Dáil Éireann Debate, Thursday - 13 May 2004
179 Mr. Durkan asked the Minister for the Environment, Heritage and Local Government the interest rate charged in respect of annuity or similar mortgages taken out in the late 1980s or early 1990s through the various local authorities; and if they are in line with current interest rates. [14027/04]
View answer
The current local authority mortgage interest rates are 2.95% variable and 4.45% for fixed. These are competitive rates of lending.
Prior to the introduction of variable interest rate loans on 1 December 1987 the fixed interest rate that applied to loans issued by local authorities was 10.5%. The variable interest rate that applied to loans at that time was 9.75%.
Since 1980 borrowers with local authority fixed rate mortgages have been permitted to redeem such loans without any interest rate penalty and refinance them in the private sector. This represents a significant concession, having regard to the redemption penalties of up to six months interest or more applied by commercial lending agencies in the event of early redemption of such mortgages.
The position regarding high fixed interest rates on local authority loans was reviewed in November 2001 in consultation with the Department of Finance. The review determined that a State subsidy to reduce interest rates would not be appropriate.
