Robert Dowds
Question:47. Deputy Robert Dowds asked the Minister for Finance the extent to which Allied Irish Bank has increased the interest rate for its variable-rate mortgage holders. [43887/12]
View answerMortgage Interest Rates Issues
Questions (47)
Written answers
The Deputy will be aware that the Bank’s policy in relation to interest rates is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, AIB has informed me that it has announced two variable mortgage interest rate increases in 2012. The first increase to variable rates of 50bps was announced on 27 July 2012, and became effective from 4 September 2012. The second increase of an additional 50bps to variable rates was announced on 3 October 2012, and will become effective from 13 November 2012. In addition the Bank did not pass on an ECB rate decrease of 25bps in July 2012, though this must be seen in the context of the two 25bps ECB rate increases in April and July 2011 that AIB did not pass on to mortgage customers.
AIB has also informed me that even following the recent increases, it will still continue to have the lowest mortgage rate in the Irish market.
Mortgage Interest Rates Issues
Questions (48)
Robert Dowds
Question:48. Deputy Robert Dowds asked the Minister for Finance if he will intervene with Allied Irish Bank to request it to reverse its raising of the interest rate on variable-rate mortgages; and if he will make a statement on the matter. [43888/12]
View answerWritten answers
The Deputy will be aware that the Bank’s policy in relation to interest rates is a matter for the management and board of the institution. I have no role in the day-to-day commercial and operational decisions of the banks, which include these matters. These decisions are taken by the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder in the institution, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, the Government is aware of the significant difficulties some homeowners are facing in meeting their mortgage obligations and it is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. In this regard, the Government is now actively implementing the main recommendations contained in the report of the Inter-Departmental Working Group on Mortgage Arrears.
A number of significant milestones have now been achieved. The Personal Insolvency Bill was approved by Government and published last June and the Committee stage of the Bill was passed by the Dáil last month. The Minister for Housing and Planning has formally launched the “mortgage to rent” scheme on a nationwide basis. Also an extensive independent mortgage advice framework has now been put in place by the Minister of Social Protection comprising (i) an enhanced website www.keepingyourhome.ie, (ii) a Mortgage Arrears information helpline, and (iii) the provision of free independent ‘one-to-one’ professional financial advice to borrowers when considering a long term forbearance/resolution offer from their lender. The list of accountants providing this service is located on the www.keepingyourhome.ie website.
The Government remains very committed to progressing these measures, which are in addition to existing supports such as the protections afforded by the Central Bank Code of Conduct on Mortgage Arrears, to assist genuine mortgage holders in difficulty and the Government sub-committee on mortgage arrears, which is chaired by An Taoiseach, continues to meet to ensure this receives priority attention across relevant Departments and agencies.
Departmental Expenditure
Questions (49)
Dara Calleary
Question:49. Deputy Dara Calleary asked the Minister for Finance if he will outline in tabular form, the amount of money allocated by his Department and agencies within his Department to Ballina, Castlebar and Westport Town Council between 1997 and 2012; and if he will make a statement on the matter. [43947/12]
View answerWritten answers
In response to the Deputy’s question no monies were allocated to Ballina, Castlebar and Westport Town Council in the period in question by my Department or agencies under the aegis of my Department.
Mortgage Interest Relief Expenditure
Questions (50, 51)
Michael McGrath
Question:50. Deputy Michael McGrath asked the Minister for Finance if he plans to review the decision to end mortgage interest relief for first time buyers at the end of 2012; and if he will make a statement on the matter. [43971/12]
View answerMichael McGrath
Question:51. Deputy Michael McGrath asked the Minister for Finance if he will set out in tabular form the number of persons who have received mortgage interest relief each year for the past 10 years; the total amount provided in mortgage interest relief each year for the past 10 years; and if he will make a statement on the matter. [43972/12]
View answerWritten answers
I propose to take Questions Nos. 50 and 51 together.
The position is as I stated in my Budget day speech and in the press conference of 8 February 2012 to announce the publication of the Finance Bill 2012 that mortgage interest relief for principal private residences will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018. This means that the loan will have to be drawn down by 31 December 2012 in order to qualify for this relief. I have no plans to review this decision.
A qualifying loan for mortgage interest relief is one which without having been used for any other purpose, is or are used in the purchase, repair, development or improvement of a claimant’s principal private residence. With regards to the cost and the numbers availing of the relief, I am informed by the Revenue Commissioners that the cost to the Exchequer of mortgage interest relief for principal private residences by way of tax relief at source (TRS) and the associated number of claimants in the past ten years 2003 to 2012 inclusive is as follows:
|
Tax Year |
Numbers |
Cost €m |
|
2003 |
443,800 |
221 |
|
2004 |
447,400 |
232 |
|
2005 |
587,800 |
279 |
|
2006 |
668,400 |
352 |
|
2007 |
720,000 |
543 |
|
2008 |
778,100 |
705 |
|
2009 |
782,700 |
486 |
|
2010 |
490,900 |
375 |
|
2011 |
488,000* |
357 |
|
2012 (9 months) |
Not available |
300 |
*These figures are provisional and subject to revision.
The expected cost to the Exchequer of tax relief allowed for mortgage interest in the 12 months of 2012 is provisionally estimated at €414 million. Numbers are rounded to nearest hundred and costs are rounded to nearest million.