Mortgage Interest Relief Scheme: Motion [Private Members]

Deputy Pearse Doherty

I move:

That Dáil Éireann:

notes that:

— the European Central Bank has increased its main lending rate for the fifth time, to a rate of 3 per cent, having been 0 per cent last June;

— approximately 200,000 tracker mortgage borrowers are facing immediate and significant increases in their mortgage repayments;

— approximately 65,000 mortgage borrowers with mortgage contracts held by vulture funds are facing immediate and significant increases in their mortgage repayments, with many now charged interest rates of more than 7 per cent;

— it is anticipated that retail banks will increase their fixed and variable rates in the period ahead, with other borrowers now facing the prospect of higher mortgage repayments; and

— these interest rate hikes will exact further financial pressure on borrowers that are already facing higher costs and lower disposable incomes as a result of the cost-of-living crisis;

further notes that:

— the Taoiseach previously stated that homeowners whose mortgages were sold off to vulture funds would be no worse off than those whose loans were owned by retail banks;

— the Minister for Public Expenditure, National Development Plan Delivery and Reform previously stated that he would be happy for his mortgage to be sold to a vulture fund; and

— mortgage borrowers whose loans were sold to vulture funds are now facing interest rates that are significantly higher than those charged by retail banks, resulting in significant financial pressure for them, proving the assurances of the Taoiseach and the Minister for Public Expenditure, National Development Plan Delivery and Reform to be nothing more than empty platitudes;

acknowledges previous statements made by the Minister for Finance, Michael McGrath TD, in 2015, when he said in reference to Mortgage Interest Relief "this payment is a very important support for families - the process of withdrawing it from existing homeowners at the same time as they are subject to a residential property tax highlights a Government that is pursuing policies that are making home ownership increasingly unaffordable for families";

agrees with Minister McGrath's then assessment and considers it an apt description of the policies of the current Fine Gael, Fianna Fail and Green Party Government; and

regrets Minister McGrath's U-turn on this issue, as confirmed by his statement last week that he has no plans to introduce a mortgage interest relief scheme, despite his previous calls in opposition, which suggests that neither Fianna Fáil or Fine Gael can be trusted to support homeownership or homeowners; and

calls on the Government to:

— offer hard pressed families real support, not empty words;

— introduce timely, targeted and temporary mortgage interest relief, to support homeowners facing significant increases in their mortgage costs;

— provide mortgage interest relief equivalent to 30 per cent of increased interest costs relative to June 2022 up to, but not exceeding, €1,500 per annum;

— work with the Central Bank of Ireland to enhance the supervision of vulture funds in the interests of struggling borrowers; and

— examine the taxation of the banking sector, including the treatment of Corporation Tax loss relief.

Since the cost-of-living crisis took hold, households have chased every possible avenue to cut costs, but there comes a time when there is nothing left to cut. So many households find themselves now in this position. For mortgage borrowers, the cost-of-living crisis has opened a new front. At the end of 2021 inflation soared, driven by supply chain disruptions as pandemic restrictions were lifted across the globe, and was further turbo-charged by Russia’s illegal invasion of Ukraine. Since the summer of last year, the European Central Bank, ECB, has responded to inflation by hiking its interest rates. So far, its main lending rate has risen by 3%. This is the most severe round of interest rate hikes in decades. The impact will be acute for many. It has been immediate for some, with their mortgage repayments set to rise by thousands of euro this year. A new source of anxiety is bearing down on them. Another blow, another drop in their living standards, another squeeze on their disposable income. Now is the time to introduce timely, targeted, temporary mortgage interest relief to support them.

There are over 700,000 outstanding mortgage accounts on primary or family homes. We know that the interest rate hikes by the ECB are impacting mortgage borrowers differently. Retail banks have not yet passed on these rate hikes in full to their variable and fixed rate customers, but they have started with further rate hikes expected in the time ahead. For the almost 200,000 borrowers on a tracker rate, the impact is significant and immediate. To give an example, a borrower on a tracker rate with €150,000 outstanding on their mortgage will see their monthly mortgage repayments rise by more than €2,600 this year.

There is also another category of borrowers, many of whom are with a lender they did not want or choose to be with. Those are mortgage loans that were sold off to vulture funds. There are more than 100,000 Irish families, borrowers whose mortgages are now held by non-banks, 65,000 of which are on variable or tracker rates. Vulture funds are now hiking their rates aggressively, with many borrowers facing interest rates as high as 7.5%. They have no option to switch or to fix their rate. Many of these vultures offer no alternatives.

I was contacted recently by a mortgage borrower, Rachel, whose mortgage was sold by Permanent TSB to Start Mortgages. She is a full-time carer for her son, who has cerebral palsy. By January she had received four letters from Start Mortgages, each informing her of a further rate hike. She will be paying over €4,000 in additional interest this year compared to last year. In her own words, Rachel tells me:

Hikes across the board from diesel, electricity, gas and food are barely sustainable, but to have the constant fear every month of the next increase coming and how to finance the previous month's increase, is inhumane. It has become the norm now, that due to this severe financial strain on us, we have to now pick and choose what therapies and hospital appointments we can afford for our son to attend.

Those were Rachel's words. Another borrower who contacted me has her mortgage held by Pepper. She is a single parent. She will be paying €2,800 in additional interest as a result of these rate hikes. In her own words, she says:

I have no option to fix. I work part-time in order to bring my kids to school. This is causing me huge stress and anxiety. I am in fear of further hikes.

Many households now face, as the stories of real lives I have relayed make clear, acute financial pressure. They have received three, four and five letters through the door and face the prospect of a sixth next month, when the ECB hikes its interest rates again in four weeks' time. For many families, the ability to pay the mortgage is just as crucial as the ability to pay the rent or the energy bill. The alternative to them, of not doing so, is arrears, increased debt and financial insecurity. For all of these reasons, it is time to introduce timely, targeted and temporary mortgage interest relief to support those borrowers who are and will continue to struggle as a result of increased interest costs. I call on the Government to act and for this Dáil to support our motion to reintroduce mortgage interest relief at a level of 30% of the additional interest charged since last June, up to a maximum benefit to an individual of €1,500.

Deputy Mairéad Farrell

The ECB hiked interest rates four times in 2022. It has already hiked rates this year and it is still only February. In line with its policy of forward guidance, it has already indicated that it intends to raise rates by another 50 basis points in March. That means a crisis for many mortgage holders. The Minister will be aware, and I am sure that people tell him in his clinics, in his local shops and at the butchers, about the real pressure they face as a result of these rises. These are people who are now coming off fixed rates or who had been on tracker mortgages. They are seeing sharp increases in their payments and they simply do not have that additional money to spend. They do not know where they are going to get it. Obviously, these hikes will not be applied universally across the board. There will be different rates depending on whether the person is on a variable, tracker or fixed rate. It will also depend on who is their lender. However, we do know that many people are experiencing this impact at this very moment. For instance, we know that the average tracker has increased over the last nine months, from just over 1% to 4.1%. For someone whose mortgage may have been sold to a vulture fund, they could have rates of more than 7%. This is really impacting them in terms of thousands extra that will be required for their mortgage repayments.

That is why we are bringing forward this motion. It proposes a timely, targeted and time bound relief measure for all those people who are really struggling at this moment. We believe this can be done, and on an affordable basis. It will help those people who are struggling at present. It only applies to the principal primary residence.

As such, we are not talking about providing relief to landlords or people with second or third homes. This motion is focused on those who are struggling to afford to get by. Since it uses an interest reference rate applied to a mortgage loan in June 2022, the relief would be based on the difference in the interest payments between the reference rate and the higher interest rate in 2023. This means our butchers, shopkeepers and others in our communities who are struggling to pay their mortgages and other bills would get some kind of relief. We need to be clear that we are listening to them about the struggles they are facing.

Deputy Thomas Gould

I support Deputies Doherty and Farrell's motion. This is a targeted motion to help people at a time when the cost-of-living crisis is overwhelming for ordinary families. We know the Government cannot solve everyone's crisis, including the cost-of-living crisis, but it can make a difference to ordinary families who need support. That is what this motion would do. What we are proposing to the Government is a solution. The pressure ordinary families are under and their struggle to pay their bills is recognised across the House.

I listened to the Taoiseach today while he spoke to our party president, Deputy McDonald. He stated that the hikes were happening to control inflation. The problem is that all bills have gone up, including gas, electricity and food. Mortgage interest rates have increased, especially for tracker mortgages and those on variable rate mortgages. There are people on fixed-rate mortgages that will come to an end this year. They are terrified because they do not know where they will get the money to make up the difference to pay their mortgages. The scheme is a short-term and targeted measure to help such people.

Many people are looking to the Dáil and the Government for help because they feel trapped in the middle. They are working every hour God sends and tightening their belts as much as they can, yet they are still struggling to pay their bills and look after their families. In this motion, Sinn Féin is proposing a solution that would go some way towards easing the pressure on families who are struggling and need support. I ask the Minister to engage with us positively and constructively. I hope we can work together. People are looking for leadership and help. This proposal goes some way towards helping them.

Deputy Donnchadh Ó Laoghaire

In the midst of a cost-of-living crisis where ordinary workers and families are struggling to get by, mortgage holders are seeing a large increase in their interest costs as a result of interest rate hikes by the ECB. The hike we saw last week was the fifth since July, meaning borrowers will be paying thousands of euro more in interest this year. Others are likely to see their interest rates increase in the current period. Tá daoine faoi bhrú dochreidte agus tá siad anois ag féachaint ar chostais ag éirí níos mó.

What Sinn Féin is proposing in this motion is affordable, sensible and necessary. This is the right time to introduce targeted and temporary mortgage interest relief. The Minister will be well familiar with the struggles and challenges people are facing. Deputies across the House talk to families every week. The Minister knows all about budgeting from his role. Very few families can comprehend how to budget for an increased cost of up to €2,000. That is a large hole in a family's finances and means major decisions have to be made - bills potentially going unpaid and treatments or other needs being missed out on because of these large extra costs. For some, the increase could be close to €3,000.

This issue affects a large number of people. Almost 200,000 households are on tracker mortgages, 129,000 are on standard variable rate mortgages, and 113,000 mortgage accounts are with non-banks and vulture funds and are particularly vulnerable to this situation.

The Minister has previously taken a great interest in the issue of mortgage interest relief. In 2015, he described it as "a very important support for families". He also stated: "The process of withdrawing it from existing homeowners at the same time as they are subject to a residential property tax highlights a Government that is pursuing policies that are making home ownership increasingly unaffordable for families". Although his comments were made in a different context - the current context is more severe in some respects - he believed at the time that mortgage interest relief was necessary. It is necessary in this targeted way now. I urge him to listen to people in our constituency and elsewhere who urgently need this help and not to delay it.

Deputy Martin Kenny

I compliment Deputy Doherty on tabling this motion on a mortgage interest relief scheme for homeowners who are under significant pressure. I meet them in my constituency. Indeed, we all meet them regularly. Only last week, I spoke to a woman who told me that, in the past two and a half years, her mortgage had increased by almost €180 per month, causing her difficulties. She was also dealing with increased childcare and other costs. The cost-of-living crisis we all talk about is the reality for many people.

In this motion, we are proposing a temporary measure that is targeted at the primary home - the family home - and is limited to a maximum of €1,500 per year. Those who have large mortgages would have needed large incomes to get those mortgages in the first place, so limiting the measure means the amount it would cost the State would be limited. The cost to the State - ensuring the taxpayer is not out of pocket - seems to be one of the Government's primary objectives. In this instance, however, the taxpayer could afford it, given there will be an estimated €6.2 billion surplus this year. We can afford to provide this scheme so that people can continue paying their mortgages, remain in their homes and not fall into further crisis as the situation goes on. According to the Parliamentary Budget Office and our estimate, the scheme would cost between €312 million and €371 million. In the grand scheme of things and in light of the size of the budget surplus we are looking at this year, this is something the Government can afford, especially as the scheme is targeted at those most in need.

Many people are struggling to pay their mortgages and make ends meet. The Minister has an obligation to try to provide for them and to support this motion. The Taoiseach was relatively positive towards it today. I hope that continues into the Minister's contribution and we can ensure this motion is passed.

Deputy Louise O'Reilly

I commend my colleague, an Teachta Doherty, on his work on this matter and on tabling the motion so that we can have this important debate.

There have been five hikes in the past seven months, with another on the way. That is more than many families are able to take. Under pressure from Sinn Féin, the Government moved to provide a modicum of relief for renters. This was an acknowledgement that, to fund the cost of keeping roofs over people's heads while they also dealt with other pressures, the Government needed to intervene. It did not go as far as we would have liked but it recognised the importance of intervening. That is why this time-bound and targeted measure is needed for those struggling under the weight of repeated interest rate hikes while the cost of everything else is increasing.

I dealt with a family in my advice clinic two weeks ago. They did not come to me to speak about mortgage interest relief. In a funny way, though, the meeting was about that. They were paying for private therapies for their disabled son. By right, those therapies should have been provided by the State but it was not doing so. Their son was on multiple waiting lists, so his family saw the need to pay privately for the services their little boy should have been getting. They can no longer afford them, though, so they made an appointment to see me to discuss therapies. They have to cut back. They cannot sustain repeated increases in the simple cost of keeping a roof over their heads. The Minister described mortgage interest relief as "a very important support for families". It is, but families have cut back on everything. They did not need the advice from the Minister's colleague, the Minister of State, Deputy Fleming, to shop around.

They were already doing that. They have cut back on everything. While all of their other bills are going up, they now find themselves having to juggle and to make the very hard choices about whether they can continue to fund private therapies for their kids and pay their mortgages. Nobody wants to get into debt or arrears with their mortgage. We all know what can happen to families when that happens and the distress it brings. Now is the time for the Minister to intervene to support these families. This is a targeted temporary measure that families desperately need.

Deputy Sorca Clarke

I commend my colleague, Deputy Doherty, on bringing forward this motion. In recent months each and every one of my constituency offices, whether in Mullingar, Athlone or Longford, has seen a dramatic increase in people coming in with the dreaded letters from their mortgage providers announcing another increase or drain on their family's resources that they simply do not have the capacity to meet. Many of these people are those who got into difficulty after the last financial crash when the most they had experienced of the Celtic tiger was reading about it in a newspaper as it affected somebody else. They saw their mortgages sold to vulture funds. The same vulture funds can now charge over 7% interest on a mortgage they bought for buttons. The options available to this cohort of people are extremely limited. They cannot move to a fixed rate or move providers. Those doors are firmly closed. So, too, was the option of relying on the Central Bank to take action as it effectively washed its hands of any responsibility. These are families who have met their repayments on time, but the continuing rises in interest rates are having such a disproportionate impact on them that their ability to keep doing so is genuinely in question at this point. They are going to fall into arrears without assistance. These are families who have seen their transport, lighting, heating and food costs increase. They need assistance and they need it at this time.

Regulatory officials may not have the power to intervene in the commercial decisions of setting interest rates, but Government does have that capacity and the power to do so. Today is the day to make that decision to do so and to make a commitment to those families and hard-pressed mortgage payers to show the Government hears the plight they are experiencing and that it is willing to go some way to relieving that additional cost they face every month. There have been multiple interest hikes over recent months and we know there are more of these sharp and significant rises in interest costs to come. Now is the right time to do this. I think the Minister and the Taoiseach understand that. The Taoiseach referred to a potential move in the upcoming budget, but in reality that is simply too far away. It needs to be done now and in a very targeted way. We need a temporary mortgage interest relief to see people over this. We must provide that relief on the portion above what the interest would have been in 2022 and limit it to the principal private home.

Minister for Finance (Deputy Michael McGrath)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes that:

— the European Central Bank (ECB) is independent in the formulation of monetary policy for the Eurozone Area;

— the ECB's objective is to maintain price stability and wishes to ensure a timely return of inflation to its 2 per cent medium-term target; and

— since last summer, the ECB has increased official interest rates on five occasions by a total of 3 percentage points;

acknowledges that:

— the current inflationary dynamic and general increase in interest rates will present increasing challenges for many individuals;

— interest rates are the primary tool to tackle inflation; and

— the increase in official interest rates will have an impact on the level of retail mortgage and other loan interest rates here in Ireland and in other countries across the Eurozone Area;

recognises that:

— the changed interest rate environment will not have a uniform impact on all borrowers and, depending on particular situations, such as the terms of individual contracts, some borrowers will experience a higher increase in interest rates than other borrowers; and

— in addition to the general increase in the cost of living, an increase in interest rates will pose difficulties for many borrowers;

further notes that the reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered, not on an ad hoc basis, but in the context of a range of other cost of living measures being provided;

recalls that:

— Budget 2023 was a Cost of Living Budget, incorporating a total package of €11 billion, focused on easing the burden of inflation on households and businesses;

— an overall budgetary package of €6.9 billion has been provided for this year, including adjustments to income tax bands, increases in tax credits and increases in transfer payments, such as social welfare and pension rates;

— in addition, a set of one-off cost of living measures, amounting to over €4.1 billion, took effect from the final quarter of last year, including an extension of the reduction in excise duties and Value-Added Tax on electricity and gas to end-February, three €200 electricity credits and other social welfare and expenditure measures; and

— this built on some €3 billion in support provided in advance of Budget 2023;

furthermore, notes that:

— there is a strong consumer protection framework in place for borrowers who may experience repayment difficulty due to rising interest rates or the cost of living more generally;

— all Central Bank of Ireland regulated lenders and credit servicers, both banks and 'non-banks', are required to follow the provisions of the relevant statutory consumer protection codes, including the Consumer Protection Code and the Code of Conduct on Mortgage Arrears;

— in particular, all cases of mortgage repayment difficulty have to be handled positively and sympathetically by a lender or servicer with the objective at all times of assisting the borrower to meet his or her mortgage obligations, and regulated entities must work with co-operating borrowers to, if possible, put in place a suitable alternative repayment arrangement;

— the Governor of the Central Bank of Ireland has recently indicated that the Central Bank expects firms to be prepared and to be proactive in supporting their customers to navigate the changing economic environment; and

— there are a number of public initiatives to assist people who are in mortgage or other debt difficulty, such as the Abhaile service, which is made up of the Insolvency Service of Ireland, the Legal Aid Board, the Money Advice and Budgeting Service and the Citizens Information Board, which provides free financial advice and, where appropriate also, legal advice to people experiencing difficulty with their mortgage; and

therefore:

— supports the Central Bank of Ireland as it continues to supervise and engage with regulated firms to ensure that such firms use all their range of forbearance for borrowers facing repayment difficulty;

— in particular, encourages the Central Bank of Ireland to continue its engagement with 'non-bank' regulated firms, to ensure that the suite of products provided to their customers who are experiencing difficulty is in line with the Bank's expectations;

— calls on the Central Bank of Ireland to ensure that all lenders assess all switching applications in a prudent and fair manner, regardless of the borrower's current mortgage provider; and

— notes that much progress has been made in recent years in reducing the level of mortgage arrears, including during the Covid-19 period, and calls on mortgage creditors and relevant public bodies to continue their efforts to further tackle existing mortgage arrears cases.

I thank Deputy Doherty and his colleagues for tabling this motion and enabling a debate on what is an important issue. There is no doubt the changes we are witnessing in monetary policy are having a very significant impact on households all over Ireland and, indeed, on many businesses as well. Of course, in recent times we have also seen the cost of borrowing for governments increase. Like the Deputies opposite me, I too receive the emails and phone calls from mortgage holders who are directly impacted by ECB rate changes. In some cases, they are impacted more or less immediately, for example, those on tracker mortgages. More recently, we have begun to see changes in variable mortgage pricing by banks as a result of changes at ECB level. Many mortgage holders have fixed their interest rate in recent times and are not directly impacted, though, of course, when they come off that fixed rate they will have to make a decision in a different environment from the one in which they perhaps fixed their rate initially.

It is worth making the point that when the Government brought forward a budget last September, neither the Government nor the Opposition made the case at that stage for mortgage interest relief, even though we had already experienced increases in interest rates from the ECB. The path it was going to follow in the direction of travel of monetary policy was pretty well flagged at that stage. It is also worth making the point that this issue cannot be considered in isolation from all of the other decisions Government has to make. As colleagues across the House will be well aware, we have decisions to make in the next couple of weeks at the latest relating to major taxation and expenditure measures that are due to expire at the end of February. Depending on the decisions the Government makes, there will be a significant fiscal impact from those decisions. Therefore, we have to consider it in the round and consider the decisions the Government is going to make. Looking at the track record we have so far in bringing forward in the budget €11 billion of new measures, about €4 billion of which were once-off and exceptional in nature and around €7 billion of which were core permanent recurring changes, again the focus has been on addressing the cost-of-living pressures households are facing and on supporting businesses get through what is a very difficult time.

I say to all lenders, whether they are mainstream bank lenders, non-bank lenders or service providers, that I expect all of them to treat customers fairly and to be sympathetic to the individual circumstances households are facing. Many such households are facing significant increases in their monthly repayments, which will be a burden, and it will be difficult for many of them to repay. I expect lenders to fulfil, both in word and in sprit, the code of conduct on mortgage arrears, CCMA, and the consumer protection code. That involves proactively working with those borrowers to ensure they do not fall into arrears. The point has to be made that we now have the lowest level of mortgage arrears in Ireland since 2010. Just over 4% of principal dwelling home mortgages are in arrears of 90 days or more. That is testament to the work of the lenders with the borrowers and the support of Government at different stages in helping people to stay afloat. It is remarkable that during the whole economic downturn and the consequences of Covid, we did not see an uptake in the level of mortgage arrears. It is because of the collective work of everyone, including the regulator, the lenders, borrowers making conscious decisions to prioritise mortgage repayments, and indeed the support of Government.

I want everyone, particularly those who have statutory responsibilities, to step up and support mortgage holders who are going to come under pressure. There is no doubt whatsoever about that. Government will, as always, consider what is the most appropriate response to deal with the cost-of-living pressures people are facing. In the next couple of weeks we have decisions to make in that regard. What we cannot do is make it up as we go along and come in on an ad hoc basis every week or second week with new taxation and spending proposals without setting out the overall fiscal plan for the country. It is important we have regard to that when we are making decisions. When we are making proposals, we have to make sure we know exactly how much they are going to cost. We do not have a costing for the proposal that has been put forward here. We now have more than 716,000 primary dwelling mortgage accounts, as of the end of September. Of these, approximately 35% were on tracker mortgages and 26% were on another type of variable rate. If all of these mortgage accounts were to receive a subsidy of €1,500 it would cost in the region of €655 million per annum. Sinn Féin will make the case that is not what is being proposed, but we need to have a costing for any proposal that is put to the House that has a direct fiscal impact on the Exchequer. The sums involved are very large. I know the Deputies have said the measure is temporary. We do not know what temporary means in the context of what is being proposed.

Deputy Pearse Doherty

It means 12 months.

Deputy Michael McGrath

I also know the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has engaged with the Central Bank in the past week or so on these issues. I am in continuous engagement with the Central Bank. I know from that engagement that the Central Bank is actively on the case. It is on the case of ensuring the full implementation of all the statutory codes and the consumer protection rules that are in place through the consumer protection code and the code of conduct on mortgage arrears. It is important that work continues.

We also have to acknowledge the context of the decisions being made by the European Central Bank, despite the consequences for people in their day-to-day lives, which I acknowledge present genuine difficulties for people. However, we need to get inflation down. It is in everyone’s interest that we do so as quickly as possible. We are seeing some progress in this regard. It now stands at 7.7% in Ireland, which is still far too high and well in excess of the ECB target of 2%. Of particular concern is the level of core inflation when we exclude energy and certain food items. We have to work to get inflation down. We must all be conscious in the decisions we make in this regard. When we look in the round at what the Government has done on a phased basis, we see the bullet payments made from October right through to the Christmas period, the changes in welfare and taxation, the reductions in childcare costs that kicked in in January, the electricity credit applied just last month, the further electricity credit that will be applied in the month of March and the other decisions we made to reduce VAT and excise, all of which have continued and now fall due for a decision. Any reasonable person will accept the Government has made a genuine effort to address the very serious cost-of-living pressures that exist.

It should be acknowledged that mortgage rates in Ireland in the round are in a very different place relative to our European peers compared with where they were just a short time ago. In December 2022, the average interest rate on new mortgages from credit institutions in Ireland, which currently hold about 84% of primary dwelling mortgages, was 2.69%, the same as at the end of 2021. This contrasts with the position in many other euro area countries. Over the same period, the average interest rate for new mortgages in the eurozone increased from 1.29% to 2.95%. The average new mortgage rate in Ireland, which was among the highest in the eurozone at the end of 2021 and had been for a very long period, is now among the lowest. I am not making a prediction that this will continue but this is the current position, as evidenced again in the retail interest rate statistics published today by the Central Bank.

I acknowledge and share the concerns many have expressed about the plight of those paying far higher interest rates. I am very much aware of individual mortgage holders who have received those consecutive multiple letters, to which colleagues across the House referred, and who are now paying interest rates of the order of 7%. This will inevitably place them under genuine pressure. That is why the Central Bank is working proactively with the lenders to make sure these customers are treated fairly, that problems are prevented and that solutions are put in place for them as quickly as possible to ensure they can get through what is a difficult period in the interest rate cycle. We do not know how long this will continue. It is also worth making the point that it is not in the interests of any lender to allow mortgage holders to get back into arrears again. We have invested a lot in switching. We have more work to do. I acknowledge that is not an option for every mortgage customer at this time.

I welcome the motion and the proposal but I will not accept it. The Government has to make decisions in the round. This involves looking at all of the fiscal levers we have at our disposal. We have immediate issues on VAT, excise and business supports that need to be decided in the coming weeks. This is where my focus will immediately lie.

Deputy Ruairí Ó Murchú

The Minister has stated he accepts there are people who are under extreme pressure because of the five interest rates increases by the ECB. We all know of particular individuals who are under significant pressure. We know people on tracker mortgages who may have an added monthly bill of €200. This could be €200 on top of large increases in fuel costs and electricity costs. Other people have spoken about all of the services people may need for their children. They may need disability services they must pay for themselves because State services are not in place. This is the world in which we are operating. The Minister spoke about the fact the Central Bank is on the ball with regard to the necessity of regulation and protections. This is on the basis that we cannot just rely on vendors. This is fair to say. We are speaking about a considerable number of people.

We may disagree on what actions we take and what proposals we make and accept, but the Government did make a determination that the cost-of-living crisis was hurting people and that there would be no cliff edge. The Minister is not in support of our motion today. This is wrong and it is a mistake. Beyond that, I would like to think there will be a further look at a suite of issues with which people will need help. We are speaking about a timely measure. This means it has to happen fairly quickly. We are speaking about something temporary. We are also talking about targeted mortgage interest relief. It is a form of relief that was provided in the State previously and has been supported. We see the issues we are dealing with.

We know the numbers we are talking about. There are 186,000 tracker mortgages, 129,000 standard variable rate accounts and 137,000 mortgage accounts with non-banks and vulture funds. We all have had these people coming into our offices. We all know the particular issues they have. They have a greater level of difficulty at present. Now is the time we can provide them with some chance to get through this. This is what the supports we have had in recent years have been about. They have been to facilitate people so we do not have a recessionary disaster.

Deputy Maurice Quinlivan

In the midst of a cost-of-living crisis and a dramatic rise in costs for consumers of utilities such as gas and electricity, it will be a bitter blow for mortgage holders when interest rates rise again. We have a housing crisis, with people struggling to get on the property ladder. For those who own their homes, mortgage repayments that are already difficult to meet will become that much harder to maintain. Owning your own home takes plenty of sacrifice and hard work. Those who have worked extremely hard and saved and sacrificed to own their own homes are often left with very little disposable income. The remainder has already been eaten into by price rises and these interest rate increases. Many will be left with next to nothing in the pot for those moments and experiences that mark the difference between existing and living.

In Limerick, the average cost of a three-bedroom semi-detached home is almost €300,000. These rate increases will mean the repayments will be that little bit harder every month. The interest rate hikes expected in March will see them rise from 3% to 3.5%. This is a significant rise that will be felt in the pockets of homeowners. The departure of Ulster Bank and KBC has forced hundreds of thousands of customers to switch their bank accounts. These departures have also led to a less competitive mortgage market. Depending on what lending institution people are with, the interest rate hike will be applied differently. People are already paying over the odds for their homes. The average tracker rate has increased from 1.15% in June 2022 to 4.15%. To put this increase in monetary terms, for a mortgage payer it equates to an increase of €220 per month on an outstanding balance of €150,000 with 20 years left on the mortgage. This is not an insignificant amount.

There are, of course, borrowers whose mortgages are in the hands of vulture funds. They have no option to fix or switch. Their interest rates have risen to more than 7%. Coupled with the dramatic cost-of-living increases, the squeezed middle will get squeezed just that bit more. The combined effects of the utility price increases, food price increases and mortgage interest rate increases are impacting on citizens of the State. Something must be done to alleviate their hardship. To this end we need a targeted and temporary intervention of mortgage interest relief.

What we propose is sensible and fair. We propose to provide relief on a proportion of mortgage holders' increased interest cost relative to the rate in June 2022. Importantly, we believe this should be a temporary measure in response to the current cost-of-living challenges. It should be targeted and it should be for the primary dwelling only.

Deputy Rose Conway-Walsh

I cannot speak as fast as my colleague. The Minister knows the Government cannot stand by. I listened to him from my office when he spoke about the interaction he has with the banks and the Central Bank and what is being done. The Government cannot stand by as people are being hit with increase after increase in the midst of a cost-of-living crisis. The Minister has received the same emails as we have. He can see how this is impacting on people who are just coming out of the financial crisis. They were severely hit with banks closing. They had to close businesses. They went through all of that. The trauma of having to absorb these interest rates at a time when the cost of everything else has greatly increased is impossible for them to bear.

They are told the only solution is higher mortgage payments when they are already undergoing such costs and they just cannot make sense of the cure to the higher energy and food prices being an increase to mortgage costs.

The Government has a responsibility to protect its citizens and that is the bottom line. The only way it can do that in the necessary timeframe is to introduce this mortgage relief. It needs to be targeted, as we said, to those who really need it and it needs to be time-limited. It must apply only to people's homes and not to second homes, holiday homes or rental properties and it should be capped at €1,500. This is a very sensible and necessary measure. Fianna Fáil supported mortgage interest relief when in opposition, so it should not be a problem now. The Government must put aside the party politics and work with Sinn Féin to bring in these supports. The Minister will have received one of the emails sent to me and other Deputies by the married father of four whose mortgage was increased from €715 six months ago to over €3,000. That is a 450% increase. He was on an interest-only mortgage. We have all these things we need to deal with.

Deputy Brian Stanley

Mortgage holders across the country are really struggling at the moment. I have been getting representations and complaints on this from householders in Laois-Offaly, especially over the past couple of months. There is a significant problem with the cost that is coming on top of the cost of living. Some people have been hit with interest rate increases of 3% plus and this means an extra €200 to €400 per month on their mortgage. Last week's hike was the fifth increase since July. That means borrowers will be paying thousands of euro more in interest this year. We are in the middle of a cost-of-living crisis that has seen sharp increases in the cost of energy, transport and food and I could go on to list a range of other items.

Sinn Féin is looking for the introduction of a targeted and temporary mortgage interest relief scheme. We have had mortgage interest relief in the past. When he was in opposition in 2015, the Minister, Deputy Michael McGrath, described the relief as "a very important support for families". Sinn Féin agrees with him. We are calling for a mortgage interest relief scheme that provides the equivalent of 30% of the increased interest costs relative to June 2022. It would be a temporary measure that is targeted to provide relief to those who are most in need. It is capped at €1,500 and would not apply to second homes, holiday homes or rental properties held by landlords. It would therefore be most beneficial to the workers and families who need support most, which is very important.

Sinn Féin has developed these proposals in consultation with the Parliamentary Budget Office and based on the analysis we came up with, it would cost between €312 million and €371 million. The Minister mentioned €600 million. That would apply if everybody had gone on sky-high mortgage interest rates with vulture funds etc. Of course it depends on the ECB rates, as those are what govern this. This measure is sensible, affordable and can be funded by a portion of the State's projected surplus of €6.2 billion in 2023. It has not all been committed to expenditure. Families need real support and not empty words. We have a financial surplus, so the money is there. Ordinary people and especially hard-working mortgage holders need this during this difficult time. I call on Fine Gael, the Green Party and Fianna Fáil to back this proposal. I heard the Minister appealing to the lenders to be responsible and fair but they are not listening. Some of them are charging 7%. I ask that he and the Minister of State, Deputy Carroll MacNeill, take this on board. We can appeal to them but they do not listen. They do what they are going to do, which is to extract the maximum amount of money. The Minister referenced the 7% rate himself. It is proof they are not listening. We have the power to bring in these measures and I advocate the Government do so.

Deputy Ged Nash

As a rule, I remain somewhat sceptical about the efficacy of mortgage interest relief in delivering real help to the households who need it most, because our experience has been the mortgage interest relief system in the past tended to favour the better-off with bigger mortgages and therefore assets of greater value. However, in light of five ECB rate hikes since last July, there is an argument for a measure like this that is targeted and time-limited. The Irish banks were initially reluctant to pass on these ECB hikes to domestic mortgage holders but inevitably that has changed more recently and householders now face major hikes in their mortgage bills. It is in that context that I and the Labour Party support this motion for targeted and temporary mortgage interest relief equivalent to 30% of the increased cost of the mortgage, with a cap of €1,500 per annum. I note the Minister's own scepticism and reluctance to back this particular approach but the principle enshrined in the motion should at least be explored by him and his Department.

We would like to see the Government go further and adopt the Labour Party approach to deliver real relief to mortgage holders by guarding against future rate hikes through the introduction of a mortgage rate cap, which is a principle the Minister is familiar with. People are already being hammered by the cost-of-living crisis, so news that rates are set to rise again will come as another body blow to households that are, as we and the Minister know too well, already struggling to make ends meet. As the Minister articulated earlier, many of the once-off reliefs and expenditures introduced by the Government towards the end of last year are running out. Accordingly, people at the sharper end of the cost-of-living crisis are really going to struggle over the next few months if other initiatives are not taken by the Government. There is a real inevitability to rates continuing to rise and rise and that is why the Government must urgently get to grips with this situation. It must stop playing catch-up, as it did with efforts to meet the rising energy costs problem and associated cost-of-living issues.

The Labour Party proposed legislation to take the heat out of this situation and to relieve some of the financial pressure on mortgage holders. Our Central Bank (Variable Rate Mortgages) Bill 2022 would enable the regulator to impose caps on mortgage interest rates charged by banks where a market failure is shown. There has objectively been a market failure here. The Minister will agree, or at least his past comments align with the contention there has been, and is, a market failure in the context of the residential mortgage market. That is notwithstanding the figures he put on record a few moments ago showing where Irish new mortgage rates sit in a European context. That was not always the case. For the last few years, Irish variable rate mortgage holders were paying the second-highest mortgage interest rates in the EU. It is not because of any Government initiative that the figures have changed and the Irish situation is now a case of mid-table respectability or at the lower end of the spectrum but because the banks have, up to now, been at least reticent to pass on some of the ECB interest rates, though that is changing.

The Labour Party legislation to which I referred is similar to and draws inspiration from a Bill tabled by the Minister when he was Fianna Fáil spokesperson on finance in 2015 and 2016. If it was the case that in a period of low interest rates as prevailed in 2015 and 2016 when he proposed that Bill, which attracted great attention and scrutiny and went to the pre-legislative scrutiny stage at committee, then surely there is a necessity for a Bill like this now in a very changed environment. It was okay at a time when we had low interest rates and now, during a period of higher rates the Minister appears to have changed his position. I find that quite extraordinary. The Oireachtas has already imposed a cap on the interest rates charged by moneylenders, so there is a strong precedent for action. We remember the exploration of the legislation published to rein in moneylenders and introduce that cap and it shows there is no constitutional impediment to enabling the Central Bank to intervene in the market and introduce reasonable caps on interest rates charged by financial service providers once a process of examining the market has been undertaken, along with a range of other proportionate steps. The only impediment to such legislation is political will.

The Government must do all it can to cushion the body blow of these interest rate rises and we believe a cap on mortgage interest rates will save families thousands of euro over the lifetime of their loans. According to media reports last week mortgage interest rates could soar towards 4% this summer as Irish banks begin to pass the costs on to more customers. AIB is introducing rate increases across all mortgage types for the first time since the ECB began to hike rates last July and this move, as the Minister knows, will affect thousands of borrowers. AIB made the move just hours after the ECB announced the latest hike in rates of 0.5%, bringing the total increase in rates since last summer to 3%. The AIB rise will affect all tracker and fixed mortgages. AIB, Bank of Ireland and Permanent TSB have spared their variable rate customers until now despite the European Central Bank having raised rates four times in six months to last December, and have only passed some of the hikes to fixed products.

When asked if the latest rise will be the last, President of the European Central Bank, Christine Lagarde, ominously said "No" five times and she was quite emphatic. She said they know they have ground to cover and they know they are not done, when she spoke about interest rate rises and the use of those tools available to them to tackle inflation.

Five successive hikes have now added up to €400 per month to a €330,000 mortgage, with a further rise next month to add approximately €88 more. Bank of Ireland has been slow to increase mortgage rates so far in a bid to take more market share, it seems, but the bank's shareholders are now calling for higher prices, and rising rates there could be around the corner, affecting tens of thousands of more bank customers. This is an already enormously profitable bank, a bank that seems to be on its way to posting profits of approximately €1 billion the next time it posts.

Who is representing the public interest here? It does not seem to be the Government. I urge the Minister to not act and behave as a commentator and to make what interventions he can to try to support those who need the most support in terms of rising interest rates.

In the brief time I have left, I want to talk to the Minister about the case of Jimmy Crosbie, a father of two from Ardee who works as a taxi driver. The name might be familiar to the Minister because Jimmy spoke to "Prime Time" last week about the situation in which he finds himself. He had his residential mortgage, the mortgage on his principal private residence, with Permanent TSB. In 2015 he organised a split mortgage. It was a performing loan in layperson's language and in terms of our understanding of it. He never missed a payment. In 2019, and he spoke to "Prime Time" about this, Glenbeigh bought his mortgage and it is now being serviced by Pepper. The kinds of interest rates people like Jimmy are now being charged are absolutely extortionate. They would make the mafia blush and are putting families like Jimmy's in a very difficult situation indeed.

The Minister told Mark Paul of The Irish Times a couple of weeks ago that he had written to the Central Bank to express his concerns about the high rates of interest being charged by financial institutions affecting people like Jimmy. Has the Central Bank responded to the Minister at this stage? From media reports, I believe the Minister asked the Central Bank if it required additional powers to further regulate these funds and these financial service providers. Last week, I asked the Minister for a copy of that letter through a parliamentary question but all I got was essentially a repeat of what appeared in The Irish Times. That particular letter is FOI-able. It is a public document so I do not see any reason it could not have been provided in the public interest. What did the Minister ask the Central Bank in terms of regulatory powers? What does the Minister plan to do to support people like Jimmy Crosbie to make ends meet and to make their mortgage payments in this very difficult environment?

Deputy Róisín Shortall

It is timely to have this debate. The Sinn Féin motion notes all the different difficulties associated with the high interest rates in this country and the burden that places on ordinary families trying to provide homes for themselves. That is all very worthwhile and there are a lot of questions to be asked about why our interest rates are so out of line with other European countries.

The motion provides for five key asks and there is no difficulty with a number of them. Sinn Féin calls for the Government to offer hard-pressed families real support and not empty words and that certainly needs to be done in relation to the very high cost of housing. The high cost of housing is having such a massive negative impact on all aspects of people's lives that it is the key failure of this and the last Government. What has been missing from what the Government has been doing, or has been failing to do, in relation to housing is to drive down the cost of housing. That should be the key objective of any housing policy, that is, to drive down the cost of housing. We need much more action from Government in terms of providing real support and not just empty words.

Another two asks are to work with the Central Bank to enhance the supervision of vulture funds in the interest of struggling borrowers, which certainly needs to happen, and to examine the taxation of the banking sector, including the treatment of corporation tax loss relief, which is another area that needs attention.

When it comes to the proposal to reintroduce mortgage interest relief at a level of 30%, I can understand the motivation behind that but we have to reflect on the experience with mortgage interest relief in the past. There is certainly a chequered history in that regard. For a very long period under successive Governments we had a regime where there were property-based tax reliefs or tax breaks and they caused a lot of difficulties and a lot of pain for people, ultimately, because particular reliefs were being given to the construction industry and to developers generally. Of course with a number of those schemes, we paid a very high price for them ultimately.

I will talk about the experience of mortgage interest relief because we know that it existed until 2012 when it was cut off for new mortgage applicants. It was phased out over a long number of years for those who had availed of it and it finally finished in 2016. The effect of mortgage interest relief was to reduce the monthly cost of a mortgage to the borrower, those who were availing of it. It amounted to a transfer of public money in the form of a tax break to individual homeowners who were essentially receiving taxpayer support, but for those who could not afford to buy a home and therefore could not avail of the tax break, they were essentially subsidising those who could.

Mortgage interest relief was given at the borrower's marginal rate of tax and, therefore, those on higher incomes paying the higher marginal rate benefitted more than those on lower incomes. Taking all of this into account, mortgage interest relief is typically considered a regressive measure because it is transferring public funds, including from low-income people, to those who are relatively better off. From that point of view, it is something a lot of left-wing parties generally have difficulty in justifying.

Of course, fiscal sustainability must also be a consideration in any scheme like this. There is an argument that mortgage interest relief creates a kind of false economy, using taxpayer funds to mitigate the effects of Ireland's comparatively high mortgage interest rates and subsidising bank profits in the process. One has to ask whether that is a desirable objective. It it also artificially reducing a household's mortgage interest payments and if the policy is withdrawn, whether due to a change in policy priorities or a shortage of public funds, the tap cannot be suddenly turned off because it risks creating huge mortgage distress. Once it is in place, it is very hard to take away, something which was evident in the long phasing-out period of the policy for those who had been availing of it previously.

In some ways, the situation with the housing assistance payment, HAP, offers a comparison. It started off modest in scale and scope and now it costs €1 billion every year. It supports high rents and this is the difficulty. We must avoid measures that will contribute to the growing cost of mortgages and housing generally. While the temptation is to bring it in on a temporary basis, and this is understandable, it is, in effect, a targeted measure at the upper part of the income wealth distribution. Again, therefore, we would have to regard this as a regressive policy. We should really be looking at other ways of trying to support people who are desperately struggling with the cost of living and to do this in a way that is more targeted.

There are problems with elements of this proposal. It is suggested that it will be done in a timely, targeted and temporary way, that it would be a temporary interest relief to support homeowners facing significant increases in mortgage costs and that mortgage interest relief would be equivalent to 30% of the increased interest costs relative to June 2022, up to a total figure of €1,500. The asks are quite unspecific. There is a strong case for this measure being targeted, but we do not know what is being proposed regarding the targeting of this measure. This is not spelled out. Equally, who should this be targeted at?

This reminds me greatly of what the Government's approach has been to the exceptionally high cost of housing. This has come about as a result of successive Governments. Certainly going back to 2010 and 2011, the provision of housing has been left predominantly to the market. While house prices have increased considerably over that period, at no point has the Government set out to make housing more affordable and to drive down the cost of housing. That is how we make housing more affordable. The measures introduced by the Government, therefore, have been beneficial to individual homeowners in a position to avail of these schemes, including help-to-buy, the first home initiative, also known as the shared equity scheme, and Croí Cónaithe. Those schemes in themselves have not contributed to driving down the cost of housing and making housing more affordable to people across the board. This should be the objective of any policy measure.

We in the Social Democrats have talked about measures that could be introduced by the Government which would actually drive down the cost of housing. It has clearly been the case, though, that Fine Gael did not want to do that for its own particular interests. Sometimes, it feels this way when we look at the kinds of houses advertised in The Irish Times, for example. I looked at a page of them the other day from a well-known estate agent and there was not a single house that cost less than €1.2 million. This was a full page of house advertisements. This is what we are talking about, and the prices went up to €4.5 million. There is a certain cohort of people who maybe feel better about themselves for some reason because their houses have increased substantially in value. Maybe Fine Gael is afraid of upsetting people like that, whereas on a public policy basis the aim should be to make housing more affordable.

The only way we can do that in a sustainable way is to actually drive down the cost of housing. We in the Social Democrats have proposed a number of different measures. The vacant homes tax, for example, could have been done in a realistic way rather than the meaningless way the Government has done it. There could be a tax on investment funds. Affordable homes could be made available by various housing co-operatives that have proven this can be done cheaply on public land. There should also be a land price register and an ownership database. There are, therefore, other ways of doing this but the objective must be not to provide temporary supports which actually fuel the cost of housing. This is my concern regarding mortgage interest relief. We should have a specific policy which is designed to drive down the cost of housing and make people's lives more livable.

Deputy Richard Boyd Barrett

I thank Sinn Féin for bringing this motion forward on mortgage interest relief. While there would have to be some debate about whether this is the best way to assist people, it highlights that something has to be done to assist people who are being hit with these increased costs to service their mortgages. I have certainly received quite a few messages and emails from people who have been pretty hammered with these mortgage interest hikes. It is difficult to see how people can absorb these interest hikes at the same time as they also are seeing significant increases in the cost of living at every level across the board. We saw the figures regarding food inflation today and we know about the energy price hikes. The general cost of living is going through the roof, so this is another hit for another significant cohort of people. In the round, we are talking about, and estimates vary, ordinary workers on average probably being €4,000 to €5,000 less well-off than they were a couple of years ago. This is a huge hit for people and we must do something.

The first call I would make on this Government, given the sort of multiple hits people are taking, and I am not just saying this as some sort of rhetorical flourish to have a go at the Government, is that we really have to have an emergency budget soon to deal with the cost-of-living crisis that people are facing. There is a whole range of measures that must be taken. We can debate the whos, whys and wherefores of what has been done but it is just not enough and something will have to be done. I do not think we can wait until October to do it because people are really being hit hard. Different people are being impacted in different ways but across the board, real pain and hardship are being felt by people.

This cannot be disconnected from the issue of housing and the cost of housing. The Minister might be interested in this example, as well as the Minister of State, Deputy Carroll MacNeill, because it is in her constituency. It is also emblematic. I went on to daft.ie to look at house prices in Cherrywood the other day. The cheapest thing that could be seen for sale there, for very modest houses, was on sale for more than €650,000. The prices went up to well over €700,000. This is the biggest residential development in the country. It originally got planning permission under the strategic development zone, SDZ, measure for 8,000 houses. This figure has recently been increased because of heights and so on. This development would have had a major impact on the housing crisis in our area if the houses were sufficiently affordable and if there was a greater proportion of social housing etc.

These prices, however, mean this development is just contributing to making a bad situation worse. If there are people who can manage to get a mortgage on these houses, and it is necessary to have pretty high earnings to get one on a property of this price, this is an accident waiting to happen if anything else goes wrong, as we know from the Celtic tiger years. House prices then were so high that people did get loans from the banks but then they lost their jobs and we were in a nightmare scenario. We cannot have house prices at this level and we cannot have ordinary working people on average or even a bit above average earnings trying to service mortgages for houses that are this price. I just do not believe this is sustainable. It is an accident waiting to happen. We must, therefore, deal with the affordability of housing.

While this is a multifaceted issue, in essence I simply do not see what the point is in building houses that people cannot afford.

The first thing the State must do is flood the housing sector with public and affordable housing and, insofar as it can, take further measures to control the behaviour of the banks. I do not want to be overly political about this, but it is the truth because it was said explicitly at a time. One of the reasons we have such unaffordable house prices in this country is because after the crash the policy of the Government was to refloat the property market. That was a conscious policy aimed at restoring the balance sheets of the banks, and it was explicitly stated by Michael Noonan, the former Minister for Finance, at the time. It might have seemed like a sensible idea - we did not think it was at the time - but, in retrospect, it was an absolutely disastrous idea because the imperative to improve the balance sheets of the banks and save them has led us to where we are now.

Those same banks are still getting tax breaks as a result of losses carried forward. They are back to making extortionate profits. We are in and environment whereby Irish banks and mortgage lenders are charging higher interest rates than is the case anywhere else in Europe. While the Government will not agree, I am of the view that this is an argument for having a not-for-profit, publicly controlled banking system to prevent profiteering. The banking sector is in trouble whatever way one looks at it. Some people think the answer is more competition; I do not. I just think it proves that a competitive banking market, in and of itself, is an accident waiting to happen. We need a banking system that is actually about serving the interests of society and not just making profits for investors and shareholders. We need to ensure that, where it is needed, credit is available to ordinary working people to allow them to put a roof over their heads. Unless we get that model, we will be in trouble.

We need to ensure that housing is affordable for ordinary people. I just do not think the market has shown this. How many years do we need to go on before we decide that whatever role we think the market has - the Minister will say we must have some role for the private market - it is absolutely clear that the private market is not capable of delivering housing that is affordable to the vast majority of working people. The evidence is plain to see. Some people may be able to afford houses for €700,000, but the vast majority cannot to so. If we do not address that, messing around with credit will not fix the problem.

The Government must think about the prospect of basic incomes to help people through this. That comes back to the emergency budget issue. Average workers cannot soak up a loss of income of €4,000 to €5,000. Again, this is an accident waiting to happen. People will get very angry unless we address that quickly. There is one basic thing the Government must do. The Minister will say this could potentially be inflationary and all the rest of it. At a minimum, people's incomes, through wages, pensions or social welfare, must keep pace inflation but they are not. If they are less than keeping pace with inflation, people are poorer and, as a result, more vulnerable to other things that are happening, such as the cost-of-living crisis, mortgage interest hikes or whatever. As an emergency necessary measure, we must do that as well.

For the structural change that is necessary, the State must be able to deliver affordable housing. Affordability means that people should not be spending more than 20% to 30% of their net income on putting a roof over their heads - whether that is servicing a mortgage or paying rent. If the State is not capable of doing that, we have problem. At the moment, it is clearly not doing that. The market, on its own, is absolutely incapable of doing it. Unless we confront that reality, we are going nowhere.

We also need to look at wealth distribution. We do not even have proper figures on wealth distribution. Whatever take one has on it, the Oxfam report demonstrates that the rich in this country are getting richer and the poor are getting poorer. That is an indisputable fact. Unless we introduce a taxation policy that will start to address the gap between rich and poor, we are heading down a very difficult and troubled road. The Government needs to start to look at wealth distribution. That means wealth taxes and even knowing where the wealth is in our society.

Deputy Peter Fitzpatrick

In November, addressing the issues of home ownership and emigration among young people, the Taoiseach, then Tánaiste, Deputy Varadkar, pledged to make home ownership affordable again, advising “what we can have is stronger Government interventions to help close the viability gap”. Last week, the European Central Bank raised its base rate of interest, taking it to a rate of 3%, and pledges to raise rates by the same magnitude in March to squash raging inflation. That would see the deposit rate going to 3% and the main borrowing rate rising to 3.5%. After six years of interest rates sitting at zero, the biggest immediate impact will be on the monthly payments of approximately 200,000 families with a variable rate tracker mortgage. Those with €200,000 tracker mortgages on a rate of 2.5%, which will now rise to 3%, can expect their monthly payments to increase by around €50 at a time. This is at a time when people are struggling to keep their houses warm and put food on the table. For those with existing fixed-rate mortgages that are about to end and who want to remortgage, any new fixed-rate deal will be more expensive than the one they are about to leave. On top of this, mortgage borrowers whose loans were sold to vulture funds are now facing interest rates that are significantly higher than those charged by retail banks, resulting in significant financial pressure for them.

Economists are saying that 3% will not be the peak. It is a likely that interest rates will need to be kept higher for longer as loosening prematurely could risk a sharp resurgence in inflation once activity rebounds. However, if it raises rates too aggressively, it could tip the eurozone into recession.

The failure of the Government to help existing homeowners at a time when they are subject to a cost-of-living crisis highlights that it is pursuing policies that are making home ownership increasingly unaffordable for families. The original purpose of the mortgage interest supplement scheme was to provide short-term support to eligible people who, due to temporary unemployment or loss of earnings, were unable to meet their mortgage interest repayments in respect of a house that was their sole place of residence. While I accept that the mortgage interest supplement should be a short-term measure, the problem is that there is no short-term measure in place. People need a short-term supplement to ease the mortgage pressure they are under, rather than just loading more debt on them.

Given that the Government essentially eliminated the mortgage supplement scheme in 2014, the level of support available from the Department of Social Protection and the Government is limited, with the responsibility for forbearance in respect of a customer’s mortgage difficulties resting with the mortgage provider. The most appropriate way in which customers experiencing mortgage difficulties can be supported remains through ongoing engagement with their lender to explore a sustainable and appropriate response from their lending institution. This restricts the capacity of the State to help people who will be placed in difficulty as a result of this significant increase in the cost of mortgages. We need to step in now.

The Minister for Finance, Deputy Michael McGrath, and the Taoiseach said last week that there are no plans to introduce mortgage interest relief despite a continual rise in interest rates. In December the Taoiseach, then Tánaiste, said, “It is not something we will rule out for the future but there are no current plans to do so. It would involve reopening the budget and all the consequences that would derive from that.” As we know, thousands of people are under enormous stress with their mortgages. Why do we kick the can down the road? Why wait to act when we know this is inevitable?

People in my constituency covering Louth and east Meath are struggling. Every week in my clinic I direct families struggling to pay their mortgages to the Money Advice and Budgeting Service, MABS. While this is a fantastic service, the primary objective of all measures across the housing sector should be to increase the supply of accommodation and keep people in their current homes, whether they are rented or owned. Are we going to close our eyes and pretend that families are not struggling? The Minister for Housing, Local Government and Heritage should engage with the Minister for Finance on the implementation of a temporary measure.

This needs to be considered in the overall budgetary and policy context, whether it be through the Personal Insolvency Act to give some help and support to people in mortgage arrears or by making amendments to the Finance Bill to bring about some alleviation for people who are in mortgage distress through the reinstatement of the mortgage interest supplement scheme. We need to act now. We need to make home ownership affordable again through stronger Government interventions to help close the viability gap. We need to offer hard-pressed families real support.

I got married in 1983, when I was 21 and my wife was 20. We bought a house for £21,000. As we could not get a bank loan, we went to the council and got a simple £14,000 loan. We went to the credit union for the balance that we needed.

It was very simple. Why are we complicating things in this day and age? I repeat that the Taoiseach, who was the Tánaiste at the time, promised Government intervention. I keep saying it to the Minister that he is kicking the can down the road. People are very much struggling. It is now that people need help. I am pleading with the Minister to speak with the Ministers for Housing and Local Government and Heritage, and for Finance, about working together to put a temporary measure in place. I thank the Leas-Cheann Comhairle.

Deputy Seán Canney

I thank the Leas-Cheann Comhairle and the Ministers present. I welcome the opportunity to speak on this motion. I thank Sinn Féin for bringing it forward.

The people we are talking about here are people who are contributing to the economy in every way. These are young people, couples, or single people who went out there and took the brave step of deciding to build or buy their own house. They did not rely on the State to provide housing for them or wait around for something to happen. They decided themselves to get involved in building or buying a home for themselves. They took on and paid all of the costs, including the legal and planning costs, the planning development levies and the VAT that is being put on construction at 13.5%. That is fine. We admire them for that and we should respect them for it. The kernel of the problem is that these same people are now finding themselves becoming the new poor.

I know that prior to the budget there was a good deal of kite-flying going on by different Ministers in respect of what they were going to do in the budget. One of the things I heard being said was that we were going to look after working people and bring in a new rate and band of tax which would help people in the middle-income bracket who need that little bit of support. It has not happened for them and it is not happening now. Since last summer, we have had five or six increases in mortgage interest rates. One might say that it only amounts to 3%, but it is going from 0% to 3% and adds €50 a pop. Every increase of half a percentage point adds €50 on to the average mortgage. That is a good deal of money. When young couples come into my office to talk about how they are struggling, where both of them are professionals who work and pay their PAYE and PRSI, they say they are looking for a small bit of a hand.

Back in my time when we built our house, a subsidy was available to first-time house buyers and builders. It was something like €3,500 and it was paid out, from memory, by way of €1,500 in the first year and €750 subsequently, or whatever the figure was. There was a benefit in it for the first three or four years of the life of the mortgage which gave people a small bit of breathing space so that they could come to terms with the fact of their mortgage. They had to supply everything into the house to ensure they got to a stage where their income probably increased a bit to allow them to live reasonably comfortably and pay their mortgage then.

We now have the new poor. These are the people who are contributing every day to our economy and are the people who did not ask the State for anything. They pay for the costs of going to work and for childminding. They pay for everything. What is wrong is that right now these people are struggling and are actually counting the pennies. They are watching what they do and where they go, and are asking if they can afford to go into town for a cup of coffee, and they cannot. It has gone to that level right now and I am not exaggerating. When people say that they are living like monks at the moment, it is not a joke. They are being serious. These are the people that we expect to be able to go out and do a good day’s work, to enjoy work and living, and to enjoy bringing up their families. Yet the amount of pressure they find themselves under is completely horrendous at the moment.

We owe them little a bit more. I say to the Ministers present that we need to do something in respect of mortgage interest relief on a temporary basis for first-time purchasers of houses, whether they are on a variable rate or on a tracker mortgage. Doing this on a temporary basis over the next two to three years is not going to break this country but it will give the real working people of this country, who are contributing to the economy, a chance and a small bit of breathing space. We need to do this legitimately for these people, and do it now. There is no point in talking about doing it in next year’s budget because there are many people who will find themselves going to the Money Advice and Budgeting Service, MABS. That is not what they want. They do not want to be talking to MABS about how they can restructure a loan. They want to be able to pay the loan and all they need is a little bit of help for a number of years.

Deputy Mattie McGrath

I compliment Sinn Féin on bringing forward this motion. This motion should not be necessary and the Ministers should have the heart and the empathy with the people to support them. These are hard-working people who are carrying the weight of the bank bailout. I called it the bank cleanout at the time. What happened at the time was daylight robbery. All those bankers and bondholders had insurance bonds and were never even touched and were doubly covered. The weight of that then was put down on ordinary people. Now, with inflation and the cost of living, and with the ECB putting up interest rates, where every second week we have a president or somebody coming from the European Parliament, I ask what the Government is trying to do to our people. These are the working people who had the vision and courage to take out mortgages and to house themselves. They did not run or look to the State for housing. Now they are being literally destroyed with interest rate increases which render them having to scrounge for food, to put clothes on their children’s backs, to educate their children and to try to get to work. They just cannot manage. The cost of living and even of going out for a cup of coffee nowadays is just exorbitant.

I raised earlier today with an Taoiseach the fuel economy breaks which the Government has given because of the rising cost of fuel and of food inflation at 16%. It has risen by 16% for a trolley of food in the past three months, and we ask that the Government give people some reliefs. The Government says it will tell them in the middle of February but 1 March is fast approaching. These people cannot sleep in their beds at night with the worry. I am sure that the Government Ministers are meeting them in their constituency clinics, if they hold such clinics, or are their cluasa dúnta i gcónaí? Is the Government not listening to them because they are there?

The previous Minister for Finance - the jury is out on the current Minister, a bhí ina chara liom uair amháin - was a friend of the banks. I refer to the then Minister for Finance, Deputy Donohoe, who is a colleague of the current Minister. His last act was to give the bankers’ bonuses back to them. That allowed a situation where a fair cohort of people will earn €1.8 million a year. What kind of obscene behaviour was that? Who needs or wants at any time €1.8 million to survive and to keep going? Tá mo chuid ama caite. I will hand over to my colleague, Deputy Michael Collins.

Deputy Michael Collins

I thank the Leas-Cheann Comhairle and Sinn Féin for this motion. I fully support any calls for specific measures to provide mortgage interest relief for homeowners. For example, a scheme could and urgently should be designed to provide temporary relief for homeowners facing financial hardship, or to help first-time buyers get on to the property ladder. The scheme could also target certain groups of homeowners, such as those with low incomes or those who are struggling to meet their mortgage payments due to changes in interest rates.

Various other EU countries have already implemented policies to support homeowners who are struggling with mortgage payments. These policies have taken different forms such as temporary financial assistance, tax relief, applying pressure on lenders or giving incentives to lenders to offer more favourable mortgage terms.

In Ireland, we are witnessing the negative impacts of rising interest rates on both existing homeowners and first-time buyers. Higher monthly mortgage payments are now putting a significant strain on the personal finances of families and homeowners, especially as inflation is eating away at their incomes and the cost of everything else has also increased.

Deputy Mattie McGrath has just touched on the cost of fuel, which I brought up in the Chamber in the past week. VAT was taken off fuel in the past year. Surely to God the Government is not even considering putting any percentage of that back up again in the next couple of weeks. The Government is putting off the decision for another couple of weeks, and talking about soft blows, but everyone in Ireland is feeling a very hard blow at present.

We hear about a tax take of billions and how happy the Government is about it. Where are the ordinary people in all of this? They are suffering on a day-to-day basis. There are fuel costs for farmers and fishermen. There was a fuel subsidy from Europe to Ireland, worth €5 million. The Minister for Agriculture, Food and the Marine, Deputy McConalogue, would not put his hands out, gather that money and give it back to the inshore fishermen or larger trawler fishermen. He refused to do so.

We have a farming crisis caused by the price of fertiliser. Farm incomes have not got any higher. Lack of housing is another major issue. There is a lack of infrastructure, transport, services for the public and home help hours for the elderly. There are many issues. The people have had enough. I fully support measures being put in place for homeowners.

Deputy Danny Healy-Rae

I thank Sinn Féin for giving us the opportunity to talk about this very important matter. Banks, of course, never lose. When they did, the Government bailed them out with taxpayers' money. When people put their money into the banks, they get very little interest for it. In fact, if they leave it there long enough, it depreciates in value. People with mortgages are suffering. I am adding to the pleas for an interest relief scheme to help those people.

The Government could help more with the costs of electricity and running a car. It should do something about the cost of electricity but it is not. If a young couple or anyone else is building a house, more than one third of the cost goes into levies, services and VAT on materials. The banks make it very hard for couples to get mortgages in the first place, yet, the Government has shares in the bank. How is it the Government cannot talk to the banks and help the people it represents?

I will tell the story of a young man, Tim Brosnan, who built his house about a year and a half ago. He built it as per regulations and had to put in an air-to-water system. He is on to me every day about the cost of electricity. He is paying €1,200-odd in each bill to cover the cost of his heat pump. It is absolutely ridiculous. He says he has no bother coping with the mortgage but this cost is beating him. He goes out in the dark, comes home in the dark and still cannot make it work. It is easy for him to tell that solid fuel, whether it is oil, turf or timber, is still the cheaper and better option for the people who are suffering. I ask the Government to do something to help people because these regulations are crippling them.

Deputy Carol Nolan

I welcome the opportunity to speak during this important debate. I support the call in the motion for Government to introduce timely, targeted and temporary mortgage interest relief to support homeowners facing significant increases in their mortgage costs. I also support the call on Government to work with the Central Bank to enhance the supervision of vulture funds in the interests of struggling borrowers. This is an issue that my colleagues and I in the Rural Independent Group have been to the forefront on.

The Government would do well to remember that in November of last year, Fianna Fáil and Fine Gael, along with the Green Party, voted against a Rural Independent Group Bill which would have provided legislative protection to farming families against vulture funds. This issue has been going on for years. In 2020, during Leaders' Questions, I raised the fear and terror that these vulture funds are generating through forced farm sales. Such fear and terror re-emerged following the end of the Covid-related moratorium on forced sales. We knew then and we know now from reports by personal insolvency practitioners and farm organisations that some farm sales were even being forced through without any prior notice being given.

In addition, the problem of home mortgage arrears is enormous, as we know from the most recent data supplied by the Central Bank. In fact, the outstanding balance on principal dwelling mortgage amounts in arrears of more than 90 days was €6.2 billion, which is equivalent to 6% of the total outstanding balance on such mortgage accounts. Recently, in County Offaly in my constituency, more than 570 family home loans were in arrears for two years or more. However, I suspect that number has increased dramatically more recently.

Mortgage holders who happen to be small business owners are also facing a double blow. In recent weeks, I have seen many small businesses forced to close due to utility costs. I ask the Government to do more to help our small businesses, which create so much local employment, to survive in our communities.

Deputy Marian Harkin

The Sinn Féin motion to reintroduce mortgage interest relief is worthy of serious consideration. I say that for many reasons but, in my short time, I will address two that stand out.

First, the proposal is made in the context of inflation levels of more than 7.7%, allied with very significant price increases for many daily essentials such as food, home heating oil, petrol, diesel, etc. I heard the Minister for Finance, Deputy Michael McGrath, say that this issue cannot be considered in isolation, but it is not being considered in isolation. It is being considered in the context I have just spoken about, that is, spiralling inflation and prices for hard-pressed households and, on top of that, increasing mortgage interest rates.

Anybody paying a mortgage knows it is a considerable chunk of money out of one's monthly income and most mortgages are paid from monthly incomes. The very significant increase in mortgage interest rates in such a short time means mortgage repayments are increasing significantly every single month, with the real fear that the situation will worsen. The increase is significant for those on tracker mortgages, but it is crucifying for those whose mortgages are held by vulture funds. Approximately 65,000 people, many of them families, are paying mortgage interest rates of 7% or more.

I recognise that the Government has not stood idly by and has made efforts to assist individuals and families to manage the spike in the cost of living, but the Minister of State has to agree with me that, at the very best, it is a safety net. While it is an important safety net, families and individuals are still facing much greater demands on their income and are making very difficult choices about food, heating, children's clothes, etc.

Many homeowners paid inflated prices for their homes in the first place and loading significant increases in mortgage repayments on to their shoulders at this time puts them under extreme pressure. Many mortgage holders may not be able to continue paying their mortgages which causes heartbreak and devastation and is a disaster for them and their families. It also adds to the housing waiting list.

In my constituency, house prices have increased by 18% in counties Sligo and Leitrim since 2021. They have increased by 14% in Donegal and by a similar amount in County Roscommon. Those who have taken out mortgages recently have paid significantly more for their properties. They are under even more pressure when the interest rate they pay increases because their repayments were calculated based on their monthly income. The proposals in this motion could help.

My second reason for supporting this proposal is that it is targeted and temporary, applies to some 30% of the increased costs relative to June 2022 and does not exceed €1,500 per annum. That is what makes this proposal worthy of serious consideration, especially where it is confined to a family home and under no circumstances could be paid on a second property. The amount is capped at €1,500, which means nobody can benefit massively, although it is still a significant amount of money, at approximately €125 per month at most. That is real money for many people and even on a temporary basis, it would make a real difference.

I have listened to various opinions on this. The Government seems to suggest that enough is being done, as it were, and we will continue as we are, but most people recognise that is not the case. Others have expressed reservations that it is a regressive taxation step. If it were the old mortgage interest relief scheme, I would agree but it would be capped and temporary and while there would be a transfer of some economic benefit to home owners, it is small and designed to help those who are most at risk of not being able to continue paying their mortgages.

Finally, the Government has tabled a countermotion that takes an as-you-were position but this morning during Leader's Questions, the Taoiseach did not set his face against the proposal. I hope that on reflection, the Minister for Finance will not do so either.

Deputy Catherine Connolly

Gabhaim comhghairdeas leis an Aire Stáit nua. Ní bhfuair mé deis é sin a rá go dtí seo agus go n-éirí léi ina ról nua.

I thank Sinn Féin, as usual, for tabling this motion which has merit. While I have some concerns, it is time-limited, targeted, capped and it is for family homes. Why does the proposal have merit? We are talking about more than 400,000 families that are struggling on different types of mortgages, with prices rising daily. I agree with Deputy Shortall who put it very well earlier when she said that we cannot look at this in isolation. We are tampering with something because Government policy is embedded in a completely dysfunctional system. The Minister of State might not agree but that has been my opinion since the day I arrived into Dáil Éireann. The housing policy of this and the previous Government is utterly dysfunctional and, therefore, we are left supporting motions such as this and saying it is worth looking at when really, houses have to be built and prices have to come down. The price of my house has to drop and the price of the Minister of State's house, if she has one, simply has to drop. It is not possible to have sustainable living with house prices going up as they are.

It is not possible to call Government policy coherent when it is allowing the market to dictate. Ministers have stood up in the Chamber and said that is not accurate but it is. Let me just mention the help to buy scheme. It is worthwhile looking at the reviews of that scheme. It has been described as "not a rational scheme" and reviewers said that they would not start from here but, unfortunately, it is now embedded and we cannot take it out. The HAP scheme represents the worst possible change in housing policy. It is still with us and the cost continues to rise, with €1 billion mentioned earlier. We also have the mortgage to rent scheme and some of those who are struggling with mortgage payments now will move on to that scheme. Issues with the mortgage to rent scheme were brought to my attention and forced me to read into it further. It was introduced in 2012 and was to be run by voluntary bodies and housing associations. They did okay but the uptake was quite low because they did not have the capability and they were not helped to build that capability. What did the Government do in 2018? It invited expressions of interest for a private company to come forward, with the misleading name Home for Life. The homes are not for life but for 25 years. Misleading language is used, with talk about local authorities as landlords when they are not the landlord; the Home for Life company is the landlord or the voluntary body. The Government twists and turns language and make the tenants believe that they are social housing tenants when they are not.

Let us look at what happened to the scheme when the aforementioned company got involved. The company is now in the Commercial Court. I am not going to get into that because I understand the separation of powers but that company is now in that court because it had an agreement with another company to do repairs and there is a dispute about that. More importantly, several local authorities, including Dublin City Council, reported issues with Home for Life repair works, prompting the Housing Agency to launch an investigation. In inspections of 224 Home for Life properties carried out by late October, 166 homes had issues and would need further work to be carried out. I am mentioning this to illustrate the point that we have gone further down the road of privatisation, with private companies coming in, instead of building up the voluntary bodies. I understand that further expressions of interest will be sought from more companies. What those companies do is buy the house of a person who is in mortgage distress, like a person I have in mind in Galway, they do the repairs, get the rent, keep the asset and they lease it back to the local authority for 25 years. That is called a home for life. One of the advantages of the scheme was that participants could buy back their home after five years. Does the Minister of State know how many repurchases there have been? There have been six. Has there been a business case analysis? No. Has there been a review to see what the scheme has cost? Is there any understanding of the agreement between the local authorities, the Housing Agency, and the Department or any analysis of what money has been paid over? Absolutely not and I am sure we will be told it is commercially sensitive. This is another little ingredient added to an already dysfunctional market that ensures fewer people will own their own home, fewer will be able to rent a public house at a controlled rent and fewer will have security of tenure for life. This is because of the dysfunctional housing policies from successive Governments.

Minister of State at the Department of Finance (Deputy Jennifer Carroll MacNeill)

I thank Deputies for the points they raised. I will try to address as many of them as I can. I do not necessarily agree with all the points made but I do see coherent trends among them, including a real and genuine concern around inflation and increasing house prices, and the targeting of supports most effectively. I will try to address all of those concerns.

As the Minister for Finance said earlier, the debate is happening in the context of a significant inflationary environment, albeit 2% lower than it was last year but still 5% ahead of where we should be on the ECB measure and where we would be in any way comfortable. That is creating significant cost-of-living pressure that Deputies are hearing about from their constituents on a day-to-day basis. The Minister has set out the response of the Government, which includes both one-off and permanent measures to try to address that pressure. In the budget last year, €11 billion worth of support was aimed primarily at supporting households through this period of exceptionally high inflation. Before Christmas those on social welfare received a double weekly payment and a Christmas bonus. Lump sum payments were made to people who are in receipt of the fuel allowance, living alone allowance and the working family payment. A €500 once-off payment was made to those receiving the carer's support grant, the disability allowance, the blind pension and the disability pension. A further double child benefit payment was made to approximately 640,000 families. Before Christmas we also had the first in a series of electricity credits, with a second administered last month and a third one planned for March.

A number of permanent cost-of-living measures also came into effect, which some Deputies referenced, such as the increase to the entry point for the higher tax bands and an increase to tax credits. There has also been a general increase in social welfare payments of €12 per week, which came into effect recently. We also created a new rent tax credit of €500 for a qualifying individual or €1,000 for a qualifying couple for both 2022 and 2023. There have also been significant changes to the national childcare scheme.

It is clear the Government understands the inflationary pressures that people are facing and has tried to introduce targeted supports in so far as possible. However, it is not credible to simply go, week on week, to corporation tax receipts. It is important to recognise that we are dependent on what are highly volatile corporation taxes and if what we estimate are windfall taxes are excluded, there was an underlying deficit of approximately €5.25 billion last year. We have to be careful about the management and sustainability of the public finances. We are concerned about the inflationary cycle and, as the Minister said, we have genuine concerns about core inflation. In that context, mortgage interest relief is an unusual measure to try to advance at this time, having regard to the effect it would have. We phased out mortgage interest relief specifically because of its impact on increasing house prices. Mortgage interest relief for principal private residences was phased out, as Deputy Shortall outlined earlier, between 2009 and 2020. The decision to abolish it was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. At its peak, it cost more than €700 million in 2008. As a measure, it also contributed to rising house prices. Research from the Organisation for Economic Co-operation and Development, OECD, found that mortgage interest relief results in higher rather than lower house prices, where housing supply is constrained, as it gives buyers more purchasing power.

In addition, the OECD highlighted significant equity concerns, noting that mortgage interest relief provides greater benefits to high-income households as they are more likely to be homeowners, a point that aligns with the findings of the 2009 Commission on Taxation. That sits against the point of it being a relief targeted at the most vulnerable. All the international research suggests it is not so targeted. Mortgage interest relief has also been found to encourage household indebtedness and is correlated with volatility on the housing market. It is for those reasons that the Commission on Taxation and the OECD recommended limiting or phasing out mortgage interest relief on owner-occupied housing. As has been said, prior to its curtailment and eventual abolition, in 2005, for example, mortgage interest relief benefitted best the top two income deciles, which accounted for close to half of the tax foregone through tax relief. It was again highlighted in the 2009 Commission on Taxation report. Mortgage interest relief puts up house prices and benefits the wealthier in the community in the context of the scale of relief available. It simply is not targeted at the most vulnerable, if that is who the Sinn Féin motion is attempting to target.

I am not sure which cohort of borrowers the motion is targeting. Is it targeting all 716,000 mortgage accounts? Is it targeting those on tracker, variable or fixed mortgages? What is the equity position between those situations? In November 2022, more than 93% of new mortgages created were fixed mortgages. Many people who switched to a fixed mortgage may have done so as the interest rate changes were well signalled last year. It is unclear to me in what way it is being targeted. Neither is the costing clear. Deputy Doherty identified a figure of €1,500 annually but no costs were put forward by Sinn Féin until Deputy Stanley, the 11th Sinn Féin speaker on the motion, put forward a figure of approximately €340 million. Perhaps Deputy Doherty will clarify that. It is clear from a straightforward read of the 716,300 primary dwelling mortgage accounts at the end of September 2022 that for each of those to receive a subsidy of €1,500 would cost in the region of €655 million per annum, which is a substantial fund of money. There is no point in Deputy Doherty laughing about this.

Deputy Pearse Doherty

What the Minister of State is doing is stupid.

Deputy Jennifer Carroll MacNeill

It is extraordinary that he can laugh away that amount of money.

Deputy Pearse Doherty

It is a reference rate.

Deputy Jennifer Carroll MacNeill

What is even more interesting------

Deputy Pearse Doherty

It is a stupid argument.

Deputy Jennifer Carroll MacNeill

I am sorry?

An Ceann Comhairle

The Minister of State without interruption.

Deputy Pearse Doherty

It is a stupid argument.

Deputy Jennifer Carroll MacNeill

What might be better is if the Deputy came into the House with costed proposals. It might be better if he signalled any interest in those proposals in the Sinn Féin budget document. The word "mortgage" features once in the Sinn Féin mortgage document. Sinn Féin makes no effort to provide for private home owners of any description in its mortgage document or its housing documents but it is now interested in mortgage holders and those who own private homes. It made its budget choices and that is fine - I respect it making its own budget choices - but it did not make this choice. These interest rate changes were well signalled but Sinn Féin made no reference to them at the time. Perhaps Deputy Doherty will allow me to finish without interruption. I do not need to be called "stupid" on the floor of the House-----

Deputy Pearse Doherty

I did not call you stupid; I called the argument stupid.

Deputy Jennifer Carroll MacNeill

-----and I am responding on the Sinn Féin motion, which is uncosted and would increase house prices, so the Deputy should allow me to finish. The overall fiscal framework has not changed. The cost-of-living crisis remains and, as Deputy Doherty and others know, the Government is well aware of the challenges people are facing. In that context, in the coming weeks, as has been well planned and signalled, the Government is considering, in the context of measures that were introduced in the budget, how to provide the best and most targeted supports on a sustainable basis that would be of the broadest benefit to the greatest number of people. Those decisions have been signalled. They will cost significant sums and the Government has to work out what are the best measures to take that forward. The Minister, Deputy Michael McGrath, along with the Minister, Deputy Donohoe, and the leaders of the three parties in government are considering that at this time.

In my role as Minister of State with responsibility for credit unions, I see a substantial opportunity for credit unions to come more firmly into the mortgage market. This is a slightly different point but it is one I want to make every time I can do so. There are significant sums in reserve. The loan-to-asset ratio of credit unions is too low, at 27%. There is an opportunity to create another force in the mortgage market, which has been uncompetitive in the Irish context due to the exit of various banks in the past decade. There is an opportunity for credit unions, however, which are local and trusted financial institutions, to play a much stronger role as community banks and in the mortgage market. I would welcome that considerably. As Deputy Doherty is aware, we will be taking forward legislation to try to provide the structures that would support credit unions in that way.

Deputy Pearse Doherty

I thank all those who contributed on the motion. It is an important debate because so many people are struggling as a result of high interest rates. For some borrowers, they have increased on five occasions since June of last year. I described some of the arguments put forward by the Government as stupid arguments. I did so because the Government speakers have tried to suggest that every mortgage holder in the State will get €1,500. However, the motion is clear, as the Minister of State would know unless she has not read it, that it relates to the increased interest rate since June last year. It is not the case that everybody would get €1,500. That is a nonsensical suggestion. I made clear in my earlier contribution that we work with the Parliamentary Budget Office - I am sure the Ministers opposite will recognise the independence and professionalism of that office - and it costed this proposal for us. It did so on the basis of assumptions in respect of interest rate increases that could happen in the coming period and those that have already taken place. I can touch on that point again later. There is a clear motivation on behalf of the Government in this context, and it is not about the interest rate or the fact that people spoke in public, such as on "Prime Time" last week, for example, about being mortgage prisoners and how they are now paying 7.5%. The Government's objective does not relate to reaching out or trying to support those individuals; rather, it is to somehow suggest this is going to cost €600 million or €700 million and so on-----

Deputy Jennifer Carroll MacNeill

How much will it cost?

Deputy Pearse Doherty

-----or to purport not to understand the proposal that is being put forward, despite my earlier contribution, in which I addressed increased interest rates. It is about trying to minimise, downplay and brush off instead of recognising there are probably people listening to this debate who are hanging on and hoping against hope that the Government will see sense in the context of introducing this proposal. The Minister said the proposal would push up house prices - this from a Minister who believes the help-to-buy scheme will not do so. Let us be clear. As this measure does not increase the purchasing power of the individual, it would not have the effect suggested by the Minister. That is why it is tailored. It is not like the mortgage interest relief introduced by Fine Gael, which applied to all the interest one paid on a mortgage, with no caps in place. That is why the wealthiest got that benefit. As it was not time limited, it did increase borrowers' purchasing power because they were able to factor in that some of the interest would be paid by the State.

The motion is about the increased interest rate. It is spelled out in black and white. It is the increased interest rate that has happened since June last year. The Minister of State's argument again falls in that regard. I am begging the Government to address this issue. We have had different signals from the Government. This morning, its leader seemed to be open to the idea because he recognises the ECB will increase interest rates again next month.

There are 118,000 people who have family mortgages with vulture funds. The Minister of State's party leader gave them assurances they would be no worse off but that was complete and utter balderdash. They are far worse off. The former Minister for Finance, now Minister for Public Expenditure, National Development Plan Delivery and Reform, Deputy Donohoe, said he would have no problem if his loan was bought by a vulture fund. Let me spell this out in clear terms. The biggest tranche of loans that went to vulture funds was sold by Permanent TSB. If those loans were still with Permanent TSB, the borrowers would be paying less than 4%, which is the highest standard variable rate with Permanent TSB. Instead, in some cases they are now paying 7.5% with Pepper. That means they are paying more than €400 extra per month, or close to €5,000 per year. Next month, they will get a sixth letter in the door because the ECB at its March meeting will increase interest rates by another 0.5%. These people, who are now paying an interest rate of close to 8%, are thousands of euro worse off than they would have been if they were with Permanent TSB. The commitments given by the Government in the past, and particularly by the political parties in government, are clearly void.

The people here see very clearly that they are so much worse off. Not only that, people have come to me who are victims of the tracker mortgage scandal. Permanent TSB took money from them to which they were entitled, in the form of interest rates, and because they were in financial distress they had to go for split mortgages. Their repayments on these split mortgages were more than if they had the original tracker rate to which they were always entitled. Their loans were then sold to vulture funds because they were in split mortgages. What is happening now? They are paying at a rate of 7.5%. They were screwed by Permanent TSB. Their tracker rate was taken off them. They had to go into an arrangement and, because of the way Permanent TSB structured such arrangements, they were deemed to be non-performing loans and were, therefore, sold on. These individuals did nothing wrong. If the principle relating to restoration is to be followed through, these individuals should be back with Permanent TSB and paying at a rate that is significantly lower than what the vultures are charging.

As I said, we have worked with the PBO to cost this measure. It would provide 30% relief on the increased interest costs relative to June last year, and capped at total relief of €1,500 per qualified household. It would exclude second and holiday homes, and rental properties held by landlords. The Minister's party leader spoke about how he gets letters in this regard all the time. As we know, landlords can get 100% tax relief. The Fine Gael Government increased it from 80% to 100%, so this excludes landlords. This measure is a shock absorber for those households that face difficulties in the months ahead. It is targeted. It would absorb a portion of increased interest costs. It is affordable, sensible and necessary.

Following our work with the PBO, we estimate the proposal would cost between €350 million and €400 million. Why is there a range? It is because none of us can be 100% sure where interest rates are going. The higher end of this range, for example, is that fixed rates would increase by 1.5% compared to June last year. Standard variable rates would increase across the board by 3%. We know this is not anywhere near what is happening. We have, therefore, built potential significant increases for fluctuations for the remainder of this year. This is a measure that would last for the next 12 months. It is one that is sensible, targeted and time limited. Crucially, it is an initiative that would give support to individuals now.

I mentioned Rachel earlier. The Minister just ignored that point in trying to deflect in silly numbers to the effect that everybody would get €1,500. Let us bring this back to the individuals. Rachel is a carer with a child with cerebral palsy. Her mortgage type has meant an increase of €400 per month. This is before this month's increase has been passed on to her. She will then face the March increase. Such individuals are looking for the Government to support them now. They are looking for the Government to do the right thing.

We put it to the Government last year to consider bringing forward a proposal. If it had come forward with a proposal to cap a relief at €1,300, that would have been grand. We would have asked to discuss it. The Government could equally have suggested that the measure should have not kick in until the interest rate was above 3%, and we would have said, "Let us do that." Sinn Féin, though, has undertaken work that did not happen overnight and that has been going on for months with the PBO. The party has its information from the Central Bank concerning performing and non-performing loans. I can give the Minister examples in this regard. If fixed rates increased by 1.5%, the cost would be €36.5 million. For non-performing loans with the five banks, it would be €450,000. If standard variable rates went up by 3%, the outlay would be €136.4 million. If tracker rates were at 3.5%, it would be €175 million for performing loans and €7.81 million for non-performing loans. The PBO has done all this work. If the Government, however, wants to have a silly debate about the costings of this proposal or question the independence or assumptions of the PBO, that is fine. However, I would like to talk about Rachel and others who have come to me and said they are mortgage prisoners. They are asking us how they will pay a mortgage at a rate of 7.5% or 8%. In emails, they are asking me where they are supposed to get the money to pay the €4,500 to €5,000 extra they will have to pay this year compared to last year.

I know that if I were the Minister for Finance, I would not be able to take that weight completely off those people. We are not suggesting that the State absorb that entire interest rate increase. We are recognising, though, that the primary factor driving inflation in Europe is the war in Ukraine. Measures have been introduced that have upset some of the worst impacts of inflation, and rightly so. This is another issue. These families need to be supported and protected. For the next 12 months, therefore, it is a sensible proposal to have an interest rate relief of 30% of the increased mortgage levels being paid by customers, with reference to the rate from June last year, and with no mortgage holder benefiting by more than a total of €1,500. As I said, the range in the cost is from €350 million to €400 million. The banks should not pass on all these increases and, in fairness to them, they have not been doing so. Equally, however, if they did not pass on this 3%, the total cost would not be anywhere near these figures. It would be less again.

The point here is to be focused and centred. I know the Acting Chair will agree with us because he has made these points on many occasions. We need to focus on those who are struggling with mortgage arrears. From the Government, I have heard no solution, plan or anything else. Talking about the Central Bank and solutions involving improving regulation do not cut it. These vulture funds do not offer fixed rates or switching. In many circumstances, they do not offer alternative arrangements. The only thing the Code of Conduct on Mortgage Arrears needs to do is make sure they go through the suite of measures they offer. If they do not offer at option, people are in dire straits. This is why the Government needs to step in. I commend the motion to the House.

Amendment put.

An Cathaoirleach Gníomhach (Deputy Bernard J. Durkan)

In accordance with Standing Order 80(2), the division is deferred until the next weekly division time.

Dáil Éireann debate - Wednesday, 8 Feb 2023

Mortgage Interest Relief Scheme: Motion [Private Members]

Dáil Éireann debate -
Wednesday, 8 Feb 2023