Vol. 523 No. 4
148 Mr. Crawford asked the Minister for the Environment and Local Government the steps that he has taken to rectify the anomaly whereby low income families are being forced to pay a fixed interest rate on county council loans because they signed up for these loans many years ago and are not in a position to get mortgage support elsewhere; and if he will make a statement on the matter. [21079/00]
Borrowers with local authority fixed rate mortgages are free, since 1980, to redeem such loans without any interest rate penalty and refinance them in the private sector. This is a very significant concession the cost of which must be borne by the Exchequer, the housing finance agency or the local authorities.
Borrowers with building society-bank fixed rate mortgages on the other hand are obliged to pay significant redemption penalties of up to six months interest or more in the event of early redemption.
In the past five years the amount outstanding to the local loans fund and the housing finance agency in fixed interest rate loans has reduced significantly, from £509 million to £218 million, indicating that many borrowers have availed of this concession.
A survey of local authorities, carried out by my Department earlier this year, indicates that out of a total of almost 44,000 individual fixed rate housing loans over 60% of them are at an interest rate less than 12.5%. Overall the average amount outstanding on individual loans is less than £5,200.
