Dáil Éireann díospóireacht -
Tuesday, 25 Apr 2023

Vol. 1037 No. 1

Re-introduction of Mortgage Interest Relief: Motion [Private Members]

Deputy Pearse Doherty

I move:

That Dáil Éireann:

acknowledges the most recent Stability Programme Update 2023, which forecasts a general government surplus in excess of €10 billion this year;

agrees with:

— the Free Legal Advice Centre that "spikes in the cost of living and interest rates threaten an increase in new arrears cases"; and

— the Money Advice and Budgeting Service that "the interest rate hikes serve as a particularly alarming trend during a cost-of-living crisis and are having disastrous effects";

notes that:

— in March the European Central Bank (ECB) increased its main lending rate for the sixth time since July 2022, from 0 per cent to 3.5 per cent;

— the ECB is due to meet again in the next two weeks to consider further increases;

— over 250,000 tracker mortgage borrowers have seen immediate and significant increases in their mortgage repayments;

— more than 43,000 variable rate mortgage borrowers with loans held by non-banks and vulture funds have seen significant increases in their mortgage repayments, with interest rates reaching as high as 8 per cent; and

— a wider cohort of mortgage borrowers, including first-time buyers, face or are likely to face further increased mortgage repayments; and

calls on the Government to:

— introduce targeted and temporary mortgage interest relief to support homeowners facing significant increases in their mortgage costs;

— provide mortgage interest relief exclusive to principal private residences only, equivalent to 30 per cent of increased interest costs relative to June 2022, with a maximum relief to mortgage holders of €1,500 per annum;

— reverse its previous position and mandate the Minister for Finance, Michael McGrath TD, to commit to his previous position on the issue in 2018; and

— work with the Central Bank of Ireland to enhance the supervision of vulture funds in the interests of struggling borrowers.

Molaim an rún atá os comhair an Tí anocht. Níl dabht ar bith ach go bhfuil tionchar ag na rátaí ardaithe úis a chímid anois agus go bhfuil an tionchar seo ag brú síos go mór ar theaghlaigh atá ag streachailt leis an ardú ar chostais mhaireachtála. Do na mílte oibrithe agus teaghlaigh, tá tionchar láithreach agus tubaisteach ag na rátaí úis seo, atá ag dul in airde. Is arduithe de na céadta euro in aghaidh na míosa agus na mílte euro in aghaidh na bliana atá i gceist anseo do dhaoine atá ag díol a gcuid morgáistí. Níl dabht ar bith ach go bhfuil sé in am don Rialtas gníomhú, feidhmiú agus tacú agus cuidiú leis na teaghlaigh seo. Is féidir é seo a dhéanamh. Is féidir leis an Rialtas, agus, i mo thuairim, caithfidh an Rialtas, scéim tacaíochta úis mhorgáiste a thabhairt isteach chun tacaíocht, cuidiú agus faoiseamh a thabhairt do na teaghlaigh seo lena gcuid costas i leith a gcuid morgáistí, atá ardaithe mar gheall ar chúrsaí úis. Tá géarghá chun é seo a dhéanamh go sciobtha.

For more than a year, households have been dealing with high inflation and the impact of rising prices, and for mortgage holders, a new front has opened in the cost-of-living crisis, with mortgage costs having spiralled for tens of thousands of homeowners across the State. Since July, the European Central Bank has increased its main lending rates six times, by a total of three and a half percentage points. The ECB will meet again next Thursday and it is likely it will increase the rate once more. Retail banks have been slow to increase their fixed and variable rates, although it is expected rates increases will follow in the near future.

Tens of thousands of households have felt the full brunt of interest rate hikes. They have received letter after letter informing them of another interest rate hike and a higher mortgage repayment, with more pressure, anxiety and distress for the families involved. The more than 250,000 households on trackers have faced immediate hikes in their interest rates and immediate reductions in their disposable income. Then there are those whose mortgages were sold at discount to vulture funds. They were told by the Taoiseach they would be no worse off once their mortgages were sold on to the vultures, but Sinn Féin repeatedly warned the sale of mortgages to vulture funds would leave workers and families at the mercy of these funds and exposed to higher interest rates, and that is precisely what has to come to pass. More than 80,000 households and borrowers with mortgages held by non-banks and vulture funds are on variable interest rates. They are now being hit by spiralling rates, with some being charged as high as 8%. Their mortgage repayments have increased by hundreds of euro per month and thousands of euro per year. For a worker or family, the monthly mortgage repayment is no different from an energy bill or the weekly food shop. It is an essential outgoing that cannot be avoided without dire consequences such as arrears, increased debt, financial insecurity and anxiety.

I want to outline the real impact that rising mortgage costs are having on families and workers. A borrower whose mortgage had been sold to Pepper contacted me. Her interest rate has increased from 4.5% to 8% and her mortgage repayments have increased by €300 per month, or €3,500 per year. With the income shock this has caused, she is terrified of having to cut back her repayments or fall into arrears. Another borrower, whose mortgage was sold by Permanent TSB to a vulture fund, also contacted me. She has seen her mortgage repayments increase by €523 per month, or more than €6,000 per year.

This is the context in which we need to debate this Sinn Féin motion. In the past several months, the State has rolled out schemes to support businesses including large corporations with their energy costs, and schemes whose design is imperfect but whose objective is often justified. The question we must now ask, as we debate this motion and as borrowers face spiralling mortgage repayments, is whether we should stand back and do nothing or be proactive and do something. As so many have said in recent times, we cannot let the perfect be the enemy of the good. It is clear to me and Sinn Féin that households facing these spiralling mortgage costs in the midst of a cost-of-living crisis need support, and that is what the motion calls for. It calls for the introduction of a mortgage interest support scheme providing targeted and temporary relief to assist struggling households with rising interest costs. That should be done by introducing a scheme that absorbs a portion, 30%, of the increased interest costs compared with June 2022, before interest rates began to rise. It should be capped at a maximum benefit of €1,500 per household that qualifies over the course of the scheme. This would apply only to primary dwelling homes and would exclude second and rental properties, and it would be temporary, in place between now and the end of the year, for eight months. As an example of how this would work, for a household whose mortgage costs have risen by €400 since June 2022, the scheme would provide relief of €120 per month, or, between now and the end of the year, €960 over the course of its operation. It would not insulate households from the full impact of rising interest rates, but it would provide some relief. It would take the sharp edge off the shock.

This would not be a blanket relief, as existed previously, which the now Minister for Finance, Deputy Michael McGrath, championed in 2018 and which the now Tánaiste called for to be increased in 2015. The relief we are talking about would be temporary and targeted, providing much-needed support to households at the sharpest edge of rising rates and to struggling home-buyers. As has been said many times, we cannot let the perfect be the enemy of the good. We propose that an allocation of €400 million be made towards the scheme, taking into account standard variable rates potentially increasing by 2%, fixed rates increasing by 3% and tracker rates increasing further in the time ahead, and all with immediate effect on mortgage loans provided by retail banks. We have also engaged with the Parliamentary Budget Office regarding the costs associated with these scenarios.

It should be noted that in this period AIB has increased its standard variable rates by 0.35%. The assumptions are very high. It also assumes the maximum relief is applied to all standard, variable and tracker mortgages held by non-banks and vulture funds - an overestimation that is unlikely to materialise but, for the purpose of costings, reasonable assumptions are made.

This is a sensible and necessary proposal to bring forward mortgage interest relief, is one that can be delivered and that can provide meaningful support to households at the sharp edge of the interest rate hikes and stave off the risk of rising arrears. I call on all Deputies to stand by those who have mortgages, to reintroduce targeted, tailored and time-bound mortgage interest relief and to support this motion.

Deputy Louise O'Reilly

Figures produced by the CSO recently show that in real terms wages have fallen by 3.3% because they are not keeping pace with inflation. What that means for people who are facing hikes in their monthly mortgage repayments, people who would benefit from the Sinn Féin proposal that we are debating this evening, is that they are getting squeezed from all sides. They are paying more for goods and services, more for their shopping every week, more for their gas, electricity and every other bill. Something has to give. People who are working hard to pay their bills are finding, week on week and month on month, that their wages cannot stretch to meet the growing demands on their pay packets, which are already falling well behind inflation. The mortgage interest support scheme that Deputy Doherty has proposed will be targeted and time-bound and will support those who are struggling to pay their mortgages and are fearful of the hikes that are to come.

The Minister will have heard about people from the Society of St. Vincent de Paul saying that there might be a car in the front garden or that people may not outwardly appear to be struggling, but they are. I want to talk to the Minister about a woman. I will not name her. I will not identify her because she is absolutely mortified. She is mother to one of the more than 1,000 children in my constituency who are waiting for services from the children's disability network team. At a recent meeting, the HSE stated that we are among the longest waiters and have the longest lists. The woman in question buys services for her daughter privately. Her daughter is autistic. She buys those services privately. Every time her mortgage goes up, she has to cut back on the services for her child. The Minister does not seem minded to put enough effort into supporting the child, but perhaps he might be minded to put a bit of effort into supporting her parents, who are subsidising the State from their own wages.

Deputy Martin Kenny

Rising mortgage interest rates have put homeowners at risk and under severe financial pressure. In the context of last week's announcement from the Government that there will possibly be a surplus of €10 billion this year and one of up to €16 billion next year, it is completely ridiculous that the Government is not supporting homeowners who are experiencing such stress.

Mortgage interest repayments are rising by colossal amounts. In some cases, they are increasing by thousands of euro per year. Some people are paying up to 8%, particularly those who are in the clutches of vulture funds and other agencies that bought up loans at low prices and are now pushing repayment rates through the roof on people.

Our proposal is that repayment should be on the basis of the interest rate that was charged in June of 2022 and that we would look at 30% of the additional interest being taken away in order that people could have a bit of a break, and that this would be capped at €1,500 per annum. In the past, it was open-ended. That is not what we are talking about. We are talking about something that would be controlled and that would be in place to support people through all of the difficulties they are experiencing. Rising mortgage interest rates are putting the possibility of buying homes beyond the reach of so many people. First-time buyers are finding it very difficult.

The Government recently announced grant aid to assist people in regenerating older properties. People cannot get mortgages to buy those properties in the first place. If they do get mortgages, the interest rates relating to them are through the roof. There needs to be an assessment of all of this in order to see how we can support people.

Sinn Féin has repeatedly called for the introduction of a temporary mortgage interest relief. We need to have that in place to support mortgage holders, we need to have a limit on it and we need to ensure that it is introduced as quickly as possible. It is time for the Minister to accept what he has set his face against for so long and recognise that, in the context of the largest budget surplus he will ever have, there needs to be something put in place to protect and assist mortgage holders who are under major pressure. That needs to be done immediately. Now is the time to act in order to ensure that we can save people in every constituency from the huge distress they find themselves in.

Deputy Pa Daly

The need for this motion to pass and for mortgage interest relief to be granted is clear because evictions, repossessions and mortgage arrears are all on the rise in Kerry, as they are across the State. County Kerry has a very high level of relative deprivation. Employment is often seasonal, part-time and low paid. Homeowners in the county are particularly susceptible to interest rate increases and rising household costs more generally. The recent revelation - this is not a joke - that exactly one affordable home was built in the county last year is a damning indictment of how the county is being served by the Government and its housing policy. Housing lists are long - up to 14 years - affordable homes are few and far between and the cost-of-living crisis is forcing those with mortgages on their homes into even greater precariousness.

The main reason for this cost-of-living crisis is, of course, rising energy prices. Whether paying for energy directly or for goods that are subject to higher energy costs, workers and families are being squeezed. In this context, I want to outline some facts from the recent Household Energy Price Index study commissioned by the Austrian and Hungarian energy regulators. The study found that Ireland was the most expensive of 33 countries surveyed. That includes the EU, UK and Ukraine. Financial supports per capita for households to help cope with the price rises are lower here than in other European countries. After this month's credit is applied, no further supports are in the offing. The survey also found that residential gas prices in Ireland were the eighth most expensive of 28 counties studied. The cost of electricity has doubled for Irish households in the past two years. The Household Energy Price Index calculates the supports per capita in Ireland at €1,071 since September of 2021. Ireland was well above the EU average unit price of 28.3 cent per kilowatt hour at a staggering 49.9 cent per kilowatt hour, or nearly double. Most disgracefully, a sharp drop in wholesale costs has not resulted in any drop in consumer prices. Recent Central Statistics Office data shows wholesale prices went down by more than 50% in the year to last month.

Households are at breaking point and need whatever assistance they can get. Mortgage interest relief is only one part of the picture but it is an important measure nonetheless.

Deputy Matt Carthy

It is hard to fathom that since July of last year we have seen six increases in ECB interest borrowing rates from 0% to 3.5%. Knowing, as we all do, that this represents hundreds if not thousands of euro worth of additional pressure on already hard-pressed families and workers, it is hard to fathom why Government has not done a single thing to support people. In fact, the increases in mortgage payments for many families go way beyond countering any supports that they have received by means of other cost-of-living measures. Now we are told that another increase is coming down the line, and the Government again tells us that it plans to do nothing to support those families who will struggle as a result.

The people who have suffered most as a result of these hikes are those who suffered on the previous occasion when Fianna Fáil was in government and whose loans were sold to the vultures. They are being crucified by the vulture funds that were welcomed into this country by the parties in government.

There is also another time bomb that is ready to explode, and that is those thousands of families who are currently on fixed rates and whose fixed-rate periods are coming to an end. They will see an astronomical increase in their payments. It is imperative that Deputy Doherty's motion before the Dáil is passed and implemented because the outworkings of the alternative do not bear thinking about.

In a week in which the Government announced €1 billion in subsidies for developers, what we are putting forward is a proposition to support the people at the coalface. What we propose would cost €400 million at most.

The alternative to the Minister doing something is that he will push families, workers and those people who are lucky enough to have their own home at present into financial distress. It would be the irony of ironies, when we spend so much time in this House talking about those people who, as a result of the Minister's policies, are not able to have their own home, if it was matched with those people who are lucky enough to have a roof over their head that they can call their own being under threat because of the financial distress that will be caused if we do not implement the measure we are calling for. It is a time-bound, limited measure that will give some assistance to those people who have been suffering so much as a result of rising interest rates.

Deputy Brian Stanley

Mortgage holders across the country are seriously struggling at the moment. I have received many complaints, as I am sure others have, from mortgage holders in Laois-Offaly. Households are paying interest rates of 7% and 8%, with repayments rising by thousands of euro per year. This is happening at the same time as the banks are making huge, record profits, but offering 0% interest on deposits. Banks are not passing on any share of their profits to ordinary people and mortgage holders. Instead, they are increasing interest rates on mortgages to breaking point. We are in the middle of a cost-of-living crisis. We do not need to be reminded of this but I will say it. It is in the context of sharp increases in the cost of energy, transport, food and so on that we are putting forward a modest measure. Sinn Féin is calling for a targeted, temporary mortgage interest relief scheme. We had mortgage interest relief in the past. It was open-ended. Indeed, the Minister called for it to be reintroduced.

What we are calling for is a modest measure. It is a scheme to support struggling householders by financially covering 30% of the additional interest paid per month, up to a limit of €1,500. Mortgage holders with an outstanding balance of €200,000, with 20 years left, which would be typical in a county like Laois or Offaly, have seen their interest rates go from 2% or 2.5% to 5.5% or 6%. They have seen a 6.5% jump. They will now be paying €400 extra per month. The scheme that we are proposing will see some relief for them and would mean €120 extra in their pockets, or €960 in total in the current year. This would not apply to second homes, holiday homes or rental properties. It would only apply to the family home. It would therefore be most beneficial for those in the family home and workers and families on low and middle incomes, because it is set at a limit, whereas previously that was not the case. We developed these proposals in consultation with the Parliamentary Budget Office. Based on that analysis, it would cost a maximum of €400 million.

To conclude, this measure is sensible and affordable. It can be funded by a portion of the State's projected surplus this year of more than €10 billion. Families need real support, not empty words. We are often asked for solutions and we constantly point them out. I ask the Minister to take this one on board. We have a financial surplus and we have the money. We are asking the Minister to use a very small part of this to help ordinary people, especially hardworking mortgage holders who need relief at this difficult time.

Minister for Finance (Deputy Michael McGrath)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"notes that:

— the European Central Bank (ECB) is independent in the formulation of monetary policy for the Eurozone Area;

— the ECB's objective is to maintain price stability and wishes to ensure a timely return of inflation to its 2 per cent medium-term target; and

— since last June, the ECB has increased official interest rates on six occasions by a total of 3.5 percentage points;

recognises that:

— the changed interest rate environment will not have a uniform impact on all borrowers and, depending on particular situations such as the terms of individual contracts, some borrowers will experience a higher increase in interest rates than other borrowers; and

— in addition to the general increase in the cost of living, an increase in interest rates will pose difficulties for many borrowers;

further notes that:

— the reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered, not on an ad hoc basis, but in the context of a range of other cost of living measures being provided; and

— recent research by the Economic and Social Research Institute Behavioural Research Unit found that consumers can potentially make substantial savings by choosing better value financial products, including mortgages;

recalls that:

— Budget 2023 was a 'cost of living' budget, focused on addressing inflationary pressures;

— a budget package of €6.9 billion is in place for this year, including over €3 billion in direct measures to address the cost-of-living challenge, such as adjustments to income tax bands and increases in social welfare payments;

— this was complemented by a set of one-off cost of living supports introduced in the final quarter of last year worth over €4 billion, and this built on the cost of living measures announced before Budget 2023 amounting to €3 billion;

— the Government has continued to act to respond to the rising cost of living, and a further package of supports worth €1.3 billion was introduced in February; and

— this brings the total fiscal support made available by Government to assist with the cost of living challenge to some €12 billion, or almost 4.5 per cent of modified national income;

further recognises that:

— while a general government surplus of €10 billion is projected for 2023, this figure includes windfall corporation tax receipts estimated at almost €12 billion this year; and

— if these potentially transient receipts are excluded, there is a significant underlying deficit in the public finances;

acknowledges that:

— Government policy must strike a balance between providing support when appropriate and ensuring the public finances remain on a sustainable trajectory over the medium-term;

— the increase in inflation over the last year has had a significant impact on the cost of living for Irish citizens;

— while the Government has already acted repeatedly and on a significant scale to absorb some of the impact, fiscal policy must remain broadly neutral so as not to add to inflationary pressures;

— borrowing costs, including sovereign borrowing costs, are on a rising trajectory, increasing the importance of prudent fiscal policy; and

— the budgetary process is the best and most appropriate way to consider further action on the cost-of-living challenge, and this issue must be addressed in a strategic, comprehensive and responsible manner;

furthermore, notes that:

— there is a strong consumer protection framework in place for borrowers who may experience repayment difficulty due to rising interest rates or the cost of living more generally;

— all Central Bank of Ireland regulated lenders and credit servicers, both banks and 'non-banks', are required to follow the provisions of the relevant statutory consumer protection codes, including the Consumer Protection Code and the Code of Conduct on Mortgage Arrears;

— in particular, all cases of mortgage repayment difficulty have to be handled positively and sympathetically by a lender or servicer with the objective at all times of assisting the borrower to meet his or her mortgage obligations, and cost of living regulated entities must work with co-operating borrowers to, if possible, put in place a suitable alternative repayment arrangement;

— the Governor of the Central Bank of Ireland has indicated that the Central Bank expects firms to be prepared and to be proactive in supporting their customers to navigate the changing economic environment; and

— there are a number of public initiatives to assist people who are in mortgage or other debt difficulty, such as the Abhaile service, which is made up of the Insolvency Service of Ireland, the Legal Aid Board, the Money Advice and Budgeting Service and the Citizens Information Board, which provides free financial advice and, where appropriate also, legal advice to people experiencing difficulty with their mortgage; and

therefore:

— supports the Central Bank of Ireland as it continues to supervise and engage with regulated firms, to ensure that such firms use all their range of forbearance for borrowers facing repayment difficulty;

— in particular, encourages the Central Bank of Ireland to continue its engagement with 'non-bank' regulated firms to ensure that the suite of products provided to their customers who are experiencing difficulty is in line with the bank's expectations;

— also calls on the Central Bank of Ireland to ensure that all lenders assess all switching applications in a prudent and fair manner regardless of the borrower's current mortgage provider; and

— notes that much progress has been made in recent years in reducing the level of mortgage arrears, including during the Covid-19 period, and calls on mortgage creditors and relevant public bodies to continue their efforts to further tackle existing mortgage arrears cases."

I thank the Deputies for raising this important issue in the House this evening. Let me begin by acknowledging the common ground that exists here tonight. The current inflationary environment and the resulting increase in interest rates undoubtedly present serious ongoing challenges for many. High levels of inflation cause difficulties for the economy and hurt households and businesses. Inflation impacts people's real incomes, increases costs for firms and heightens economic uncertainty. I and my Government colleagues recognise and acknowledge this. While inflation in Ireland has fallen, it is still running too high. The European Central Bank has an independent mandate to maintain price stability and is taking action to bring it down to its desired target of 2% over the medium term. The ECB has now increased its official interest rates six times since last summer, as Deputy Doherty said.

Due to their particular contractual arrangements, existing tracker mortgage borrowers will see that their interest rate is increasing in line with ECB rates. For borrowers on fixed-rate mortgage contracts, their interest rate will not change over the period the interest rate is fixed. By its nature, the adjustment of the interest rate on a variable mortgage is more flexible. The data indicate that a significant proportion, 93% in February this year, of new mortgages in recent times are fixed-rate mortgages and this will protect borrowers in the event of a rise in official and market interest rates for at least the period that the interest rate is fixed.

The Irish average interest rate on new mortgages is now below the eurozone average and in February Ireland had the third lowest mortgage rates in the eurozone for new mortgages. However, I acknowledge, of course, that interest rates are higher on outstanding mortgages. Central Bank data indicate that, at the end of last year, the average interest rate on mortgages held by banks was 2.93% and it was 3.26% for those held by non-banks.

The increase in the level of interest rates, allied to the general increase in the cost of living, causes real difficulties for some mortgage holders. I and my Government colleagues are acutely aware of this. In this regard, I am continuing to liaise closely with the Central Bank and I have also engaged directly with mortgage lenders. In the context of the Central Bank's review of the consumer protection code, I have indicated that it will be important to support borrowers as they seek to minimise their mortgage costs and to assist the mortgage switching process. Lenders can do more to show that they are open to mortgage switching applications and to resource that banking activity. It is my view that the Central Bank should further review existing regulatory provisions and consider whether a stand-alone mortgage switching code could better encourage and facilitate switching in the mortgage market in Ireland. The Central Bank should put further information and data on the mortgage market into the public domain and I understand that the bank intends to publish material and research on the impact of rising interest rates on mortgage borrowers tomorrow. I look forward to that.

The drivers of inflation are global in nature and, accordingly, it is not possible for any Government to fully absorb the costs. However, this Government has responded swiftly and decisively, multiple times, to help to offset the most severe impacts of inflation. The policy response has also been designed to avoid generating second round effects that could lead to an inflationary spiral. Overall, €12 billion in direct relief has been made available to counter the effects of inflation so far.

It is important that the cost-of-living issue is addressed in a strategic, comprehensive and responsible manner and the budgetary process is the best and, in my view, the most appropriate way to consider further action in respect of the cost-of-living challenge. The reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered not on an ad hoc basis, but in the context of a range of other cost-of-living measures being provided. As the Deputy will be aware, mortgage interest relief for principal private residences was phased out on a gradual basis from 2009 onwards. As part of the discussions leading to the Programme for a Partnership Government in 2016, I proposed and it was agreed to retain mortgage interest relief beyond the original end date of 2017 on a tapered basis up to 2020. This tapered extension took the form of the continuation of 75% of the existing relief into 2018, 50% in 2019 and 25% in 2020. The decision to taper the ending of the relief was targeted at people who had taken out their mortgages at the height of the property price boom and were in substantial negative equity. Notably, this motion put forward does not include an estimated costing of the proposal, nor does it specify the duration of the relief, although it was said tonight that it would be until the end of the year.

Deputy Pearse Doherty

I have said it so many times.

Deputy Michael McGrath

It is not in the motion before the Dáil. Deputy Doherty said in the media yesterday that it would cost in the region of €400 million between now and the end of the year, and that it would be funded from the surplus. He did not say how much it would cost next year.

Deputy Pearse Doherty

Because it ends.

Deputy Michael McGrath

He has not said it will end at the end of the year and when or in what circumstances it will end. He has put forward a motion, which the Dáil has to consider, not what he has said elsewhere or previously. My officials estimate it could cost up to €600 million in a full year. There was no mention of mortgage interest relief in Sinn Fein's pre-budget submission published last September even though ECB rates had already been increased by 1.25% by that date and there was a widespread expectation of further rate increases. In fact, this proposal is part of a consistent pattern on the part of Sinn Féin, issue by issue, calling for more expenditure or tax concessions without ever giving us an overall picture of how much in total it would cost.

Even looking at the Sinn Féin website today, we see the party spokesperson on environment and climate action, Deputy O'Rourke, is calling for an energy price cap. It is not clear who would pick up the tab but presumably the State would be on the hook for most if not all of it. Deputy Cullinane recently called for a multi-annual capacity expansion plan to deliver increased hospital capacity. The party's education spokesperson, Deputy Clarke, called for changes to the salary scale for new teachers and highlighted demands to increase spending on second level education from 1% to 1.9% of GDP, even though Sinn Féin knows well that GDP is not the appropriate metric for Government spending to be compared with other jurisdictions. It has also made recent calls for more funding for child and adolescent mental health services, increased investment in psychosocial supports for family carers, a dedicated retrofitting programme for solid fuel households, new supports to sheep farmers and increased stipends for PhD student supports. I could go on and on.

Deputy Pearse Doherty

All in our alternative budget.

Deputy Michael McGrath

These are just the demands made in the past couple of weeks. All of these are undoubtedly worthy proposals in themselves but when they are aggregated, they certainly add up to hundreds of millions of euro of additional expenditure at a minimum.

Deputy Pearse Doherty

And all in the alternative budget.

Deputy Michael McGrath

They are not.

Deputy Pearse Doherty

They are.

Deputy Michael McGrath

The proposal Sinn Féin has put forward tonight is not.

Deputy Pearse Doherty

Bar this one because interest rates have gone up to nearly 4%.

Deputy Michael McGrath

If Sinn Féin is genuine, it should publish a consolidated package setting out in total what its proposals are. Just as it recycles the same tax proposals every year in the pre-budget submission-----

Deputy Matt Carthy

Says the man who announced €1 billion in spending this week for developers.

Deputy Michael McGrath

-----restricting pension tax relief and hammering high earners, there is a predictability to the expenditure proposals as well. Each proposal is designed to target an individual group of voters without any overall strategy or coherence.

As regards the impact of this motion, the proposal is unlikely to be of benefit to mortgage holders who fixed their mortgages - approximately two fifths of all mortgage holders or 39% - as the interest rate on fixed interest mortgages will not change until the end of the fixed rate period. Mortgage holders who could and did fix their mortgages made what they regarded as a prudent decision. However, they are unlikely to benefit from the proposal in the motion. This may give rise to potential equity and fairness issues. Equally, anyone who took out a mortgage since last June, would presumably not benefit from this proposal either.

Deputy Pearse Doherty

They do.

Deputy Michael McGrath

That is not spelled out. This is despite such mortgage holders experiencing a significant increase in the cost of their mortgages. Additionally, it is important to note there may be scope for many borrowers, in particular variable rate mortgage borrowers who have built up equity in their homes, to look at alternative mortgage options to reduce their mortgage costs.

That being said, there will be some mortgage holders who are not in a position to fix their mortgage or may experience real difficulty. It is essential, therefore, that lenders and servicers, as well as borrowers who are experiencing difficulty, avail of and utilise the strong consumer protection framework to protect borrowers and ensure, where possible, real and effective solutions are put in place. As the independent regulator, the Central Bank has stated it expects regulated firms to be proactive and prepared to support their customers who may experience difficulties in what we know are challenging times for many. It is actively engaging with regulated entities, including non-banks, to ensure that their approach to supporting their customers will use all their range of forbearance for borrowers experiencing repayment difficulty and is in line with the bank's consumer protection framework and expectations.

These are challenging times for many mortgage holders. However, the Central Bank and wider Government framework to protect, support and assist mortgage holders has worked during difficult times in the past, such as the fall-out from the financial crisis and, more recently, the Covid period. It is a sound framework to meet the current difficulties that will arise for many borrowers. The Government will continue to work with regulators and lenders to ensure borrowers are protected at this time. I commend the countermotion to the House.

Deputy Pearse Doherty

Maybe the Minister should get a basin of water to wash his hands of how he has abandoned mortgage holders.

An Cathaoirleach Gníomhach (Deputy Michael Ring)

The Deputy will have an opportunity to respond.

Deputy Chris Andrews

I commend my Sinn Féin colleagues on the motion. We have seen from previous financial crashes, including those associated with the Covid-19 pandemic, the war in Ukraine and the current cost-of-living crisis, that we live in a very volatile economic system. It is shifting and changing, not always for the better. Since July, the European Central Bank has increased its key lending rate six times. Many struggle to get their head around the impact of these announcements and how they may impact on their repayments.

These interest rate hikes are having a crippling effect on thousands of families. While this Government is sanctioning €1 billion in savings to developers, it will not help struggling mortgage holders. These hikes are costing families thousands over the course of a year. Ireland's mortgage rates are already much higher than the European average. Homeowners whose mortgages were sold off to vulture funds are among those most at risk. Some of their rates have gone as high as 7.5%. Those homeowners have been abandoned by Fianna Fáil, Fine Gael and the Green Party and left at the mercy of the vulture funds. As a result of all these hikes in interest rates, homeowners are now under severe financial pressure and deeply worried about what lies ahead. The fear of losing their homes is a tragic possibility for many. At a time when the Government is forecasting a surplus of more than €10 billion this year, why is it not standing on the side of homeowners? We have never been a wealthier country. We have never had so much money and yet so many have so little. People are suffering and having to put up with the Government supporting developers and vulture funds, while it gives no relief to hardworking mortgage holders. Why is the Government not giving homeowners the break so many are calling out for and need?

The sharp rise in interest rates is not just having a harsh impact on mortgage holders. The increases in interest rates are pushing the possibility of buying a home further and further away from first-time buyers. They are being left to pay sky-high rents as the Government fails to deliver affordable housing. Sinn Féin has repeatedly called for the introduction of temporary mortgage relief, a proposal that would see homeowners who are struggling with their mortgages get support, with relief of up to €1,500.

Deputy Dessie Ellis

The cost-of-living crisis has been a dominant part of people's lives since the end of 2021. In particular, the significant increases in fuel prices and the cost of food, groceries, heating and energy, in addition to exorbitant rents, have all greatly impacted on those least able to shoulder the burden of these runaway costs.

The high cost of this crisis for the country is that many have been driven out to take up better employment and educational opportunities not available in Ireland, where they will have a better quality of life, a chance at homeownership and a lower cost of living. The most urgent needs for people are housing and quality healthcare. They are not getting either here. Substantial amounts of an individual's income are also going towards the cost of childcare, education and transport. There is too much uncertainty and instability in people's lives and they are fearful about their future. Those fortunate enough to own their own homes are now finding that rising mortgage rates are putting them under severe financial pressure. The repeated increases in the main lending rates by the European Central Bank since last July have resulted in mortgage repayments that are exorbitant amounts for some.

Typical tracker interest rates have increased from 1.15% in June last year to 4.65% on average. Those with tracker mortgages are particularly feeling the brunt of these interest rate rises. Those on tracker mortgages now face increases in repayments on a typical tracker of up to €1,650 over a full year. These interest rate rises will also impact on first-time home buyers who will find it more difficult to buy a home. People in such a position are at great risk of falling into arrears. There is also a possibility that, in the long term, they will lose their house or apartment.

These interest rate rises have proved to be very challenging for homeowners. This is why Sinn Féin has called for the introduction of a targeted and temporary mortgage interest relief that would be limited to eight months and subject to strict criteria, namely, that it would apply only to principal dwelling homes and new and existing mortgage agreements. It is time to give homeowners a break. This measure will go some way to alleviating the acute financial distress these interest rates are causing homeowners.

Deputy Réada Cronin

On all the evidence, the Government is indifferent to the suffering of people in this housing disaster. It is indifferent to the suffering and panic of people who are facing eviction and have nowhere to go. It is indifferent to the suffering caused by a series of increases in their mortgage repayments leaving them completely broke and broken, many for the first time in the lifetime of their home loan. The Government's supporters, the usual free marketeers, do not have to worry from the security of their plush homes, handy inheritances and well-pensioned jobs.

A heck of a lot of people in north Kildare are contacting me to tell me they are squeezed dry; rate rise after rate rise. They are shocked to a man and woman, and they are frightened. There are people who would have previously been comfortable being able to afford a takeaway on a Friday night or a holiday during the summer and weekends away with no problems funding trips or hobbies for their kids, living the lives that ordinary working people really should be expected to be able to live. Now, suddenly, at the end of the month, they have nothing. It is a noticeable number of people.

I met with a man yesterday who is having trouble because of his mortgage repayments. He told me he had never contacted Sinn Féin before but now realises that we are the only party listening to people and that understands the fear he is experiencing. Suddenly, a doctor's visit or even a note home from school about a trip or outing is a major financial problem. There is a coarseness and an ignorance, a sense of a dog-eat-dog mentality entering into financial and fiscal politics and society, and the people in this situation are really suffering. Our mortgage interest relief proposal will support people when they are suffering in this deep crisis of the cost of living. People are battered by a series of rate hikes in their mortgage for their ordinary house. The Minister might call that their primary dwelling. They call it their home. It means the world to them because it is the home for them and their children. It is where they have their lives as a family and where they can close the doors and feel safe.

Despite the #bekind, there is zero kindness in this Government to people who are struggling with housing, be it evictions or the increasing mortgage payments. There is zero kindness and zero concern. This Government's indifference should be a red flag to the people who voted for it. Fianna Fáil likes to pretend it is the party of homeownership. Do not make me laugh.

Deputy Paul Donnelly

I met a woman recently when I was canvassing in Huntstown, which is in my constituency. To say that she was extremely worried about the never-ending increases in her mortgage interest rate and was becoming increasingly concerned that there will most likely be more increases in interest rates in the coming months is an understatement.

As was stated, the Central Bank of Ireland has increased its key lending interest rates an incredible six times. In real-life terms, this means 250,000 people on tracker mortgages have been on the sharp end of those increases in interest rates. The most vulnerable among those people have been caught up in this nightmare situation are those who have loans held by the vulture funds and non-banking groups. It is estimated that in the region of 43,000 people, which is a phenomenal number, have no power or no belief that those who own their loans care about them. It is all about maximising profit. For many people, it is the difference between paying the mortgage, paying for food and paying a massive gas or electricity bill. The luxuries have been long stripped out of their budget.

There is all sorts of talk about the budget surplus. I heard the Minister on the radio talking about billions of euro washing around in the coffers. I heard him speak about rainy days and how we need to put money away for the future. I agree with him; we need to do all of that. We also need to ensure that people are looked after in the here and now, however, and that we support as many people through this very difficult time as we possibly can. As was mentioned, Sinn Féin is proposing a temporary and targeted mortgage interest relief for a period of eight months that will give upwards of €1,500 benefit to a household. We appeal to the Minister at this late stage, despite his amendment to the Sinn Féin motion, to reconsider his position on the issue of supports to those who are faced with massive increases in their mortgages.

Deputy Ged Nash

I spoke in favour of a similar motion in February and since then, there has been a further hike in the European Central Bank, ECB, rates. It is the sixth such rise since July of last year. As we know, the ECB governing council is meeting again in early May. It said it will use data to inform its next move. Irish mortgage holders will anticipate that meeting with dread.

As I said in this House previously, I and the Labour Party remain somewhat sceptical about the efficacy of mortgage interest relief as a public policy instrument in delivering help to the households that need it most. In the past, it has tended to favour the better off with the bigger mortgages. We know that in 2008, the relief cost €800 million for that year alone. We know, too, from independent research that it was the richest - those who live in the biggest and most expensive houses - who benefitted the most. It was a policy where, perversely, the lowest earners with no homes to call their own subsidised the better off through taxes. The transfer of wealth from the have-littles to have-lots was in many ways a reverse Robin Hood. In light of six ECB rate hikes since last July, however, and the more recent concerns over rate increases expressed by the Money Advice and Budgeting Service, MABS, and Free Legal Advice Centres, I absolutely understand why the case would be made for a measure like this on the basis that it would be targeted and time limited. The Labour Party supports this motion this evening.

Initially, Irish banks were reluctant to pass on these ECB hikes to domestic mortgage holders. However, inevitably, that has changed more recently, and householders are now facing major hikes in their mortgage costs. It is in that context that I and the Labour Party support this motion for targeted and temporary mortgage interest relief equivalent to 30% of the increased cost of the mortgage capped at €1,500. It is but one contribution to the challenge of high and growing mortgage costs. We would like to see the Government go further, however, and adopt the Labour Party’s approach in delivering real relief to mortgage holders and guard against future rate hikes by the introduction of a mortgage rate cap. The Minister will be familiar with that approach because it is something he himself proposed.

People are already being hammered by the cost-of-living crisis and these constant mortgage rate hikes are like repeated body blows to households who are already struggling to make ends meet. There is a very real possibility that rates will continue to rise. That is why Government must urgently get a grip on this situation and stop playing catch-up like it has done with energy cost rises.

The Labour Party proposed legislation to take the heat out of this situation and relieve some of the financial pressure on mortgage holders. Our Central Bank (Variable Rate Mortgages) Bill 2022 would enable the regulator to impose caps on mortgage interest rates charged by the banks where a market failure is shown. The Minister will be familiar with that approach. The legislation I refer to draws inspiration from a Bill the Minister tabled when he was in opposition as Fianna Fáil finance spokesperson just a short number of years ago. If the Minister's Bill was necessary then when he was in opposition and, I will remind him, in an era of low interest rates, he surely must agree that it is essential now with more ECB interest rate hikes on the way.

There is a precedent for the Oireachtas to enable the Central Bank to intervene in the market once certain clear thresholds are met or, indeed, breached. We passed legislation in this House in recent years to impose a cap on the interest rates on moneylenders. There is no constitutional impediment, as was argued previously. It had been argued by the 2016 to 2020 Government in terms of the Bill that it proposed with regard to mortgage caps. There is no constitutional impediment to enabling the Central Bank to intervene in the market and introduce reasonable caps on interest rates charged by financial services providers. That is established. The only impediment is the lack of political will and ideology.

Commentators suggest that mortgage interest rates could soar towards 4% later this year as Irish banks begin to pass on the costs to more customers. AIB introduced rate increases across all mortgage types for the first time since the ECB began hiking rates last July. This move has affected thousands of borrowers. The policies of the other main lenders are changing too, and we anticipate significant changes over the next short period in response to ECB moves. The ECB president, Ms Christine Lagarde, is on record as saying there were likely to be further rises in the ECB rate and nobody knows where this will end. While we must, of course, respect the independence and the independent mandate of the ECB - the ECB and our own Central Bank are independent of Government for good reason - hardly anybody is questioning the continuous increases to interest rates being signed off by the European Central Bank from a policy point of view.

At times of high inflation, central banks have always routinely reached for the interest rates tool to dampen demand and activity and take inflation down. That is traditionally what has been done. We know there can be a lag, of course, between actions and the impact on an economy. When one looks at the some of the main indicators, however, perhaps it is time that the reliance on interest rate rises as the almost exclusive weapon for tackling inflation ought to be critically reviewed.

I say that because successive rises have not demonstrably impacted demand the way interest rate rises have in the past. It has not impacted significantly on bank lending. Savers, as was referred to earlier, have seen no benefit whatsoever in terms of interest rates on deposits. We have seen the phenomenon of greedflation, with big firms profiting enormously off the backs of customers and charging high prices at the checkout, even as input costs go down; all, of course, under the guise of the rising cost of living. The European Central Bank, hardly an anti-poverty NGO, also recognised this phenomenon. It has acknowledged that hyperprofits contribute to the inflation being felt most acutely by the least well-off. There is a very live debate happening across the European Union now about how that should be dealt with. One way is to consider a windfall tax approach on superprofits, for example, big supermarket chains raking it in at the expense of the ordinary consumer. We have seen the impact of enormous food price inflation and we know who is impacted most by it - those on low and modest incomes, those predominantly on low pay and people who depend on the State for their income. Those are the types of policy perspectives that ought to be considered, not simply all the time reaching for the tool of increased interest rates to deal with inflation. The policy debate needs to refocus and examine tackling outrageous corporate profits, rather than asking young mortgage holders and small businesses with loans to carry the can. There have been six successive hikes which have added hundreds of euro a month to the average family mortgage. The hikes show no sign of stopping; in fact, it is only going to get worse.

All of this occurs at a time when the Organisation for Economic Co-operation and Development, OECD, today reported a study, which I am sure the Minister has been briefed on and is familiar with, which stated that Irish households are, for the first time since 2013, experiencing a reduction in living standards and seeing them fall. That is despite the package the Government introduced last year in the budget, which contained a series of once-off measures and the repeat of some measures announced earlier this year. The Government's response is failing. It is not hitting the target or addressing these issues. We are in a real crisis and it behoves the Government to use every weapon at its disposal to cushion the impact of high costs for citizens across the economy, including mortgage holders with variable interest rate mortgages. The Labour Party supports the principles of the motion.

Deputy Róisín Shortall

I thank Sinn Féin for bringing forward this motion at a time when so many families are struggling to survive. They are trying to cope with the high cost of housing, the ongoing situation regarding inflation and pressures on family budgets at a time when interest rates continue to rise. All of this combines to place a heavy burden on many mortgage holders and first-time buyers. Unfortunately, the situation has only gotten worse since we last debated this proposal in February. Squeezed workers and families are struggling to absorb these huge interest rate hikes, not least in the context of the cost-of-living crisis, as I said.

Notwithstanding the real challenges facing mortgage holders, there is a need for a debate on what is the most effective and fairest way to intervene. I understand the desire to intervene directly by assisting those hardest hit but I am not convinced that this is the fairest or most effective way. In February, I outlined some concerns I had based on our very chequered history with mortgage interest relief. My overarching difficulty with the principle of mortgage interest relief remains the same, that it is a measure targeted at the upper end of income distribution. People who manage to get a mortgage are by and large in a better situation than most of their peers. Indeed, they are in a better situation than a great number of young people who now can no longer aspire to the whole principle of home ownership. The figures in respect of home ownership show clearly how they have collapsed in recent years. We must then ask if those who are better off, with better-paid jobs, are the only category who can aspire to home ownership and can get a mortgage. To get a mortgage for an average house in the Dublin area, you need a family income of approximately €120,000, way above two people on average incomes. While I am not saying that people in that category are wealthy, there is a large cohort of other people who cannot aspire to that in circumstances in which they continue to live in their parents' homes in their twenties and thirties or are renting and paying exceptionally high rents. Where is the support most needed? How is that support going to be provided to people? We must always observe the principle of both fairness and effectiveness in taking any measure which intervenes in the housing market.

In view of this, mortgage interest relief is typically considered a regressive measure because it amounts to transferring public funds, including from people with low incomes, to those who can manage to get a mortgage, which is quite an exclusive group of people in this day and age. It is a terrible reflection on this Government and the last, but it is the reality. People who are relatively better off are the only people who can now afford to get a mortgage. That is not to say we should do nothing because we cannot rely on the market to address these issues. However, our interventions must be designed specifically to drive down the cost of housing, not potentially or inadvertently fuel it. The need to drive down the cost of housing has never been recognised either by this or the last Government. The view has always been that this is about supply and if there is sufficient supply, then prices will go down. That does not necessarily follow. The rules of supply and demand do not apply to house prices because the other factor is the cost of land. At no point, certainly in recent history, has there been any serious attempt to address the issues of the high cost and high price of land. Essentially, developers control the supply of land, which they do in a way that maintains house prices at such an unaffordable level.

Any intervention must be very targeted and specific. I hear what people are saying about the time limit, which is to last until the end of the year but I have not heard anybody talk about what level of targeting, if any, would apply to placing limits on people's income, house prices or the size of the mortgage. Those are all factors which are important if there is to be an intervention like this and if it is to pass the fairness test. The Social Democrats has proposed several measures to drive down the cost of houses. We must use the very extensive public land banks that exist.

We know from, for example, Ó Cualann that it is possible to build a house at a build cost that is very substantially lower than the actual market price. That difference not only relates to developers' profit margins but also amounts very often to the cost of land. That is why it is critical the Government maximises the provision of housing on public lands. In that way the Government can achieve much cheaper prices for houses and, of course, a substantial increase in supply.

Another thing the Social Democrats have been talking about is that it is fine to say there is a lot of housing in the pipeline - probably not enough - but that takes time. There is no doubt that by far the fastest way of increasing the supply of housing is through dealing effectively with the large number of vacant homes. I have said already that the new tax that has been introduced is really not a serious tax. Ultimately, the Government needs to rethink radically its approach to the housing crisis and play a much more active role in delivering housing. The idea of more incentives for developers such as waiving development levies is certainly not the way to go. Those types of policies will not and cannot deal with the dysfunction in the housing market. In fact, they add to that dysfunction. The approach the Government has taken in most cases is to subsidise what are already unacceptably high house prices. That is the key thing. The aim has to be to drive down the cost of housing, not to subsidise already overvalued house prices. Unless the State steps in, this Government will continue to fail utterly to get to grips with the housing crisis.

Returning to the specifics of the motion, it is my view that the call on the Central Bank to enhance the supervision of vulture funds in the interests of struggling borrowers deserves much greater discussion. I fully support this aspect of the motion as the Central Bank has a key role in protecting mortgage consumers. In my view, however, it is completely failing to do so. New analysis by Moneysherpa, based on recent data released by the Central Bank, estimates that around 85,000 mortgage holders are currently customers of vulture funds. The majority of those customers, around 69,000, are paying mortgage rates of more than 4% on average, while an estimated 38,000 are on average variable rates of 5.57%. Tackling that rip-off that is going on in respect of mortgage rates has to be the priority. The Government has opened the gates and put down the red carpet for vulture funds, and it is again tolerating a situation in which people are being screwed over because of the lack of regulation in this area.

Deputy Richard Boyd Barrett

I thank Sinn Féin for bringing forward this motion on the very important subject of how mortgage holders are being absolutely creased with the mortgage interest increases they have experienced as a result of not only the rising ECB rates but also, and this is critical, as far as we are concerned, the profiteering of the banks. It is for that reason we think the Sinn Féin proposal is far superior to the do-nothing approach of the Government that essentially says these are decisions of the ECB, commercial banks and investment funds, and there is nothing we can do about it. Ordinary working people are seeing massive increases in what they have to pay to service their mortgages. For reasonably average mortgages people might have, they can have seen increases of up to €5,000 or €6,000 in the costs they have experienced over the past year or so. That is a huge hit for people on top of all the other cost-of-living increases they have suffered: rising energy costs, rising food prices and rising costs on just about every front. While we welcome, therefore, any attempt to give relief to mortgage holders, we do not favour the approach in this motion as the way to do it because it does not deal with the fundamental problem, which is the profiteering of the banks and the questionable policy of the European Central Bank to hike interest rates over recent times to deal with the inflation crisis.

I will not spend too much time on the bigger picture of why we have rising costs on a whole range of levels. Suffice it to say that, mostly, in broad terms, it comes down to the decisions of big companies and corporations trying to maintain their profit levels and therefore increasing prices in the same way they decide production levels and the supply of key resources based on their private commercial interests. They make decisions to reduce supply, to increase supply, to increase prices and so on to ensure their profits stay up. That is what we need to deal with. Of course, on every single front this Government and, by and large, the European Union, or governments generally, are not willing to do what is necessary, which is to deal with the root problem of profiteering. In other words, if landlords are charging extortionate rents, limit their ability to charge those rents and introduce caps on rents. If house prices are extortionate and totally unaffordable, which they are, intervene and control the price of housing to ensure it is affordable. If energy companies are bringing in extortionate increases in electricity or gas prices, do not let them. Introduce controls and caps on what they are charging. This can be done, it has been done and it should be done, but the Government does not want to do it because, ideologically, it believes in the market. It does not want to or is unwilling to intervene in the market. The same goes for the banks and their profiteering and the profiteering increases in mortgage interest rates.

What is needed, therefore, are caps. It is as simple as that. What we propose is that the Government impose a cap of 3%, that is, that banks cannot charge interest rates higher than 3%. That will deal not only with the people who are being absolutely creased, who are on trackers and who are now paying 6% and 7%, but also even with the people on the fixed and variable rates who are paying in excess of 3%. It will give them all relief. That can be done and should be done. Of course, if that is done, it will also have another positive spinoff effect, which is that the vulture funds will probably be driven out. That would be a very good thing. Some of the vulture funds are not even borrowing from the ECB but are using the ECB increases as their excuse to hike up rates. Let us drive the vulture funds out and use the banks in which we still have a majority shareholding to establish a public banking system whereby the priorities of the banking and financial system are directed towards the needs of our society and ensuring money is available at a price that can actually deliver affordable housing for people buying homes.

It may be of interest to the Minister as a reminder that even the US Federal Reserve has a broader mandate in ensuring the affordability of housing than the ECB, whose only mandate is to control inflation. That is a mistake on the part of the ECB. The ECB should have a broader mandate to be concerned with the cost of housing, and we should certainly ensure that.

In our view we should cap mortgage interest rates at 3%. Given that ECB rates have increased, the banks are making huge additional profits on the back of people's deposits at the moment. They are giving far less interest for ordinary customers' deposits than they are getting from those deposits sitting with the ECB, where they are getting the ECB rates. There is a massive surge in profits for these banks. There is plenty of scope to cap mortgage interest rates so that people are not suffering these large increases, and for that to be absorbed by the excessive profits the banks are making. I am not necessarily saying that would cover all the costs of capping rates but it would cover a significant amount.

This should also be linked to developing a new not-for-profit public banking model in this country. It is absolutely clear the existing banking model is failing, either in terms of profiteering banks charging these excessive mortgage interest rates, significantly higher than the average in the rest of Europe, or, in the case of other banks, just leaving because they are not profitable, like Ulster Bank. They decided they could not make enough money here and that they would just dump a million customers who might have been banking with them for generations. They decided to just dump them because they do not really care about them, because the banks do not care. They do not care about their customers. They will leave them, they will screw them, it does not really matter to them. We need a different type of banking model. All the more folly the Government decision to start selling off further shares in the Allied Irish Banks as it has done with Bank of Ireland and other banks that we had effectively nationalised. After bailing them out and nursing them back to profitability, as soon as they start to make profits we hand those profits back to private shareholders. We should be retaining those institutions, controlling their behaviour and ensuring their interest rates and general objectives are about meeting the needs of our society for affordable housing and fair and reasonable access to credit. No doubt the Minister would deem our proposal radical but it is the only one that is going to deal with the systemic problem we are facing, of rampant profiteering by financial institutions, vulture funds and generally by corporations that benefited and are benefiting from the cost-of-living crisis imposing so much suffering on ordinary people.

Deputy Seán Canney

I welcome the opportunity to speak on this very important subject. I commend the Government on its announcement this morning in respect of the Croí Cónaithe scheme, something we in the Regional Group have advocated for, and on the fact that development levies are being waived. That creates a bit of buoyancy so that people will get the confidence to build or purchase a house. I want to see them working fairly fast. I hope that, at the end of the day, the local authorities will be paid the development levies monthly, as is stated, so there is no gap in funding to them.

When some young person or couple takes on the brave step of purchasing or building a house, we need to commend them. They are not looking for handouts or anything other than a chance. The issue we have at the moment is that where a tracker mortgage is in place, additional costs are accruing to those people. How we support them to get through this difficult time is the subject matter we are discussing this evening. I would say to the Minister for Finance that he probably cannot do anything right now, but in the budget he should be looking at bringing in mortgage interest relief and making it effective for 2023 so that people can get some benefit from it. I ask him to consider that. The Government has come a stretch today in positive things for construction as far as I can see. However, there are a few other things that need to be done. The help-to-buy scheme should be extended to first-time buyers of second-hand or vacant properties so they have that same benefit. The local authority mortgage loans that exist at the moment should include not just the purchase price of a second-hand house but also the refurbishment cost of that house so that it becomes a mortgage rather than a mortgage to buy with the need for another loan to refurbish the property. Things like that can be done and will help first-time buyers. At the end of the day, if we can help these people to buy their own houses and make homes for themselves and their families, we are doing a massive service to the State and in respect of the housing crisis.

One other thing that needs to be looked at very carefully is the whole area of the rural housing guidelines. The Taoiseach was talking about them this morning. Coming from a rural constituency, it is important that the rural guidelines are published so that people who want to live and can prove they have an association with an area can live there. I have a perfect example of two sons wanting to build in my village. Their grandfather and great-grandfather and mother are living and were born within the village. The sons are just outside the speed limit, in a small village, and they are not qualifying as having a housing need in that village. There is no other land available. We are surrounded by a turlough and a hill, great, beautiful scenery, and this is the kind of codology that is going on. We need to cut that out. I also believe building houses on family farms for second and third members of the family is a good thing. It creates family supports as parents get older. In my case, when our children were small, we had the support of our mother and father to help us when we were out working or whatever. As they got older, we and our children were there to help them and keep them at home for as long as possible. There is a massive social benefit to all of that. We are coming to a stage where we need to show respect for the courage young people have. I ask the Minister and Minister of State to look at the mortgage interest relief.

Deputy Peadar Tóibín

Interest rates are at the highest level since 2019. By any reasonable projection we are going to see that spiral increase over the next while. The ECB has increased its lending rate six times since January 2022 and more increases are coming in the next week. Increasing the interest rate is a good tool commonly used to deal with inflation, and in fairness it often works in the case of demand-pull inflation. When there is too much money washing around the system chasing a limited supply, interest rates cool down that demand, for sure. However, most of the inflation we have at this moment is cost-push inflation. It does not behave in the same way as demand-pull inflation at all. It has been caused by the constriction of the supply chains. This type of inflation is far more resistant to interest rate hikes than demand-pull inflation. A high interest rate is less effective in dealing with cost-push inflation such as we have now. Anybody doing first year economics in the local university will tell us that is the case. The EU is using a tool currently to try to control inflation that is not suited to the inflation we have.

It is using a hammer to crack a nut.

It is important to analyse why we have such high inflation in this State and the type of inflation we have. One of the major reasons is that the construction and supply chain was severely affected by the Covid restrictions. That was an international factor but it was more acute here because Ireland was an outlier in terms of the severity and length of the Covid restrictions. No other country in Europe closed down as severely or for as long as Ireland. No other country in Europe closed down the building of houses. It is amazing the country with the biggest housing crisis was the only country to close building sites during the Covid crisis. In many ways, the actions of the Government have engineered a significant level of the inflation with which we are dealing in this State. Of course, the Government does not admit that. It blames international factors for the inflation. I put the issue of inflation to the Taoiseach today and mentioned that, in the past 12 months, the OECD has stated that Ireland's standard of living has fallen in real terms. A report published today states that the cost of electricity in Ireland is the highest in Europe. The per-unit cost of electricity in this State is double the European average. I put that to the Taoiseach but he said inflation is due to international factors. Let us think about the logic of that. How is that we have the highest rate of electricity if it is because of international factors? If it was because of international factors, we would have the same electricity prices as the rest of Europe. That is clearly not the case. Domestic policy has significantly pushed inflation in recent years and that is not by accident. The Green Party has a policy objective of having high fuel costs. It wishes for fuel to be expensive because high fuel costs reduce the consumption of fuel and that reduces greenhouse gas emissions. In many ways, the Government is not dealing with the massive inflation we have, especially in the energy sector, because it does not wish to do so. It is not in its in interests or objectives to do it.

Irish people are trapped in this inflationary cycle. In the context of housing, 60,000 people are in the clutches of vulture funds. Those 60,000 customers - I use the word "customers" loosely because they did not choose to be customers of the vulture funds - are paying interest rates as high as 8%. The Minister of State, Deputy Richmond, who is present, was, along with me, a member of the finance committee. It is immoral that the Government has created a two-tier mortgage market where the vast majority are experiencing rates of between 3% and 4% but a particular sector has been left out in the cold, exposed to vulture funds that are literally milking the system and charging mortgage holders 8%. If the Government were to do one decent thing to help, it should be to bring those vulture funds into the regulations so that, at least, those interest rates could be reduced to the market average.

Deputy Mattie McGrath

I, too, am delighted to be supporting the motion. It is a good motion and an opportune time for the Government to introduce mortgage relief for homeowners. Doing so would help to provide support for struggling homeowners who are facing significant increases in their mortgage costs. The ECB has increased its main lending rate six times since July 2022, with the latest increase being to 3.5%. This has resulted in more than 250,000 tracker mortgage borrowers experiencing immediate and significant increases in their mortgage payments. More than 43,000 variable rate mortgage loans are held by non-banks and vulture funds and those borrowers have seen significant increases in mortgage repayments, with the highest rates reaching 8%. Even the word "vulture" is anathema to any right-thinking person. We have almost completed lambing season and we know what vultures do to baby lambs. The former Minister for Finance, Michael Noonan, welcomed the vulture funds to Ireland. Any party that would welcome vulture funds to Ireland now would need its head examined. The Government does not want to look after people in houses or those without houses who are struggling to get loans.

There was another announcement today. I welcome the Croí Cónaithe fund and so on but the whole situation in respect of development fees is the wrong approach. It would be far better to support small builders and homeowners who want to build their own houses. I am not anti-developer. The word "developer" does not have bad connotations for me, although it does for some people. It would be far better to support the daoine beaga and the daoine óga, however, and give the money to county councils. Now the county councils are going to be starved of finance. The Taoiseach told me the money is going to be reimbursed. The whole system is unwieldy and we do not know what impact it will have or where it will end. People who commenced houses in recent days will not qualify, while, at the other end, people who apply for planning tomorrow will wait 12 months for it to go to An Bord Pleanála and they, too, will miss out. There will be more angst and trauma.

The Government can do something meaningful in this area if it wants to do so. The motion should be accepted. I know the Government has tabled a countermotion but it does not want to help the ordinary small people - na daoine beaga. Fine Gael is a party of the rich and powerful and Fianna Fáil has gone the same way. The whole issue of the cost of living and the price of fuel relates to the Green Party. The Government wants to keep fuel prices high to keep people down. It is a phoney objective and it is wrong.

Deputy Carol Nolan

Tá áthas orm deis a fháil labhairt ar an rún seo a bhfuil bunaithe ar théama an chostais maireachtála. Tá géarghá don Rialtas rudaí a chur i bhfeidhm chomh luath is féidir agus gníomhachtaí a chur i bhfeidhm chun cabhair a thabhairt do theaghlaigh ar fud an Stát.

I support the motion to introduce targeted and temporary mortgage interest relief to support homeowners facing significant increases in their mortgage costs. The entire area of mortgage law and the capacity of vulture funds to act with apparent impunity is of increasing concern. The Government and the Central Bank do not seem to be able to get a handle on it. Cillian Sherlock recently wrote in the Offaly Independent about how repossession orders were granted to an investment fund in cases where less than €6,000 was owed on the mortgage and, in a case where the mortgage was still being paid, €11,000 was owed. The Offaly Independent noted that the Money Advice and Budgeting Service, MABS, criticised a power imbalance between individuals and institutions with an army of lawyers at their disposal and stated that the key component in these cases was that the mortgage holder was not present in the court. Hundreds of families in County Offaly are being put to the pin of their collar trying to repay mortgages. The issue of arrears is also impacting on local authorities in my constituency. Recently published data indicate that loan arrears owed to Offaly County Council amounted to €163,000 in 2021, with 68% of those related to arrears outstanding for more than two years.

It is incredibly important for the banking culture in this country to change. The banks could learn a lot from the credit unions, which are community based and do a fantastic job. We hear a lot from the banks, PR firms and representative bodies, but the cold reality is many people, including those with family farms, receive very little comfort or accommodation when they get into mortgage distress.

Deputy Richard O'Donoghue

The Minister, Deputy O'Brien, and the Ministers of State, Deputies O'Donnell and Noonan, appeared at the housing committee today to discuss Housing for All. The Ministers spoke about the houses being built in Limerick city and elsewhere in the country. I welcomed the waiving of the planning permission fee for local authorities. The positivity stopped, however, when we considered County Limerick and discussed infrastructure. Everybody in my constituency is on the back foot because of the lack of infrastructure. Houses cannot be built in County Limerick due to the lack of infrastructure. We spoke at length about the promises of Government through the past 38 to 40 years with regard to the sewerage system in Askeaton, an issue previously raised by a Fianna Fáil councillor who is now retiring. The timeline for delivery in that regard is now between 2025 and 2030.

A mortgage for a house means that you have to be able to build a house. In County Limerick at the moment, we only have two or three locations in the county where we can actually build houses and get mortgages. That affects the supply and demand, which means the price will be higher.

Let us look at the banking institutions and the way they rate people for a mortgage. They put them on a high interest rate to check if they can afford a mortgage over 12 months. If a person has a dependant, the bank charges for the dependant. If a person has a car loan, there is a charge for the car loan. By the time it is all added up, a couple would nearly want to be on €1,000 each per week to afford a €300,000 mortgage and to make it barely payable for the banking system. Will the Minister of State, Deputy Richmond, tell me if there is any couple on €1,000 each to come up with a mortgage of €300,000? They have to show this, and they also have to show that they are able to save to get a mortgage. We have got a problem in Limerick. We have no infrastructure, which is a failure of the Government and previous governments for not investing in it. The Minister, Deputy O'Brien, is going to announce next week that funding is going to be given to the county councils to bring in the infrastructure that Uisce Éireann is not able to produce. That means I might be able to build houses in Limerick for the people who need them and who can try to get mortgages.

Deputy Michael Collins

The question today is why any Irish government would oppose the reintroduction of a mortgage interest relief scheme in the middle of such a dire housing crisis. Mortgage interest relief, which offers borrowers tax relief on the interest portion of their mortgage, ended in the Republic in 2020. However, the pressures facing mortgage holders today, in addition to other cost-of-living increases, mean its reintroduction is justified. The fact is the coalition's failure to act on this issue and on other housing related policy matters means that pressure is now growing for action on a number of fronts, including support for borrowers as mortgage interest rates rise.

Furthermore, the plight of borrowers whose loans were sold to so-called vulture funds has not been addressed by the Government. These people have effectively been thrown to the wolves. More than 100,000 borrowers had their loans sold to vulture funds, with some now paying interest rates of up to 7% - well above the levels paid to the banking lenders.

I brought up a case many times about O'Donovan's Hotel and the way the banks and vulture funds treated it, putting the jobs of 70 employees in jeopardy. I have listened to the ins and outs of this case – from the banks' actions, to the vulture funds, their finance and the carry-on of them. There must be an independent inquiry into the way O'Donovan's Hotel was treated. The only reason Fianna Fáil, Fine Gael and the Green Party will not allow that is they know that once the independent investigation takes place, it will rip right open what is going on in this country with vulture funds and the carry-on with the cosy relationship they have with the banks. That is what happened here. The good-living, hard-working people of Clonakilty, who were paying their debt and who wanted to continue to pay their debt, had their loans sold to the vulture funds unknown to them. If they were not paying their debt, I would have sympathy for some bankers somewhere, but there is no sympathy whatsoever here.

I continued to call on the Tánaiste, Deputy Martin, and on the Minister for Enterprise, Trade and Employment, Deputy Coveney, last week to launch an independent investigation. I do not want any investigation by the bank or the vulture funds. It must be an independent investigation into how the hotel was treated. Farmers, residents and business people in this country have their loans sold unknown to them. It is shocking. People have committed suicide because of the upset and harm that has been done to their businesses and the Government is standing over this continuously. It is afraid to tackle the banks, even though the Government itself is a major shareholder in the banks. It is afraid to take them on but the Government has to take them on. If it is honest, O'Donovan's Hotel should be the first case to be investigated. An independent investigation must be carried out in this country once and for all. I call on the Minister of State, Deputy Richmond, to stand with the people here.

Deputy Marian Harkin

Once again, we are discussing the Sinn Féin proposal to reintroduce a targeted, temporary and capped mortgage interest relief scheme for home buyers. When I spoke on this issue just over two months ago, I supported the proposal and I still support it. It is a reasonable, well-thought out proposal and it would be very much welcomed by the many families and individuals struggling with the increased cost of living and who find themselves dreading the latest notification from their mortgage provider that their interest repayments have increased again. Many families have received four, five or perhaps even six such notifications. The pace of the increase in mortgage repayments has been relentless for the past ten years.

Those same families are facing massively hiked energy bills, food bills and home heating bills. To be fair, the Government has responded with significant packages to take the edge off some of those increases. That is why the Government should seriously consider this proposal. Whatever countermotion the Minister of State puts forward, it should contain some package to help those who have been hit hard by the relentless rise in mortgage repayments. I listened to the Minister earlier, and he said these types of proposals should be made at budget time. He is right. That is the ideal time, but when last year's budget was being prepared, interest rates were just beginning to rise. Nobody could have known that those interest rate increases would continue at the pace at which they have. The Government has taken one-off measures to help those struggling with the cost-of-living increases. This is what we are looking at here: a one-off, time-bound intervention to give people a breather.

The Minister also said it is not possible for any government to fully absorb the costs. Again, he is right, but this proposal does not ask any government to absorb all the costs. It is a reasonable and a modest ask - up to 30% of increased mortgage interest costs, not 100%, not 70%, not even 50%, just 30%, which is less than one third of the increased cost, and it is capped at €1,500. That is why I believe it is a proportionate proposal and should not be dismissed because of timing or process. It should be evaluated on its merits. In previous times, mortgage interest relief certainly benefited the better off in a disproportionate manner, but this proposal avoids that trap. While it is universal in nature, in the sense that all mortgage holders can apply for the relief, it has a built-in equality mechanism in that any relief would apply to just 30% of the increase in interest rates, and it is not open ended. The maximum benefit any mortgage holder would receive is €1,500. That is just a little more than the average monthly repayment.

This proposal will also help those who are starting out on their mortgage journey more so than those who are nearing the end of their payment time. Those who are starting out will obviously have the greatest increase in interest payments and so will benefit a little more than those who have paid off most of their loan. I believe there are a lot of pluses in this proposal and it does deserve serious consideration. Of course, this proposal is not made in isolation. Our inflation levels are hovering around 8% and the knock-on impact of that is very significant, as the Minister of State is well aware, for all families when they come to purchase their daily essentials, from food to fuel. Today, we see that the price of electricity in Ireland is the highest in Europe. That is the context in which this proposal is made. It is not just a once-off proposal that sounds like a good idea. It is looking at the reality of people's lives and how they are struggling and trying to come up with a proposal that is modest, reasonable, and would make a difference to those who are paying mortgages.

Everybody knows a mortgage is a considerable chunk of money out of one's monthly income. The very significant increase in mortgage interest rates in such a short time means that every single month, mortgage repayments are increasing, with the real fear that this situation will simply continue to worsen.

These significant payment increases really hit people hard but are absolutely crucifying for those whose mortgages are held by vulture funds. Approximately 65,000 people, many in families, are paying mortgage interest at a rate of 7% or more. How helpless must those people feel? How trapped must they feel? This proposal, perhaps with a relief for just one month, would be a small window of hope. Many homeowners paid inflated prices for their homes in the first place, especially those who bought recently. Loading significant mortgage repayment increases on their shoulders at this time puts them under extreme pressure. While a significant proportion have fixed interest rates, the proposed measure is not for those people; it is for those hit by increasing interest rates.

In my constituency, Sligo–Leitrim, house prices have increased by 18% since 2021. They have increased by 14% in Donegal and a similar amount in Roscommon. Those who have taken out mortgages recently have paid a significant amount of money for their properties, and they too are under severe pressure because their incomes have not kept pace with the rate of inflation – not even close.

I have listened to various opinions on this. The Government seems to suggest enough is being done and that we should continue as we are doing; however, most people recognise that this is not sufficient. Others have expressed reservations to the effect that the taxation step is regressive. If the scheme were the old mortgage interest relief scheme, I would agree, but the proposal is capped and temporary. Yes, there would be a transfer of some economic benefit to homeowners but it would be small and designed to help those most at risk of not being able to continue paying their mortgages. While the Government's counter-motion states it will not do anything regarding this matter, I urge the Minister of State to re-examine it. Even if he does not agree with this specific proposal, he should think, now and not at the next budget, because the increases just keep coming for people, about how we can help those who are struggling with increased mortgage repayments.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Neale Richmond)

I appreciate the opportunity to speak in this lengthy, wide-ranging debate, which has covered a topic that has been a subject of previous Private Members' business. It was a familiar topic to me and Deputy Durkan at meetings of the finance committee over recent years. Unfortunately, Deputy Conway-Walsh and I were not members of the committee at the same time but I appreciate that the arguments made have been made in good faith and are genuine and sincere. I accept the arguments of all Deputies who have come to the House this evening. I do not want it to be underestimated for a moment that the Government of course accepts that the increase in the cost of living, together with the increase in interest rates, will pose serious repayment difficulties for some homeowners. These difficulties can and should be addressed in an open way by both the lender and the borrower. Where proper engagement takes place on both sides, fair solutions can be reached and put in place.

The Government has addressed economic and loan-repayment challenges in recent years, particularly during Brexit and Covid, and we can now address the latest challenges arising from the need to tackle high inflation. The Government is acutely aware that the rising cost of living over the past year has posed significant challenges for households and firms but it has responded swiftly and decisively multiple times. Just this week, on Wednesday, Thursday and Friday, we will see payments of €200 made to people in various social welfare categories. They are really welcome and necessary payments for those most at risk. Overall, €12 billion in direct relief has been made available to counter the effects of inflation and the genuine squeeze from the cost-of-living crisis.

The reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered not on an ad hoc or one-off basis but in the context of a range of other cost-of-living measures that are and will need to be provided. I do not believe the reintroduction of mortgage interest relief at this time is the appropriate course of action or is in the best interest of all mortgage holders and the State given the potential Exchequer implications and the current high inflationary environment. Research from the OECD has found that mortgage interest relief results in higher house prices where housing supply is constrained because it gives buyers much more purchasing power. The OECD also highlights equity concerns, noting that mortgage interest relief provides greater benefits to high-income households as high-income households are more likely to be homeowners, a point that aligns with the findings of the 2009 Commission on Taxation report. Mortgage interest relief has also been found to encourage household indebtedness and is correlated with volatility in the housing market. It is for these reasons that the OECD has recommended limiting or phasing out mortgage interest relief on owner-occupied housing.

The positive headline surplus figures set out in the recent Stability Programme Update include windfall corporation tax receipts. If these potentially transient receipts are excluded, there is a significant underlying deficit in the public finances. Ireland's public debt is almost a quarter of a trillion euro and remains among the highest in the developed world on a per capita basis. Ireland is a small open economy where wage growth in excess of other economies erodes our competitiveness and puts future jobs and economic growth at risk. That is the sort of thing that really hurts households. Government policy must therefore strike a balance between providing support when appropriate and ensuring the public finances remain on a sustainable trajectory over the medium term. While the Government has already acted repeatedly and on a significant scale to absorb some of the impact, fiscal policy must remain broadly neutral so as to not add to inflationary pressures. Borrowing costs, including sovereign borrowing costs, are on a rising trajectory, increasing the importance of prudent fiscal policy.

While the measure in the Opposition's motion is a measure on the face of it, and while people talk about moveable figures, we have to consider this in the context of a broader package. Every week, there is a different motion calling for a different package. The costs of all of the packages must ultimately be paid for in some way. We have to ensure that we strike a balance for everyone in the State. That is the difficult responsibility of the Government members, who serve in their offices daily.

We are aware there are supports within the framework of the regulatory system already. The Central Bank is clear that it expects all regulated firms to be ready to assist their customers who are facing mortgage repayment difficulty and also be ready to work with and, where necessary, offer appropriate arrangements to them to enable them to meet their mortgage obligations. This consumer protection regulatory framework is important and is being kept under review. My Department and Government colleagues will work closely with the Central Bank on this.

The Central Bank has informed me that it has engaged with lenders to ensure they have sufficient resources in place to deal adequately with applications for new or switching mortgages and that it expects all lenders to assess switching applications in a fair and prudent manner, irrespective of the borrower's current or past mortgage creditor. This is something the Central Bank will continue to monitor through its supervisory engagement with regulated entities. However, if sustainable agreements cannot be reached within the scope of the Central Bank regulatory and consumer framework, there are other options available to borrowers to address a debt difficulty, including the Money Advice and Budgeting Service, a personal insolvency practitioner, the Abhaile scheme and the personal insolvency arrangements in place. The mortgage-to-rent scheme is also available, and over 2,000 cases in that regard have now been dealt with. Those options available directly in the financial system and more broadly at Government level to fairly deal with mortgage debt should be fully utilised by lenders, in line with the regulations and expectations set out by the Central Bank, and by borrowers experiencing repayment difficulty.

No doubt we will come back to this topic in future Private Members' business or more widely through parliamentary questions or meetings of the finance committee, which I intend to continue to keep an eye on although it is no longer within my brief. However, I fundamentally believe the Government's counter-motion is broad and realistic. That is crucial to the subject of this debate. No party or individual has a monopoly on compassion or empathy for those in mortgage distress or wider society. I fundamentally believe the Government's efforts and measures are realistic and cognisant of the very genuine circumstances and hardship unfortunately being faced by far too many in this State. We will work every day to strive to ease the hardship and provide solutions that will genuinely have an impact and help not only affected individuals but also wider society.

Deputy Bernard J. Durkan

I am glad to have this opportunity to say just a few words on this issue, which is very important for everybody.

It goes without saying that the announcements made by Government in the past 24 hours or so are helpful. There is no doubt about that. They are a start. They are not, could not and were not intended to be the total solution but they are a start and will make it possible for families to look again at the possibility of providing themselves with a home by one means or another.

It is important to ensure that the public knows fully how the schemes work and how operable they are. Excellent schemes were available in the past but when you inquired about whether you qualified for them on income or age grounds, they did not cut the mustard. The more schemes we have to deal with and the more information is available to possible applicants about housing and the initial stages, the quicker we can try to resolve the housing problem.

A number of schemes should still be considered. The subsidised private sites scheme was very influential all over the country in the past. Under this scheme, serviced sites were made available. Incidentally, they are still being made available through the approved housing bodies, AHBs, but in the scheme with which I dealt, we had to buy the sites at commercial value, which was a fair difference compared to what was available through the AHBs.

I saw situations where land was free in a particular development but it did not make any difference to the price of houses. The land came free because it was zoned by way of agreement. In recent times, the Taoiseach has said about 250,000 houses are needed and I agree with that. Whether we can do that is up to us but it will require about 60,000 finished houses per annum, with that figure descending as the need is reduced because otherwise we would have a flop in prices. I ask that consideration be given to that and also to log cabins and modular houses. I noticed that the modular homes proposal disappeared for a while. I cannot understand why that happened. We need a great deal of urgency to be applied in the shortest possible time. There is still scope to do it. We can still make a difference and we can still address the concerns of the people who worry about their housing needs and how they are going to meet them themselves.

Deputy Martin Browne

We all know people who have had to cut corners to pay their bills, to keep food on the table and to ensure their children are properly dressed and fed throughout the cost-of-living crisis. Among those households are those with mortgages. They have seen their mortgage payments soaring by thousands of euro a year because of the European Central Bank’s response to inflation, which is to raise interest rates. This has happened six times between July 2022 and March 2023 with the bank increasing its interest rate from 0% to 3.5%.

Over 250,000 tracker mortgage customers have seen immediate and sudden increases in the cost of their mortgage but for the 43,000 variable rate mortgage holders whose loans are held by non-banks and vulture funds, the situation can be even worse with some witnessing a surge in their interest rates of up to 8%. I am aware of people who are genuinely fearful about how long they will be able to shoulder this burden. The Money Advice and Budgeting Service summed it up by saying “the interest rate hikes serve as a particularly alarming trend during a cost-of-living crisis and are having disastrous effects”. This is being proven by the constituents who have contacted me and others in this House desperate for help in meeting their repayments while also meeting their other obligations. What about first-time buyers? Many of them have faced, and many more are likely to face, significantly higher mortgage repayments in the time ahead.

The pressure on these families is immense. Is this Government going to wait until their home is something they are no longer able to afford? With the State expected to run a surplus of more than €10 billion in 2023, is the Government seriously going to continue with its policy of delay and inaction or will it intervene for the benefit of our citizens? Unfortunately, it seems as though the Government is willing to allow people to struggle but Sinn Féin is not. We are proposing temporary and targeted mortgage interest relief until the end of the year. This would involve absorbing 30% of the increased interest costs facing mortgage borrowers and would be based on the interest rate charged in June 2022 capped at a maximum relief of €1,500. We have fully costed this measure and would allocate €400 million towards it. We have factored in a high bar in further increases that would more than likely result in the cost of the scheme being less than we are providing for. We cannot allow people to be left to fend for themselves amid this turbulent time. We urge the Government to act

Deputy Pauline Tully

We are calling for the introduction of time-limited mortgage interest relief for homeowners hit by interest rate increases. It is a sensible, affordable and necessary measure aimed at supporting homeowners facing significant increases in their mortgage costs, and they are significant. One of my constituents is a young self-employed woman whose husband was working up to a year ago, suffered a stroke at the age of 37 and is now on illness benefit. They have two children, one of whom has additional needs for whom they are paying privately to get extra support. Their mortgage has gone from €1,198 to €1,559, an increase of almost €400. She sought assistance but there is none for people struggling to pay their mortgage. There is assistance for those in arrears but there is none for those who are paying a mortgage with difficulty. She has tried to restructure the mortgage and has reached out to other mortgage providers. Hopefully, something will break for her but she is not the only one. There are others whose mortgage repayments have increased by hundreds of euro per month on top of the increase in the cost of food, fuel and electricity.

We are going to add to our homeless figures because we are going to see homeowners lose their homes because of an inability to pay their mortgages. One woman whose mortgage has practically doubled is seriously considering selling but I do not know where she is going to go after that because there is nowhere to rent. She cannot put up with the stress of trying to make ends meet. Something has to be done to assist households such as these. They are at breaking point.

There is no rational or reasonable argument that we do not have the ability to do this. It was forecast in the most recent stability programme update that there will be a general Government surplus of in excess of €10 billion this year. I listened to the Minister pick holes in the wording of the motion. We need action here. We need the Government to do the right thing to help these struggling homeowners. They need action rather than just words. It is not a political issue and should not be a political issue. It should not be about who is doing the right thing or who is doing the wrong thing. If we do not do the right thing by these homeowners, they will lose their homes.

Deputy Rose Conway-Walsh

I will address a number of points raised by the Minister and the Minister of State. Several points were raised about equity. I understand these concerns and that is exactly why the scheme we are proposing is temporary and targeted. It provides relief on the increased interest costs that mortgage holders have faced as a result of rate hikes since June 2022 to ensure that those at the sharpest edge of the interest rate hikes are supported most. This is not blanket relief as existed before - the relief the Minister championed as recently as 2018 and the relief the Tánaiste called to be increased back in 2015. The proposal we are putting forward is not a reintroduction of the old scheme. It is more targeted and it is temporary. It would be effective in supporting households that face spiralling interest rates in the context of a cost-of-living crisis and aspiring home buyers struggling to get their foot on the property ladder. There were many mistakes that the Minister put forward in his contribution.

As has been said many times before, we cannot let the perfect be the enemy of the good. With regards to cost, we believe an allocation of €400 million should be made towards the scheme. The Minister said his officials had costed it at €600 million for the full year. That may be the case but with our costing of €400 million, we are asking it to be extended until the end of this year. This is on the basis of a number of reasonable assumptions, including standard variable rates increasing by 2%, fixed rates increasing by 3% and tracker rates increasing further in the time ahead on mortgage loans provided by the retail banks. It should be noted that in this period, only AIB has increased its standard variable rate by 0.35%.

It also assumes the maximum relief is applied to all standard variable and tracker rate mortgages held by non-banks and vulture funds, an overestimation that is unlikely to materialise.

These are reasonable assumptions, just as the Government makes assumptions whenever it introduces a scheme. I remind Deputies that the temporary business energy support scheme, TBESS, was introduced with an allocation of €1.25 billion at a time no one knew if and how much energy prices would continue to rise. Had the maximum value of claims been made under the scheme, it would have cost the State €24 billion. The Government made that allocation on what it described as reasonable and appropriate assumption. That is fair enough and precisely what we have done. The Government cannot stand idly by as people are being hit by increase after increase in their mortgage costs in the midst of a cost-of-living crisis. More than 43,000 variable mortgage borrowers with loans held by non-banks and vulture funds have seen significant hikes in their mortgage repayments with many seeing interest rates rise as high as 8%. Paying a mortgage on 8% is impossible. A family in County Mayo I have been in contact with has seen its monthly mortgage repayments go up by 30%. The mother told me these increases are not sustainable for them with the high cost of living and food costs increasing weekly. She now has to go back to work full time, which means facing high childcare costs. Her husband has a good job but they have nothing left to live on.

Workers cannot be told that they need to suffer inflation twice. First, they are hit with the spiralling cost of living. Then they are told that the only solution is higher mortgage payments. The cure to higher energy prices, higher food prices they are told is an increase in their mortgage costs. The Government has a responsibility to protect its citizens. The only way to do that in the necessary time frame is to introduce mortgage relief. It needs to be targeted to those that really need it and it needs to be time limited. This is a sensible and necessary measure. The Government must put aside party politics and work with Sinn Féin to bring in these supports.

It surprises me that so much kudos is given to the Central Bank and what it is saying in this situation. The Central Bank, ESRI, economists, taxation advisers and many other bodies and so on have said they did not recommend many of the housing schemes that have been introduced by the Government, they have been causing inflation to rise and they have put house prices beyond the reach of ordinary people. Are we now being told that we cannot do this very temporary and targeted measure because the Central Bank does not advise it? Are we be to believe that the Central Bank is going to encourage banks to act in the right way? The Minister of State and I were on the finance committee and we know from that and other places that we cannot rely on the banks to do the right thing.

Amendment put.

An Leas-Cheann Comhairle

In accordance with Standing Order 80(2), the division is postponed until the weekly division time on Wednesday, 26 April.