Dáil Éireann Debate, Thursday - 9 November 2017
276. Deputy Michael McGrath asked the Minister for Housing, Planning and Local Government if the local authorities historically had or currently have interest rates on home loans that are linked to the ECB base rate and are, therefore, tracker mortgages; if he has satisfied himself that all borrowers are paying interest at the correct rate to their local authority; and if he will make a statement on the matter. [47370/17]
Amharc ar fhreagraThe current standard variable interest rate charged to local authority borrowers, applicable since 1 July 2016, is 2.3%, which is below the average variable mortgage rate charged by commercial lenders.
The rate charged by local authorities is arrived at taking into account their cost of funds from the Housing Finance Agency plc (HFA) (currently 1%), and the local authorities' costs for administration and mortgage arrears resolution (1.3%).
The interest rate charged is not linked to the ECB rate. It is the case that as the cost of funding for the HFA has declined, six different interest rate cuts totalling 1.5%, have been passed to local authorities, since 2012. This has resulted in the rate charged to borrowers being significantly lower than the average market rate.
