Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

At the outset I join Deputy McDonald in expressing my sorrow to the people of Türkiye and Syria who have experienced a terrible earthquake, and to express my solidarity with Ireland's Turkish and Syrian communities, some of whom have been directly affected by that. Some are mourning family members and others are worried about family members and friends. As part of an initial response, the Tánaiste, Deputy Micheál Martin, has allocated €2 million in emergency assistance to the Red Cross and the UN to help with the effort. We will be in touch with the authorities in Türkiye and in Syria to offer more help if we can. Tharla crith talún millteanach sa tSiria agus sa Tuirc. Fuair deich míle duine bás agus tá go leor daoine gortaithe freisin. Ar son an Rialtais agus ar son muintir na hÉireann, tá brón an domhain orainn. Cabhróidh an Rialtas. Beidh €2 milliún ar fáil mar thacaíocht chun cabhair a thabhairt do mhuintir na Tuirce agus muintir na Siria.

Regarding the Deputy's question, and I want to thank her for raising this important issue, as the House will appreciate the formulation and implementation of monetary policy is an independent matter for the Central Bank. The European Central Bank acts independently of the governments of Europe and governments do not set interest rates. The rises in interest rates are most unwelcome for anyone who is borrowing, particularly home owners and those with tracker mortgages. There are roughly 200,000 people who now, almost every other month, receive a letter in the post telling them that their monthly repayments are going up, and up, and up. While interest rates had been relatively low by historical standards, they have risen a lot in the last year or so and that is something I think all of us will have experienced from our constituency work.

The European Central Bank's governing council has indicated that interest rates will have to rise at a steady pace to reach levels that are sufficient to ensure a return to inflation of around 2%. It is important to acknowledge that the reason the European Central Bank is increasing interest rates is to bring inflation down and to restore price stability and that is something that will benefit everyone. I hope we are approaching the peak of the current interest rate cycle but there is no guarantee that is the case. It is something we will discuss at the European Council tomorrow when I am in Brussels. I do not know if the Governor of the Central Bank is able to attend this meeting but it is certainly something we will discuss at Head of Government and Head of State level because I know it is a matter of concern across the Continent.

The Government is currently reviewing what more we can do to alleviate the rising cost of living of which higher interest rates are part. We will be able to make an announcement around the middle of the month as to what else we can do to help with the cost of living as we go into the spring. The changed interest rate environment will not have a uniform impact on all borrowers and depending on particular situations, such as individual contracts, some borrowers will experience higher increases than others. Thankfully the average Irish interest rate on new mortgages is now below the eurozone average. Even though it had been higher than the eurozone average, we now have the third lowest mortgage rates in the eurozone. In fact, a significant portion of new mortgages, more than 90% of new mortgages, are now fixed rate mortgages and this will go some way to protect borrowers but I know that is of no solace at all to people who hold tracker mortgages.

Mortgage interest relief was phased out between 2009 and 2020 and at its peak the relief cost more than €700 million per year. It is not something we are currently considering but it is not something we would rule out for the future. It is the kind of thing we would do normally in the context of a budget when we have to weigh up many other choices and options to help people. We cannot do them all; we can only ever do a small number. Certainly if Sinn Féin has a proposal and wants to produce a paper on it, we would be happy to consider that, to cost it, to work out the various practicalities and to issue a more formal response.

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