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Dáil Éireann díospóireacht -
Wednesday, 14 Oct 1998

Vol. 495 No. 2

Written Answers. - House Prices.

Michael Creed

Ceist:

83 Mr. Creed asked the Minister for Finance the impact he envisages a sharp decline in interest rates will have on the Government objective of facilitating first-time house buyers. [19183/98]

From 1 January 1999, there will be uniformity of short-term interest rates in the euro area, as set by the European Central Bank. As regards the intervening period, interest rates in Ireland will continue to be a matter for the Central Bank of Ireland, which is independent in the implementation of monetary policy. As I am sure the Deputy is aware, the Central Bank cut official Irish interest rates with effect from Monday, 12 October in preparation for Ireland's participation in EMU. I would not speculate on the timing of further convergence of Irish interest rates between now and 1 January 1999.

Government policy on the housing market is, in the first instance, a matter for my colleague the Minister for Environment and Local Government Deputy Dempsey. It seems that obviously lower mortgage payments due to a fall in interest rates would benefit all variable rate mortgage holders, including first-time house buyers. However, first-time house buyers would also be affected by a number of other factors, including the impact on house prices of, for example, the fall in interest rates and the Government's response to the Bacon report. Due to the complexities of the housing market, it is therefore not possible to precisely predict the net impact of interest rate reductions on first-time house buyers.

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