asked the Minister for the Environment if he is aware of the serious hardship being caused to many mortgage holders by the recent major increases in mortgage rates and if it is intended to introduce a selective subsidy for particular groups of mortgage holders who can least afford these increases.
Ceisteanna—Questions. Oral Answers. - Mortgage Rate Increases.
18.
I assume the Deputy is referring to the mortgage rate being charged by building societies.
I am very much aware of the difficulties being caused for many mortgage holders by the present high mortgage rate and I regret that influences beyond our control have brought about the situation where a high mortgage interest rate must be charged. I must in fairness point out that building societies have held their investment rate—which rate directly affects the mortgage rate—at the same level since 1 December 1978, although the rates payable by some other bodies competing with the societies for investment funds, in particular the associated banks, have increased appreciably since then.
As regards subsidising particular groups of mortgage holders, while I have every sympathy with borrowers affected by the present high interest rates, I feel that all available housing moneys should be directed towards assisting those still in need of housing. While there are still numbers of our people in need of proper housing accommodation it would be inappropriate to apply public moneys to assist those already adequately housed.
Does the Minister not agree that there is already a subsidy for people who are housed by way of income tax relief? What is being sought is the Minister's consideration of a scheme that would give preference of some kind to first time mortgage holders or to people of a certain income who have to pay the same interest rates as those with substantially higher incomes.
There may be a case for a subsidy. However, at the moment I have no plans for subsidising mortgage holders. As the Deputy is aware, this matter would not be solely my responsibility.
Would the Minister consider making representations to the Minister for Finance in time for next year's budget? I can assure the Minister that there is considerable hardship for both SDA loan mortgage holders and building society mortgage holders.
I will make representations to the Minister for Finance.
Is it intended to introduce interest rate subsidies in the coming year because of the extremely high interest rates which have apparently been caused by the prevailing high interest rates in England? The previous Government introduced an interest rate subsidy. Would the Minister explain to the House why we were given to understand upon entry into the EMS that high interest rates would not prevail?
The building societies have not increased their rates since December 1978. Despite increases in the interest rates of the associated banks and other lending agencies, the building societies have held to their December 1978 rates. This was an achievement on the part of the building societies because there was expectation, even by Members of this House, that their rates would increase by 2 per cent. Their rates did not substantially increase as a result of our entry into the EMS. With regard to the 1 per cent subsidy introduced by the previous Government, the reason why it was made available was to boost deposits. Without deposits the building societies would be unable to make money available for the purchase and building of houses. The main purpose of that subsidy was to boost deposits against other lending agencies.
(Cavan-Monaghan): Can the Minister assure us that mortgage rates will not be increased?
Will the Minister introduce a subsidy in the event of an increase in building society interest rates?
I have no evidence that interest rates are going to be increased.
Does the Minister not agree that the interest rates prevailing in England are the highest ever and may force the building societies to increase their rate? If the interest rates are increased above their present level will the Minister introduce a subsidy?
I assure the Deputy that the inflow of money on deposit to the societies has been high throughout the year and has nothing to do with our entry into the EMS.
There has been a decrease in the amount of money being invested with the societies.
I can assure the Deputy that it has not decreased. I see the returns of all the offices.
Has the Minister seen the latest returns?
Has the Minister any evidence to confirm newspaper reports that the building societies into whose coffers the money is pouring are making it available for house building loans? Has he any evidence to suggest that the building societies are putting a lot of their cash on short-term deposit because of the crisis the lack of bridging finance has produced in the house building industry?
I have no evidence to prove that. I have seen the allegations. I have had inquiries made but, as of now, I have no evidence of that.
Can the Minister indicate to the House if the building societies have explicitly and clearly denied these allegations?
I am awaiting a report on this. I saw the allegations. This would involve my Department and also the Department of Finance. I have no evidence one way or the other at present.
The allegations are two or three weeks old.
Less.
Am I right in assuming that the Minister is still awaiting an explicit denial from building societies?
I am awaiting confirmation one way or the other from our own inquiries.
The Minister has not said yes or no.
I have no evidence.
If the building societies indicate that they want to increase the rate, will the Minister call them in and seek full justification for that increase? If an increase is granted, will the Minister consider a subsidy?
That is a hypothetical question.
We always have consultations with the societies. There were two threats of this before and it did not happen. There is no evidence now that it will happen.
The Minister does not expect an increase in the interest rate?
There was no evidence that Fianna Fáil would lose Cork.