I propose to take Questions Nos. 11 and 47 together.
The Deputies seem to be suggesting that the fixed interest rates applicable to SDA housing loans be reduced to a rate of 4.5% which is close to the current variable rate of 4.25% in line with market rates. Current fixed interest rates are considerably higher including those on local authority housing loans which are set at 6.75% for a period of five years.
The higher fixed interest rates of 12.5% to 7% referred to by the Deputies relate to loans advanced in the 1970s up to the mid 1980s which reflected the cost of long-term funds available at that time. Since 1980, borrowers have been free to redeem fixed interest rate loans without penalty and refinance them in the private sector. This is a very significant concession, the cost of which must be borne by the Exchequer, the Housing Finance Agency or the local authorities. Borrowers with commercial lending institutions are, on the other hand, obliged to pay significant redemption penalties of up to six months interest or more in the event of early redemption.
The Government's review of An Action Programme for the Millennium contains a commitment to target support to home owners with high fixed interest rate local authority loans. This commitment reflects the Government's concern for those borrowers who are unable to redeem such loans due to their inability to refinance in the private sector. My Department is in contact with the Department of Finance with a view to putting in place measures to implement the Government's commitment.