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

I thank Deputy Doherty for his question. 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 European Central Bank. 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.

As the Deputy will be aware, mortgage interest relief for principal private residences was phased out on a gradual basis over the period of 2009 to 2020. The decision to abolish it was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. 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 aware that there have been successive increases in certain mortgage rates by some lenders, it is important to point out that mortgage interest rates, in particular fixed interest rates, have fallen over the last number of years. For example, in December 2014, the average level of fixed interest rates for new lending was 4.11% compared with 4.04% in July 2023. The data also indicate that a significant portion of new mortgages, around 85% in July 2023, are now fixed-rate mortgages. 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.

The reintroduction of mortgage interest relief, even on a selective or tailored basis, is likely to involve significant costs and needs to be considered, not on an ad hocbasis, but in the context of a range of other cost-of-living measures being provided. I have consistently said that I think the appropriate time to consider the introduction of mortgage support for people who are carrying the burden of successive interest rate increases is in the context of the budget.

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