The Board of the ECB announced decisions to reduce the main refinancing rate by 0.25% in July 2012 and again in May 2013. The Housing Finance Agency’s rates are not predicated on base rates afforded by the ECB, as its funding is sourced through the EU/IMF programme of financial support and dictated by EURIBOR. Independently of the ECB rate cuts, the Agency has reduced the rate it charges to local authorities by 0.55% since September 2012. This has allowed for establishment of a Mortgage Arrears Resolution Process (MARP) premium to begin to accumulate reserves which will allow local authorities to continue to make available various supports for distressed borrowers under the local authority MARP.
The rate charged to local authority borrowers continues to represent very good value. The current rate of 2.75% charged to borrowers is – by some distance – the lowest rate available currently and stands at 1.65% lower than the average variable rate ‘available’ in the domestic mortgage market. It is also almost 2% lower than the best rate available from other lenders, a number of whom have increased their variable rates since the ECB announcement.