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

On 14 September, as the Deputy will be aware, the ECB increased the main lending rate by 0.25%. It was the tenth increase in official rates since the summer of 2022, bringing the ECB's main lending rate to 4.5%. I have consistently said over the past months that the appropriate time to make a decision on whether it was appropriate to provide support to mortgage holders because of the additional burden imposed by interest rate increases would be at budget time, and that is exactly what I did. We are acutely conscious of the impact of rising interest rates. I am a constituency TD. As well as being the Minister for Finance, I have a lot of contact with individual constituents who have been impacted by interest rate increases. Monetary policy decisions are made independently, as we know, and we also know the purpose of those decisions, which is to bring down inflation and, ultimately, to put all of us on a more sustainable pathway over time.

It is undoubtedly the case that some mortgage holders will be in a stronger position than others and will have the capacity to absorb the impact of the recent increases in mortgage rates. That is the main reason that I and the Government took the view that an element of targeting was appropriate in regard to the mortgage interest relief measure we brought forward. The Deputy will acknowledge that it is not possible or desirable for the Government to fully alleviate the impact of increased interest rates for all mortgage holders. It is the case that people who have relatively low mortgages have low loan-to-value ratios and they should, in many instances, be in a better position to switch their mortgage. While that is not an option for everybody, it is an option for some. Not having a lower limit would have resulted in a less targeted scheme and, in this case, an element of targeting was warranted.

When I look at the overall numbers, as the Deputy has acknowledged, some of the relatively low mortgage balances will qualify because they will be combined with other mortgage accounts. However, when I look at the overall spread of the data that is being provided to the Department of Finance by the Central Bank, it is estimated there are approximately 253,400 private dwelling homes with mortgage balances below €80,000, of which an estimated 137,800 accounts are projected to have a higher interest bill in 2023 than in 2022. When we look at the breakdown of the 253,400 homes that have mortgage balances of less than €80,000, we see that many of them are of very low value in terms of the balance of the mortgage at the end of 2022. Over 40,000 mortgages had a balance of not greater than €10,000, another 40,000 mortgages were between €10,000 and €20,000, another 34,000 mortgages were between €20,000 and €30,000, and so on. When we look at the data, we can see that many of the mortgages in question, which are in the statistics the Deputy has outlined, are of a relatively low value.

It raises the question that when we are using public money, we have to make a decision about targeting the resources and on what basis we are going to do it. The Deputy has accepted the principle of targeting because he broadly accepted on Committee Stage that mortgage balances above €500,000 should not benefit from the mortgage interest tax relief that we have brought forward, although we differ in regard to the lower level.

This is a balanced package. It is targeted. It provides badly needed relief for the broad section of people who are in the middle group, from €80,000 to €500,000. It encompasses the vast majority of mortgage holders who need help and they will get help. My focus now, once the Finance (No. 2) Bill is enacted and signed into law, is to ensure that we have the system up and running as quickly as possible. The Revenue Commissioners are actively working on that to make sure that, early in the new year, those who have been impacted by the interest rate increases will be in a position to avail of the tax relief provided for in this Bill.

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