Mr. Barry O'Leary:

To respond to some of the other questions, while local authorities approach us with their surplus cash, we do not know the source of this money. The numbers cited are broadly correct in respect of the surplus the local authorities may have had. Unfortunately, very little of this surplus of approximately €100 million comes to the Housing Finance Agency, probably because we are offering reasonably low rates. Our cost of funds is such that we are able to secure borrowings from elsewhere at a reasonably attractive rate and, as such, we do not have to compete for deposits. The local authorities are attracting higher interest rates elsewhere, including in some of the pillar banks which are offering a little more than us at this stage.

On fixed-rate loans, it is correct that they were initially advanced at rates in excess of 10%. This was done in an environment in which interest rates in the market were 16%. We borrowed money at 10% to match-fund the loans and the Government at the time kindly allowed an opportunity for borrowers to redeem without penalty. This is unusual in a fixed-rate scenario. We have a fixed-rate borrowing rate of 10% and anyone who has a borrowing from us at 10% can redeem at no cost. Obviously, if a borrower can refinance his or her loan at 3% or 4%, it creates a difficulty for us. However, we have all the treasury risk put away in our balance sheet at this stage.