housing stock as a result of these grants. The figure of 5,000 is a very reasonable one when related to the 38,500 applications received each year for home improvement grants.
I cannot understand why Fine Gael are continually putting down motions like the one before the House, having regard to what this Government have done for housing since July 1977 and bearing in mind the way in which they ran down the housing programme during their latter years in office. The land bank was also run down. We must also remember that it takes a few years to finalise a scheme after the purchase of the land.
If I were a prospective house purchaser listening to the Minister of State I would be very disappointed. All he has done is give a long litany of what we in Government are alleged not to have done. He told us about the amazing things he and his party have done since July 1977, yes my party felt obliged to put down a motion because of the brutal increase in house prices. It is incongruous that the Minister should say that everything in the garden is rosy while we are literally forced to put down this motion. This subject is close to the hearts of many thousands of people.
The Minister has made statements which, to me, are not altogether true. He has deliberately avoided giving appropriate figures which would put certain statements he made into their proper context. For example, he mentioned the decline in housing numbers while we were in Government. The National Coalition Government were faced on assuming office with a housing crisis which was well known to Fianna Fáil long before they left office. The then Minister, Deputy Tully, laid it on the line and said that he would provide 25,000 houses per annum. He did so.
The Minister was very careful not to give the figures of new houses built in 1969, 1970, 1971 and 1972 because, if he had done so, he would have cut the ground from under his argument. He is well aware of that.
Let me give credit where credit is due. Fianna Fáil came into office having purchased the votes of the country with promises and with public money. They succeeded in getting into office and removed car tax and rates on private dwellings. Through an extraordinary level of borrowing they brought down the Consumer Price Index, which stood at 7.9 per cent for the year ended 15 November 1978. They did that by certain budgetary means, mainly through massive borrowing. Yet, despite that reasonable reduction in the CPI, we are faced with an increase in the cost of housing during the same period of something over 34 per cent. To complicate matters and throw further doubt on why this increase should have taken place, the cost of certain imported building materials decreased during the same period. Yet the Minister of State tonight and the Minister last night treated us to a long litany of the great things they have done, without giving any explanation as to why this anomaly exists today. They did not give a scintilla of hope to anybody facing the terrible prospect of having to purchase a house. Such people are badly in need of hope.
The Minister of State mentioned land banks. A little imagination would relieve the enormous pressure which this issue is causing for many people. What is wrong with providing unserviced sites through the local authority or the NBA free of charge to a certain category of persons and letting those who can afford to pay for them do so? That type of approach would relieve a great deal of pressure on a certain sector in the community. Yet to do that would seem to be beyond the bounds of imagination.
The Minister of State mentioned that the SDA loan had been raised to £9,000 and said that the income limit had been increased by 50 per cent. He did not give the figure involved—£67 per week. Many people who wanted to get their own houses some months ago, when the £7,000 limit applied in the case of SDA loans, were anxious that the income limit should be increased from £3,500 per year. What did the Minister do? He increased the loan to £9,000 but not the income limit, which meant that not one extra person became eligible for that £9,000. I am sure the Minister is well aware of the situation as a politician dealing with problems in his Clare constituency. People come to him, as they come to me, for advice on how to apply for an SDA loan. They are told they must provide a statement of income for the past year and so on. In many cases I feel obliged to advise young couples who are embarking on the purchase of a house prior to their marriage that they may not be able to afford the cost involved. I have to tell them that they may be putting a millstone around their neck that may cause trouble in a short time simply because the repayment on a £9,000 SDA loan is £24 per week.
The Minister knows well that £9,000 will not purchase or build a house. In any area of the country I hazard a guess that it will cost at least an extra £4,000 or £5,000 to provide any kind of house. In the area where I come from, where land is at a premium because of expansion in industry, it will cost another £9,000 to provide a house. A young couple must pay £24 a week on the £9,000 loan and to get the extra money necessary it will cost them more than that to repay the bank on a short-term or a personal loan basis. That young couple are being asked to pay between £40 and £50 per week in repayments on a mortgage but to have that privilege they must have an income of less than £67 per week. How in the name of God can that couple hope to survive? It is socially intolerable position. A young couple are embarking on married life and are faced with this kind of financial pressure at a crucial time in their lives. They are at an age where they have much to offer to the community, when they should take part in community and recreational activities, but yet they find themselves in a position where they can offer nothing to the community in which they live because their time is taken up completely in trying to face this massive mountain which is their housing mortgage.
Yet, this goes on because we have an obsession about house ownership. In other countries they do not seem to have this same obsession. They are quite prepared to live in rented accommodation and the kind of money they might borrow to provide a house they are borrowing in many cases to put it into productive purposes, such as personal enterprises, small industries and so on. In West Germany, for example, a young couple could provide themselves with a house but it would mean repayments on a loan of £60,000 or £70,000. Instead, they rent a house but they borrow that kind of money for a productive enterprise. In this country owning one's own house is one of the main ambitions of every young couple. Successive Governments have encouraged and enticed people into thinking on these lines and to adopting this attitude. No thought is given to the fact that in many cases the so-called house owner will never own the house because often mortgages outlive young couples. These are the hard facts of life. On a quick calculation the kind of money one is talking about on a £9,000 loan, with repayments over a 30-year period, comes to about £24,000. I am not suggesting that the first day a young couple set out to repay a £9,000 loan they are thinking on these lines but that is the kind of money invested by them in their house.
I do not know the answer but I do know that in the Fianna Fáil manifesto it was stated that the Minister for Local Government—this was prior to the appointment of Deputy Barrett—would ensure that people would be given a chance to own their own houses. In fact, it is having the reverse effect. Because of the massively increased costs, people are being forced to request the local authority to house them. I am a member of two local authorities, one at urban level and the other at county council level, and I know the delays that occur. I am aware of the red tape in providing local authority houses and I know of the long queues now formed for housing. People are seeking such houses who four or five year ago would not have dreamt of going on a local authority housing list. They do that because at least they are wise enough to see that they just cannot meet demands that the type of loan necessary will make on them in providing their own houses.
On aspect of housing finance that has always intrigued me is the formula which building societies and insurance companies apply with regard to mortgages. One of the first things the applicant is asked to do is to provide a deposit. The logic of all this escapes me. The building society or insurance company are prepared to give the applicant £20,000, £30,000 or £40,000, yet they insist that he provides a £2,000 or £3,000 deposit. If his credit-worthiness is such that he can be trusted with £25,000 or £30,000, why has he to be crucified by the demand that he should have £2,000 or £3,000 for a deposit. He is being crucified at the most inappropriate time for him. What is wrong with 100 per cent mortgages? Is it true that the person able to fork out £3,000 can use this as his ticket to success in qualifying for a mortgage? It means nothing. It should not be beyond the capacity of these insurance companies and building societies to vet their applicants to ensure, before giving them a 100 per cent mortgage, that they are credit-worthy and are a good risk and that they will have no problem with the repayments. It is quite common on the Continent to give 100 per cent mortgages.
This idea of offering 90 per cent but not 100 per cent loans is illogical. I do not know what is behind it. It would relieve a great deal of the pressure on local authorities if 100 per cent mortgages were provided. A person might be able to repay the mortgage but would find it difficult to save a lump sum of £3,000. In any event, even if married couples are moving house the money would be needed for furnishing and so on, which they will not be able to afford if they have spent it all on a deposit insisted on for no good reason. The result is that these people are now coming on to the local authority housing lists. The local authorities have always tried to work within the limits placed on them by the availability of finance. At the moment a very restricted service is being given by the local authority and the Minister cannot deny that the allocation for housing does not measure up to the demand which is increasing because, as the motion says, of the brutal increases in the price of houses. People who should not be on that list are now making demands on the local authorities because they have no option.
The Minister of State mentioned the removal of rates, but in the case of first time house purchasers I have never heard of a prospective house purchaser worrying about how he would pay the rates. That was a bill that would arise sometime in the distant future. If a new house costing £10,000, £12,000, £15,000 or £20,000 had a valuation of £15 or £20, the rate would not be applied for ten years. The removal of rates affected me and no doubt the Minister and the Minister of State, but that was in the case of a house that was fully rated. I am talking about a person moving into a new house.
The Deputy has three minutes left.
The problems facing newly-married couples are massive in any context. The position into which they are being pressed is socially undesirable and reaction to this kind of pressure will be seen in the future. Despite the assertions of the Minister, and despite the rather vague statements in newspapers recently that interest rates might come down slightly, the only kind of message that the prospective house purchaser is waiting to hear from this House is that the Minister is prepared to relieve their burden. Let the Minister do that by giving an assurance that he will subsidise the interest rate if it goes beyond a certain level or by giving a guarantee that interest rates will not rise. That is the kind of message that thousands of people are waiting for, not a litany of what the National Coalition did or did not do in their terms of office and not a litany of what the Minister has done in the past 18 months. What the Minister has done seems to be the most ineffective in controlling the price of housing and the burden that prices are placing on the shoulders of many young married couples. The guarantees or promises or assurances sought will not be forthcoming, because, as the Minister of State said, it would cost £X million and we have not got that kind of money.
Surely the Minister of State must know that when money was required for the purchase of votes and to induce people to vote in certain ways money was found but once the votes have been collected there is no sense of gratitude required on the part of the Government to look after the people who voted for them. When the Minister says that money could not be spent on that kind of relief it is a very sad day for many thousands of people who must slog along trying to keep their heads above water——
The Deputy should now conclude.
——while house increases continue to be five times the consumer price index increase. I should like to hear the Minister explain some time why that ratio exists at this time.
Amendment put.
The Dáil divided: Tá, 71; Níl, 43.
Tá
- Ahern, Kit.
- Allen, Lorcan.
- Andrews, David.
- Aylward, Liam.
- Barrett, Sylvester.
- Brady,Gerard.
- Brady, Vincent.
- Briscoe, Ben.
- Browne, Seán.
- Callanan, John.
- Calleary, Seán.
- Colley, George.
- Conaghan, Hugh.
- Connolly, Gerard.
- Cowen, Bernard.
- Cronin, Jerry.
- Daly, Brendan.
- Davern, Noel.
- de Valera, Sile.
- Doherty, Seán.
- Fahey, Jackie.
- Farrell, Joe.
- Faulkner, Pádraig.
- Filgate, Eddie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin South-Central).
- Fitzsimons, James N.
- Flynn, Pádraig.
- Fox, Christopher J.
- French, Seán.
- Gallagher, Dennis.
- Gallagher, James.
- Geoghegan-Quinn, Máire.
- Gibbons, Jim.
- Haughey, Charles J.
- Herbert, Michael.
- Hussey, Thomas.
- Keegan, Seán.
- Kenneally, William.
- Killeen, Tim.
- Killilea, Mark.
- Lalor, Patrick J.
- Lemass, Eileen.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Loughnane, William.
- Lynch, Jack.
- McCreevy, Charlie.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Sean.
- Morley, P.J.
- Murphy, Ciarán P.
- Noonan, Michael.
- O'Connor, Timothy C.
- O'Donoghue, Martin.
- O'Hanlon, Rory.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Paddy.
- Reynolds, Albert.
- Smith, Michael.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Woods, Michael J.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Bermingham, Joseph.
- Boland, John.
- Bruton, John.
- Burke, Joan.
- Clinton, Mark.
- Cluskey, Frank.
- Conlan, John F.
- Corish, Brendan.
- Cosgrave, Liam.
- Crotty, Kieran.
- D'Arcy, Michael J.
- Deasy, Martin A.
- Desmond, Eileen.
- Donegan, Patrick S.
- Enright, Thomas W.
- FitzGerald, Garret.
- Fitzpatrick, Tom (Cavan-Monaghan).
- Flanagan, Oliver J.
- Griffin, Brendan.
- Harte, Patrick D.
- Hegarty, Paddy.
- Horgan, John.
- L'Estrange, Gerry.
- Lipper, Mick.
- McMahon, Larry.
- Mannion, John M.
- O'Brien, Fergus.
- O'Brien, William.
- O'Donnell, Tom.
- O'Keeffe, Jim.
- O'Toole, Paddy.
- Pattison, Séamus.
- Ryan, John J.
- Ryan, Richie.
- Taylor, Frank.
- Timmins, Godfrey.
- Treacy, Seán.
- Tully, James.
- White, James.
Tellers: Tá, Deputies P. Lalor and Briscoe; Níl, Deputies McMahon and Horgan.
Amendment declared carried.
Motion, as amended, put and agreed to.