Tony Gregory
Question:82 Mr. Gregory asked the Minister for the Environment if, in view of the significant reduction in mortgage interest rates, he will review local authority house loans which continue to be repaid at 12 per cent.
Written Answers. - Local Authority House Loans.
The interest rate on local authority fixed rate house purchase loans is related to the cost of long term funds prevailing at the time the loans were advanced and is fixed for the life of the loan. A fixed interest rate of up to 12½ per cent applied to loans issued before 1 December, 1987. It is not possible to reduce the interest rate on these loans as the cost involved would be substantial and would have to be borne by the Exchequer and local authorities. However, borrowers of these loans may redeem them without penalty and refinance in the private sector, if they consider it advantageous to do so. This is a significant concession.
The interest rate on local authority variable interest rate house purchase and improvement loans are being reduced on an ongoing basis to a level which reflects current building society mortgage rates.