Vol. 320 No. 5
asked the Minister for the Environment if he intends to introduce a subsidy similar to that granted to building societies recently in respect of the increase in interest rates on mortgages under the Associated Banks home loan scheme in view of the fact that the interest rate on such mortgages has been increased twice in the past year without any corresponding increase in building society rates and stands at two and one half per cent more than the latter.
18.
(Cavan-Monaghan) asked the Minister for the Environment if he will subsidise interest on housing loans by banks and insurance companies in line with building societies subsidies.
I propose, with the permission of the Ceann Comhairle, to take Questions Nos. 17 and 18 together.
I do not propose to introduce a subsidy as suggested in the questions.
Can the Minister advance any support for his position in view of the discrepancy now between the building society rate and the bank rate?
As regards the banks the current rate, compared with 14.15 per cent for building societies, is 16½ per cent. It already went up last June when the bank rate went up and this time it went up by .75 per cent. The number of loans now being given by banks—longterm loans—has decreased in the last 12 months and the big percentage of those who get loans, over 40 per cent, are earning in excess of £9,000. The average price of a house for a bank loan is around £34,000 as against the building societies average price of £23,000. The case is not strong and no pressure or strong representations in any form had been made to me in regard to the banks.
(Cavan-Monaghan): Does the Minister not think it unfair that people who avail of bank or insurance company loans should continue to pay a higher rate of interest and at the same time as taxpayers subsidise the loans of other people while getting no benefit themselves and continuing to pay higher interest?
I have explained that the need does not appear to be great for subsidising bank loans or insurance company loans, which are very few. I have explained why I think so.
Even though these loans may be few if, in justice, they should be subsidised as well as building society loans, is not that the right thing to do?
The rise on this occasion was .75 per cent in the bank loans. There was a rise in June and there was no outcry whatever about it. The rise for building society mortgage rates would have been far more than three-quarters of 1 per cent.
Has the Minister any estimate of what the cost would be of equalising house loan interest rates of banks and insurance companies?
No, not the total estimate. It is difficult to get an estimate of the loans. The total figure of bank loans for housing would probably include bridging loans. I shall get that information for the Deputy.
Is the basis of the refusal to subsidise in this area related to the large size of loans involved? Could the Minister segregate the small loans from the larger loans and consider subsidising the smaller ones, if that is the basis of the refusal? Why should the Minister not facilitate the minority of smaller borrowers?
Subsidise at the smaller loan level?
Yes.
It is a very small percentage.
That may be, and therefore it will not cost much. The Minister explains why even with the best interests of social justice in mind he could not facilitate borrowers in that area and now since we discover that there are only a small number of small borrowers in this area he cannot help those either.
No. The increase in their case is .75 per cent whereas the building society increase would have been 2½ per cent. There was no outcry to do it.
Is it only on an outcry you act?
(Cavan-Monaghan): Could the Minister say what the bank interest rate is at the moment?
16.5 per cent.
Would the Minister not agree that people who have loans from building societies get a subsidy on those loans, that people who have loans for houses from banks if they are paying back sufficient interest can offset that against their tax, but if they are non-taxpayers, having borrowed money from a bank—these are the very poorest people trying to build houses—these are the people who get no help?
It is a possibility.
It is a fact.
Most non-taxpaying people would go to building societies or get SDA loans.
We cannot have a debate on this now.
(Cavan-Monaghan): Is the Minister not aware that many who avail of SDA loans have to go to the banks because the SDA loans are inadequate and they have to get second loans?
There may be a topping up operation. In regard to housing and the entire interest——
(Cavan-Monaghan): Would the Minister do something for those people because they are the poorest?
We had a working party for a week before the decision was made in regard to interest matters going over the whole spectrum of interest. That body will continue to sit and discuss the best means of tackling these problems before they arise again.
(Cavan-Monaghan): The people I am talking about now have already got loans and they are the least well off.
Question No. 19.
