Bernard Allen
Question:94 Mr. Allen asked the Minister for the Environment and Local Government the steps he proposes to take to reduce the high fixed interest rates being paid by persons repaying their mortgages to local authorities. [8655/03]
Written Answers - Housing Loans.
Certain fixed interest rate loans issued by local authorities prior to 1988 carry rates in excess of current levels. These fixed interest rates reflect the cost of the long-term funds involved.
Since 1980, borrowers with local authority fixed rate mortgages are free to redeem such loans without any interest rate penalty and refinance them in the private sector. This may be regarded as a significant concession, having regard to the redemption penalties of up to six months interest or more, applied by commercial lending agencies in the event of early redemption of such mortgages.
The position regarding high fixed interest rates on local authority loans was reviewed in November 2001, in consultation with the Department of Finance. This review determined that a State subsidy to reduce interest rates would not be appropriate.