Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 5:

In page 8, between lines 7 and 8, to insert the following:

“Report on mortgage interest relief 6.The Minister shall, within one month of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction of mortgage interest relief on a temporary basis with respect to principal private residences to assist with rising mortgage interest costs, including options for its design and implementation.”.

This relates to the issue of mortgage interest relief. The amendment would require the Minister for Finance to lay before the Dáil a report on mortgage interest relief on a temporary basis, including options for its design and implementation, within one month of passing of the Bill. The Minister will be aware that interest rates that are rising across the mortgage market, although it is happening unevenly. Interest rates have risen suddenly and sharply for those on tracker mortgages. Those on variable rate mortgages whose loans are held by vulture funds have experienced the interest rates increase, without delaying in most cases, while the pass-on through has been slower among retail banks with respect to fixed and variable rates but they are expected to continue in the months ahead.

It is important to note that with regard to the average weighted interest rate on all outstanding mortgages, the State is already much higher than the European average, at 2.88%, compared to 1.89%. We have had people on the front line before the committee from the Money Advice & Budgeting Service, MABS, and others, use words such as "alarming" and "disastrous" in the context of what is happening to individuals.

We have heard of individuals who had their mortgage held with Pepper Mortgages and whose interest costs have increased by €2,100 per year by February. They will increase further, as Pepper passes on the new interest rates hikes. We have heard of another mortgage holder with Pepper whose interests costs had increased by €1,940 by February and they will go up again. This woman said that between the cost of electricity and food shopping increasing, she simply could not pay for it all anymore. That is where many families find themselves.

Another individual whose mortgage is held by Start Mortgages has had her interest costs increase by a whopping €4,320 a year, by January, which means it has gone up further since then. This is a mother of two. She has told me they do not drink, cannot afford to socialise and that every cent is accounted and budgeted for, every single week of every month. That is the reality that many families are facing. The Minister, when he was on this committee in opposition, was an ardent proponent of mortgage interest relief, at a time interest rates were half what are being charged by some of the vultures.

The amendment calls for a temporary, targeted mortgage interest relief, not the reintroduction of what we had in the past, which looked at all of the interest paid on a mortgage. Rather, it would look at the portion of interest that has increased since June of last year, with the State bearing the brunt of 30% of that and there would be a cap of €1,500. No individual would benefit by more than €1,500 per year. It would be applied for through the period of April, to the end of the year to principal private residences only.

Something has to give. People are experiencing serious mortgage rate increases. I have given an example of someone paying €4,320 more per year.

I have other examples where people are paying €5,000 more and that is before the March increase was passed on. We do not know what is going to happen with future ECB increases. Maybe what has happened in the international markets may have tamed its appetite for further increases. Inflation has continued to increase but the rate of increase has been dropping. Even where it is at now, it is one of the biggest cost of living pressures these households have seen. When they look at how much their annual food bills have increased, or the electricity or gas bills, it does not come close to the additional €4,000 or €5,000 they are now paying in mortgage interest compared with last year. I will not go into the whole fact that they should never have been sold to vultures in the first place. The Minister was instrumental in making sure that legislation never passed this committee at the time, along with Fine Gael. But they were sold to vultures and the commitments we got from political parties that now share government that people would be no worse off is completely untrue and misleading. It never was true and now they are facing thousands of euro of an increased compared with if they were with a retail bank, whether Permanent TSB or AIB.

Therefore, I am asking the Minister to consider this measure. I have been saying this since last year. We have worked with the Parliamentary Budgetary Office which is independent, as the Minister knows. It carries out costings and it has costed scenarios around mortgage interest rate increases, the caps that apply and the costs that would apply to them. I have said to the Government before, and to the Minister's predecessor, that it does not have to take our proposal. It can come up with its own. It could have a different cap, a different rate or a different entry level. It could do a base for trackers. It can do whatever it wants but at least come up with something because something has to give in relation to mortgage interest relief. It has to be temporary and targeted. It cannot be like the last scheme which lasted so long and people built it into the money they had so it had an inflationary effect. This is a different scheme which is temporary because of the cost of living. We do expect interest rates to subside in the future. I imagine they will not go back to where they were but we do expect them at a point to come back down a bit. This is about the temporary relief of the shock that many households are facing at this point.