Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

As I have stated previously in the House, the position is that the formulation and implementation of monetary policy in the eurozone and the setting of official interest rates is an independent matter for the ECB. The Government has no role in setting official interest rates, nor in setting the retail interest rates that lenders may charge on their loans, including mortgages. That is a business and commercial matter for individual lenders.

In relation to mortgage interest relief, and as the Deputy will be aware, the relief for principal private residences was phased out on a gradual basis over the period of 2009 to 2020. It cost more than €700 million in 2008. Prior to its curtailment and eventual abolition, the top two income deciles in 2005 accounted for close to half of the tax forgone through tax relief. This issue was highlighted in the findings of the 2009 Commission on Taxation report. The relief cost approximately €280 million in 2005.

While I am acutely conscious that there have been increases in certain mortgage rates by a number of lenders, it is important to point out that mortgage interest rates, in particular fixed interest rates, have fallen over the past number of years. For example, in December 2014, the average level of fixed interest rates for new lending was 4.11% compared with 2.61% in December 2022. The Irish average interest rate on new mortgages is now below the eurozone average. In December, Ireland had the third lowest mortgage rates in the eurozone. The differential between the Irish and average eurozone interest rates for new mortgages declined from 1.40%, at the end 2021, to -0.26% in December 2022. The data also indicate that a significant portion of new mortgages, over 93% in December 2022, are now fixed rate mortgages and this will protect borrowers in the event of a rise in official and market interest rates, at least for the period that the interest rate is fixed.

See this speech in context