Vol. 515 No. 3
224 Mr. Ring asked the Minister for the Environment and Local Government when the Government will reduce the interest rates, mortgages and loans taken out with local authorities in view of the current low interest rates; the plans, if any, he has to review the lending rates for local authorities and if he will make a statement on the matter. [6001/00]
The interest rate on local authority housing loans is determined by the Housing Finance Agency by reference to mortgage rates prevailing in the financial market. The current variable rate is 4.25%. The current fixed interest rate available on local authority loans is 6.75% for a period of five years.
The Government's recently published review of the Action Programme for the Millennium contains a commitment to target support to home owners with high fixed interest rate local authority loans. This commitment relates to higher fixed interest rates on loans, advanced in the 1970s up to the mid 1980s, which reflected the cost of long-term funds available at that time. Borrowers with local authority fixed rate mortgages are free, since 1980, to redeem such loans without any interest rate penalty and refinance in the private sector. My Department is currently examining options with a view to putting in place measures to implement the Government's commitment as soon as possible.
