Dáil Éireann debate -
Wednesday, 15 Dec 1993

Vol. 437 No. 3

Written Answers. - Local Authority Mortgage Repayments.

Ivan Yates

Question:

75 Mr. Yates asked the Minister for the Environment if his attention has been drawn to the fact that many people who are paying fixed rate repayments on local authority mortgages at 12½ per cent now find that these are extremely uncompetitive in relation to the current prevailing rates of mortgages through banks and building societies; if he has any proposals to review the fixed rate aspect of these loans to see if they can be revised through a variable rate or if some concession can be given on redemption figures so that such mortgage holders can redeem their local authority loans and obtain new substitute mortgages from banks or building societies; and if he will make a statement on the matter.

Minister of State at the Department of the Evironment (Mr. Stagg)

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.