Vol. 426 No. 2
65 Mr. J. O'Keeffe asked the Minister for Finance whether his attention has been drawn to the increase of interest rates on commercial mortgages under £50,000 by 3 per cent in November, 1992, and by a further 3 per cent in February 1993; his views on whether these increases will put many small firms and tourist enterprises out of business; and the proposals, if any, he has to alleviate the hardship now being endured.
I am informed by the Central Bank, which is the body with primary responsibility for interest rates, that the general rise in retail interest rates in October included a rise in building society commercial mortgage rates. While one building society has increased its commercial mortgage rates since then, the remainder have not done so. However, many commercial mortgages (and other borrowings) with other financial institutions carry rates of interest related to the interbank market, and these rates fluctuate in line with interbank rates.
The Government was very much aware of the burden of high interest rates on both residential mortgage holders and on businesses and their employees, when it decided to devalue the Irish currency. Since the devaluation interbank interest rates have fallen sharply, and many businesses have benefited from this. Further reductions in interest rates are expected during the course of the year and this will help borrowers in general, including small firms and those in the tourism industry. In anticipation of these developments, I announced on 30 January that proposed exchange rate guarantee schemes for business and for mortgage institutions would not be implemented.
