Bernard Allen
Ceist:480 Mr. Allen asked the Minister for the Environment, Heritage and Local Government, the reason the owners of the National Housing Agency are charging 12% interest on house loans. [18117/05]
Amharc ar fhreagraTuesday, 31 May 2005
Ceisteanna (464)
Freagraí scríofa
Minister of State at the Department of the Environment, Heritage and Local Government (Mr. N. Ahern)
The loans in question, which were issued by local authorities before the introduction of variable rates in December 1987, reflect the long-term costs of the funds prevailing when the loans were advanced. Rates were fixed for the life of the loan. The subsequent introduction of variable interest rates for local authority mortgages has given borrowers increased flexibility and choice.
Borrowers with fixed rate local authority repayments are permitted to redeem such loans without any interest rate penalty and refinance them in the private sector. This represents a significant concession, having regard to the redemption penalties of up to six months' interest or more applied by commercial lending agencies in the event of early redemption of such mortgages. In 2001, the position regarding high fixed interest rates on local authority loans was reviewed in consultation with the Department of Finance. The review determined that a State subsidy to reduce such interest rates would not be appropriate.