Dáil Éireann debate -
Tuesday, 13 Oct 1992

Vol. 423 No. 4

Written Answers. - Interest Rate Increases.

Michael Bell

Question:

77 Mr. Bell asked the Minister for Finance the plans, if any, he has to give financial assistance to mortgage holders who are faced with serious financial problems as a result of the substantial increase in interest rates; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern)

I am fully aware of the burden which the recent interest rate increases have imposed on many households. These increases arise from the severe disruption of foreign exchange markets internationally which has occurred in recent weeks. Outflow of funds from Irish Pounds into foreign currency led to the "bidding up" of money market interest rates with a knock-on effect on the financial institutions' lending rates. As market conditions return to normal interest rates will fall.

The Deputy will be aware that the Government already provides very significant assistance to mortgage holders through interest rate tax relief. The estimated cost of this relief in terms of tax forgone, before the recent interest rate increases are considered, will be £184 million in the 1992-93 tax year. This is a very significant cost, and I could not consider measures which would add to this cost.

Most of the major financial institutions either have so far been able to postpone increasing mortgage rates or are prepared to make special arrangements to postpone the immediate impact of the increase, for those who wish to avail of them. It is, of course, up to individual mortgage-holders to decide whether it is appropriate for them to opt for a postponement of the impact of the increase. The interest rate on local authority house purchase loans has not been increased and Housing Finance Agency loans are not affected.