Dáil Éireann Debate, Tuesday - 17 January 2017
459. Deputy Catherine Murphy asked the Minister for Housing, Planning, Community and Local Government the way the variable interest rate is applied by local authorities; if it is linked to ECB rate reductions or increases; if changes are proposed; and if he will make a statement on the matter. [41026/16]
View answerThe current standard variable interest rate charged to local authority borrowers, applicable since 1 July 2016, is 2.3% which is circa 1.5% below the average variable mortgage rate charged by commercial lenders, delivering interest savings of approximately €1,500 per annum on a mortgage of €100,000.
The rate charged by local authorities is arrived at taking into account their cost of funds from the Housing Finance Agency plc (HFA) (currently 1%), and the local authorities' costs for administration and mortgage arrears resolution (1.3%).
The interest rate charged is not linked to the ECB rate. It is the case that as the cost of funding for the HFA has declined, six different interest rate cuts, totalling 1.5%, have been passed on to local authorities, since 2012. This has resulted in the rate charged to borrowers being significantly lower than the average market rate.
There are currently no plans to change the rate charged, which represents excellent value to borrowers.
