Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

-----or to purport not to understand the proposal that is being put forward, despite my earlier contribution, in which I addressed increased interest rates. It is about trying to minimise, downplay and brush off instead of recognising there are probably people listening to this debate who are hanging on and hoping against hope that the Government will see sense in the context of introducing this proposal. The Minister said the proposal would push up house prices - this from a Minister who believes the help-to-buy scheme will not do so. Let us be clear. As this measure does not increase the purchasing power of the individual, it would not have the effect suggested by the Minister. That is why it is tailored. It is not like the mortgage interest relief introduced by Fine Gael, which applied to all the interest one paid on a mortgage, with no caps in place. That is why the wealthiest got that benefit. As it was not time limited, it did increased borrowers' purchasing power because they were able to factor in that some of the interest would be paid by the State.

The motion is about the increased interest rate. It is spelled out in black and white. It is the increased interest rate that has happened since June last year. The Minister of State's argument again falls in that regard. I am begging the Government to address this issue. We have had different signals from the Government. This morning, its leader seemed to be open to the idea because he recognises the ECB will increase interest rates again next month.

There are 118,000 people who have family mortgages with vulture funds. The Minister of State's party leader gave them assurances they would be no worse off but that was complete and utter balderdash. They are far worse off. The former Minister for Finance, now Minister for Public Expenditure, National Development Plan Delivery and Reform, Deputy Donohoe, said he would have no problem if his loan was bought by a vulture fund. Let me spell this out in clear terms. The biggest tranche of loans that went to vulture funds was sold by Permanent TSB. If those loans were still with Permanent TSB, the borrowers would be paying less than 4%, which is the highest standard variable rate with Permanent TSB. Instead, in some cases they are now paying 7.5% with Pepper. That means they are paying more than €400 extra per month, or close to €5,000 per year. Next month, they will get a sixth letter in the door because the ECB at its March meeting will increase interest rates by another 0.5%. These people, who are now paying an interest rate of close to 8%, are thousands of euro worse off than they would have been if they were with Permanent TSB. The commitments given by the Government in the past, and particularly by the political parties in government, are clearly void.

The people here see very clearly that they are so much worse off. Not only that, people have come to me who are victims of the tracker mortgage scandal. Permanent TSB took money from them to which they were entitled, in the form of interest rates, and because they were in financial distress they had to go for split mortgages. Their repayments on these split mortgages were more than if they had the original tracker rate to which they were always entitled. Their loans were then sold to vulture funds because they were in split mortgages. What is happening now? They are paying at a rate of 7.5%. They were screwed by Permanent TSB. Their tracker rate was taken off them. They had to go into an arrangement and, because of the way Permanent TSB structured such arrangements, they were deemed to be non-performing loans and were, therefore, sold on. These individuals did nothing wrong. If the principle relating to restoration is to be followed through, these individuals should be back with Permanent TSB and paying at a rate that is significantly lower than what the vultures are charging.

As I said, we have worked with the PBO to cost this measure. It would provide 30% relief on the increased interest costs relative to June last year, and capped at total relief of €1,500 per qualified household. It would exclude second and holiday homes, and rental properties held by landlords. The Minister's party leader spoke about how he gets letters in this regard all the time. As we know, landlords can get 100% tax relief. The Fine Gael Government increased it from 80% to 100%, so this excludes landlords. This measure is a shock absorber for those households that face difficulties in the months ahead. It is targeted. It would absorb a portion of increased interest costs. It is affordable, sensible and necessary.

Following our work with the PBO, we estimate the proposal would cost between €350 million and €400 million. Why is there a range? It is because none of us can be 100% sure where interest rates are going. The higher end of this range, for example, is that fixed rates would increase by 1.5% compared to June last year. Standard variable rates would increase across the board by 3%. We know this is not anywhere near what is happening. We have, therefore, built potential significant increases for fluctuations for the remainder of this year. This is a measure that would last for the next 12 months. It is one that is sensible, targeted and time limited. Crucially, it is an initiative that would give support to individuals now.

I mentioned Rachel earlier. The Minister just ignored that point in trying to deflect in silly numbers to the effect that everybody would get €1,500. Let us bring this back to the individuals. Rachel is a carer with a child with cerebral palsy. Her mortgage type has meant an increase of €400 per month. This is before this month's increase has been passed on to her. She will then face the March increase. Such individuals are looking for the Government to support them now. They are looking for the Government to do the right thing.

We put it to the Government last year to consider bringing forward a proposal. If it had come forward with a proposal to cap a relief at €1,300, that would have been grand. We would have asked to discuss it. The Government could equally have suggested that the measure should have not kick in until the interest rate was above 3%, and we would have said, "Let us do that." Sinn Féin, though, has undertaken work that did not happen overnight and that has been going on for months with the PBO. The party has its information from the Central Bank concerning performing and non-performing loans. I can give the Minister examples in this regard. If fixed rates increased by 1.5%, the cost would be €36.5 million. For non-performing loans with the five banks, it would be €450,000. If standard variable rates went up by 3%, the outlay would be €136.4 million. If tracker rates were at 3.5%, it would be €175 million for performing loans and €7.81 million for non-performing loans. The PBO has done all this work. If the Government, however, wants to have a silly debate about the costings of this proposal or question the independence or assumptions of the PBO, that is fine. However, I would like to talk about Rachel and others who have come to me and said they are mortgage prisoners. They are asking us how they will pay a mortgage at a rate of 7.5% or 8%. In emails, they are asking me where they are supposed to get the money to pay the €4,500 to €5,000 extra they will have to pay this year compared to last year.

I know that if I were the Minister for Finance, I would not be able to take that weight completely off those people. We are not suggesting that the State absorb that entire interest rate increase. We are recognising, though, that the primary factor driving inflation in Europe is the war in Ukraine. Measures have been introduced that have upset some of the worst impacts of inflation, and rightly so. This is another issue. These families need to be supported and protected. For the next 12 months, therefore, it is a sensible proposal to have an interest rate relief of 30% of the increased mortgage levels being paid by customers, with reference to the rate from June last year, and with no mortgage holder benefiting by more than a total of €1,500. As I said, the range in the cost is from €350 million to €400 million. The banks should not pass on all these increases and, in fairness to them, they have not been doing so. Equally, however, if they did not pass on this 3%, the total cost would not be anywhere near these figures. It would be less again.

The point here is to be focused and centred. I know the Acting Chair will agree with us because he has made these points on many occasions. We need to focus on those who are struggling with mortgage arrears. From the Government, I have heard no solution, plan or anything else. Talking about the Central Bank and solutions involving improving regulation do not cut it. These vulture funds do not offer fixed rates or switching. In many circumstances, they do not offer alternative arrangements. The only thing the Code of Conduct on Mortgage Arrears needs to do is make sure they go through the suite of measures they offer. If they do not offer at option, people are in dire straits. This is why the Government needs to step in. I commend the motion to the House.

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