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

I thank the Deputy for his question.

The formulation and implementation of monetary policy is an independent matter for the European Central Bank, ECB. As the Deputy will be aware, the ECB has increased official interest rates over recent months as it attempts to combat inflation. The latest increase, which was announced last week, brings the main ECB lending rate to 4%. Any decision to change official interest rates, and the timing of any such decision, is solely a matter for the ECB. Following last week's monetary policy meeting, the ECB reiterated that its monetary policy decisions will depend on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.

The Central Bank is analysing developments in credit matters on an ongoing basis to understand how rising interest rates are affecting the economy and the resilience of the household sector as a whole and, within that, to identify groups of borrowers who may be more vulnerable to distress. The Central Bank has recently published a number of reports, studies and papers on these matters which can be found on its website.

In general, the Central Bank has noted that the ratio of Irish households' mortgage interest payments to income has fallen substantially since its peak in 2008 but that it is also the case that the impact of interest rate changes varies widely across households. Due to high levels of mortgage fixation, up to half of all mortgage holders at retail banks are likely to have experienced no increase in repayments by the end of 2023 and about 40% will be insulated from higher interest rates by the end of 2024. On the other hand, tracker mortgage customers and certain other borrowers are among the most exposed to repayment shocks. This most exposed group also tends to have substantially larger mortgage balances than less exposed customers.

On the question as to what support we can give as a Government in terms of fiscal intervention, and as I have said before, the most appropriate time for that decision, in my view, is when we consider the available resources we have in the lead-up to budget day.

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