Brian Cowen (Laois-Offaly, Fianna Fail)

I do not accept that the increase in mortgage interest relief for first-time buyers has been wiped out by the ECB interest rate rises in recent months. It depends on the circumstances of the household concerned. In the case of a mortgage of €250,000 taken out for a typical loan period of 33 years for example, a 0.25% rise in interest rates results in an increased payment of some €38 per month. This compares with increased monthly tax relief of €53 for a married couple and some €67 for a single person. For a mortgage of €350,000 over 33 years, a 0.25% increase results in an increased repayment of €53 per month, compared with increased tax relief of €128 in the case of a married couple and €67 for a single person.

It was estimated at budget time that approximately 125,000 first-time buyers had interest payments of sufficient size to benefit from the increased level of relief. As interest rates have increased, it is likely that the numbers benefitting have also increased. I made my decision on this matter in a way that would help buyers and those who already have mortgages without affecting affordability via an increase in house price inflation. This was against a background of emerging evidence of a softening housing market. It was the right approach to take in the circumstances that pertained.

I have heard the term "toxic debt" in regard to sub-prime lending. It is a feature of the liberalised market in the United States where some companies have got into serious difficulties as a result of the sub-prime lending policies they have pursued. There is no evidence from the Financial Regulator that a similar situation exists here. The sub-prime mortgage market is relatively small. There is evidence that where people have regained credit with regard to how they are viewed as borrowers, they have moved from the sub-prime market back into the mainstream mortgage market.

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