Dáil Éireann Debate, Wednesday - 15 April 2015
820. Deputy Aengus Ó Snodaigh asked the Minister for the Environment, Community and Local Government the reason interest rate decreases have not been passed onto mortgage holders who are part of the affordable housing or shared ownership scheme with local authorities since April 2012; and the way it was decided not to authorise local authorities to pass on the three decreases since then. [14785/15]
View answerRates charged to local authority borrowers offer exceptional value by comparison to rates charged by commercial lenders. The current rate of 2.75% is approximately 1.5% lower than standard variable mortgage rate (saving borrowers €1,500 per annum on a €100,000 loan) and is the lowest rate available currently in the domestic mortgage market. The Housing Finance Agency (HFA) provides loan finance to local authorities and voluntary housing bodies for housing and related purposes. The interest rates the Agency must pay are not predicated on base rates afforded by the European Central Bank (ECB) as its funding is sourced through a variety of market sources, including the European Investment Bank. Independently of the ECB rate cuts, the Agency has reduced the rate it charges to local authorities by 0.8% since September 2012. This has allowed for the establishment of a Mortgage Arrears Resolution Process (MARP) premium to begin to accumulate reserves. Such financial resources are necessary to ensure that local authorities can continue to offer the range of restructuring options to local authority borrowers in arrears that are included in the MARP.
My Department issued revised guidelines to local authorities for dealing with mortgage arrears within the local authority sector in June 2014. Dealing with Mortgage Arrears – A Guide for Local Authorities is available on my Department’s website at:
http://www.environ.ie/en/Publications/DevelopmentandHousing/Housing/FileDownLoad,30943,en.pdf.
