The interest rate on local authority housing loans, including affordable housing loans, is determined by the Housing Finance Agency by reference to mortgage rates prevailing in the financial market. The current variable rate to borrowers, excluding mortgage protection, is 4.3%. The current fixed interest rate available on local authority loans, excluding mortgage protection, is 5.3% for a period of five years. These rates compare favourably with the equivalent rates charged by commercial lending agencies and are adjusted in line with any movement in ECB rates.
The shared ownership scheme consists of two elements, a mortgage portion which operates as a normal annuity related loan and a rental portion which is index linked in nature. The mortgage related portion would be subject to the same rates as those that apply under the affordable housing scheme while the rental portion attracts a rental charge of 4.5% to the borrower and the capital is indexed by reference to movement in the consumer price index. There is no link between the rate charges on the rental portion and the rates quoted in the European market and therefore no adjustments can be anticipated in line with ECB movements.