Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I am glad to have the opportunity to speak in this debate. I welcome the motion because it is certainly a time when so many households are struggling with the high cost of living, including the spiralling cost of housing. In particular, we know that many mortgage holders are being pushed to the pins of their collars and that has to be addressed in some way. I am not necessarily saying that it should be addressed in the way the motion outlines proposals in that regard, but it needs to be addressed and we need to hear fairly soon from Government with regard to its intentions.

Last month's Central Statistics Office, CSO, consumer price index found that mortgage interest costs rose by a staggering 51% in the previous 12 months. The last thing mortgage holders needed was a tenth consecutive interest rate hike. At this stage, one would have to seriously question the European Central Bank's, ECB's, approach to rising inflation. Interest rates are now at their highest since the creation of the euro with the eurozone economy teetering on the edge of recession.

What has the impact of the ten interest increases over the past year or so been? We know the contribution of those interest hikes has been approximately 18% to the level of our inflation. This is a measure that is supposed to reduce inflation yet it is contributing 18% to our inflation rate as a result of increased house prices. I accept that the measure is having an impact in terms of slowing the increase in house prices, and we saw figures that came out in just the last few days. For the very many people who are already purchasing homes and have mortgages, however, it is having a hugely negative impact on many families' disposable income. That has to be borne in mind. It is not just about a theoretical approach to inflation. The actual practical impact of the ECB's policy is really hurting people very badly and that should be recognised.

The other point it is important to make is that the Economic and Social Research Institute, ESRI, recently reported on our inflation rate and concluded that approximately 50% of our inflation rate is down to increased company profits. What is the Minister doing about that? That is a huge driver in inflation in this country. I am not aware of the Minister doing anything of any great significance with regard to tackling those ballooning profits, particularly in energy companies but in so many other companies as well. In this context, there is a need for a debate around the most effective and fairest ways to help struggling householders, including mortgage holders. As I have said many times, and as the Social Democrats have been repeating constantly, the priority for Government should be to drive down the cost of housing. At no point has this or the previous Government ever set out to achieve that objective. In fact, many of the measures it has introduced with regard to housing are fuelling house prices. They are subsidies to developers and that is having the overall impact of fuelling house prices.

I can understand the temptation for some people to talk about reintroducing mortgage interest relief. I am not convinced that is the most effective or fairest intervention to make, however. My concerns remain the same, as I outlined on the two previous occasions we debated this within the past year. People who manage to get a mortgage are, it has to be said, by and large in a better situation than most of their peers, particularly renters. I am not saying for one moment that all of these people who have mortgages are well off. They are not by any means, but nor are they locked out of homeownership and forced to live with their parents into their 30s and 40s. Recent CSO data showed that homeownership has fallen to 66%, the lowest level in more than 50 years. So much for the Taoiseach talking about his party being the party of homeownership. At the same time, only approximately 50% of homes that were built since 2016 are owner occupied with a mortgage or loan. A recent ESRI report also found that of 15 western European countries, Ireland has the second largest gap in homeownership between younger and older people. Close to 80% of people over the age of 40 in Ireland own their own home while barely one third of those under 40 are homeowners. In light of these stark findings then, we must ask ourselves where support is most needed and how that support should be provided. I highlight these considerations not because I believe we should do nothing for our mortgage holders but because any intervention in the housing market should be fair and effective. In my view, mortgage interest relief is a very blunt instrument. It may assist people in the short term, but it does not do anything to help reduce the prices of houses. In fact, as I said, it contributes to an increase in the price of houses.

This motion calls for targeted mortgage interest relief, but it does not say how or at who it should be targeted. It also calls for temporary mortgage interest relief but it fails to say what "temporary" means. Undoubtedly, all mortgage holders are impacted to a greater or lesser extent by the ten consecutive hikes in interest rates. We must bear in mind, however, that a considerable number of mortgage holders are on fixed rates. That can vary for different periods but, certainly, there are a considerable number who are on fixed rates and who are not overly negatively impacted by what has happened. That does not mean they will not be impacted when their period of fixed rate changes. It is undoubtedly the case that for many people not on fixed rates, their mortgage repayments are excessively expensive. Some people can manage a higher mortgage repayment. Some people who are lucky enough to be well off can manage it. They feel it, but they can manage it. Therefore, I have to ask, should people in those very higher income brackets get relief or should they be handling it in the context of their income?

Is this the best way to spend public money then? Should it be going to everyone irrespective of the value of their property, the size of their mortgage or irrespective of their income? I do not believe it should. We also know, of course, from past experience that once mortgage interest relief is in place, it is very hard to take away. Recent media reports suggest that some form of mortgage interest relief is being considered in the context of next month's budget. If such a proposal is on the table, I would urge the Minister to ensure that support is targeted at those most at risk of losing their homes. These families and workers must be the priority as they cannot absorb any further interest rate hikes. I believe there is a case for funding this via an increased bank levy therefore making the policy a transfer from banks to customers rather than general taxpayers to homeowners. The final call in this motion regarding vulture fund mortgages is of critical importance and it is something the Social Democrats fully supports. This Government must immediately develop and implement a plan to reintegrate mortgage holders with loans held by vulture funds into the mainstream mortgage market. Earlier this month, the banking sector announced changes to the eligibility criteria for switching from a vulture fund to a pillar bank. While I welcome this announcement, including Money Advice & Budgeting Service, MABS, engagement with vulture funds, many customers will struggle to meet the criteria. They will remain mortgage prisoners. We know from analysis of Central Bank data that approximately 85,000 mortgage holders are currently customers of vulture funds. The majority, approximately 69%, are paying mortgage rates of more than 4% on average with 38,000 on average paying variable rates of 5.57%, and on top of that, they have been hit with the ECB increases over the past year.

These mortgage holders must be a priority. The Minister must force the banks to do a lot more to assist those and to take back those mortgages.

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