Vol. 508 No. 3
103 Ms O'Sullivan asked the Minister for the Environment and Local Government the plans, if any, he has to reduce fixed mortgage rates on local authority tenant home purchase schemes to reflect the rates charged in the private sector; and if he will make a statement on the matter. [18704/99]
The level of fixed interest rate charged on local authority tenant purchase schemes is determined by the Housing Finance Agency by reference to mortgage rates prevailing in the financial market. The present fixed rate is 6.75 per cent and is currently being reviewed by the agency.
Fixed interest rates on loans are related to the cost of long-term funds prevailing at the time the loans are advanced and are fixed for the life of the loan. The costs of reducing the fixed rates on existing tenant purchase loans would be substantial and would have to be borne by the Exchequer, the Housing Finance Agency or the local authorities.
However, any person with a fixed rate local authority loan is free to redeem without penalty and refinance, if necessary, in the private sector at the lower rates currently available. This is a significant concession which would not be available in respect of fixed rate loans from commercial lending agencies.
