Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

89. To ask the Minister for Finance the number of outstanding mortgage loans that are tracker or variable rate mortgages; and if he will consider options to introduce targeted, tailored and time-bound mortgage interest relief in response to rising interest rates. [55905/22]

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

On 14 September, the ECB increased its interest rate by 0.5%, bringing it up to 2%. This was the third rate hike since July with further hikes expected in the coming months. This has had an immediate impact on households on tracker mortgages and could impact those on variable rate mortgages in the coming months, heaping further financial pressure on struggling households. Will the Minister and the Department consider options to introduce targeted, tailored and time-bound mortgage interest relief to support those households in the context of the sharp and sudden hikes in mortgage interest repayments?

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy. The Central Bank of Ireland publishes mortgage statistics on a quarterly basis. The most recent statistics indicate there were around 719,500 primary dwelling mortgage accounts at the end of June last with an outstanding balance of €98.7 billion. The Central Bank estimates that around 27% of primary dwelling mortgages with credit institutions are on a tracker interest rate and a further 20% are on a non-tracker variable rate or where the interest rate is fixed for up to one year.

Mortgage interest tax relief was phased out on a gradual basis from 2009 to 2020. The decision to abolish mortgage interest tax relief was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. Mortgage interest relief cost over €700 million in 2008.

In the recent budget, the Government introduced measures, including a large range of one-off measures, which will help families and households with the increasing cost of living. These measures included a tax package of over €1.1 billion. Therefore, I do not have any plans to reintroduce mortgage interest tax relief at this time.

Prior to its curtailment and eventual abolition, as was pointed out by the 2009 Commission on Taxation, in 2005 the top two income deciles accounted for close to half of the tax forgone through mortgage interest tax relief. As the European Central Bank, ECB, has changed its monetary policy since the summer, the average interest rate on new Irish mortgages has broadly held steady and the difference between here and the Eurozone average has declined.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Gabhaim buíochas leis an Aire. I am fully aware that the interest hikes are yet to be felt by all mortgage holders. Hopefully the bank will continue to absorb these hikes. Time will tell, but it is likely that some of that will change. For those on trackers, there has been an immediate impact. Those with an outstanding balance of €200,000 will see their repayments increase next year by more than €2,000. That is a big jump for anybody who is already under pressure. The Central Bank has noted that 54% of outstanding mortgage balance is in variable mortgages and says we will likely see an immediate increase in mortgage interest costs when rates rise.

There is capacity. The Minister gave a figure but there are other figures, depending on the rate at which mortgage interest relief is introduced and at whom it is targeted. In one year, for example, it cost just over €50 million. There is scope and capacity for a targeted, tailored and time-bound form of mortgage interest relief. Does the Minister not recognise that households that have seen their repayments increase by over €2,000 in six months are looking to the Government to help them deal with this shock with a tailored measure that targets mortgage interest relief?

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is important to be clear on the possible costs of this. I have outlined what the cost was in 2008. The most recent data, from the end of June, indicate there are currently 720,000 mortgage accounts with an average outstanding balance of €137,100 at an interest rate of 2.5%. Assuming mortgage interest relief was granted at a rate of 20% on the average interest payment, such a reintroduction would cost in the region of €500 million per annum.

In seeking to understand the background to the Deputy's proposal, I sought the budget proposals Sinn Féin published before budget day but they have been removed from the Sinn Féin website and are no longer available. The Sinn Féin alternative budget for 2022 is available but that for 2023 is no longer on the website. Will the Deputy explain to the House why that is the case?

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The Minister talks about modelling the cost but the reality is people here face a massive increase in repayments. For people struggling with gas, electricity, food, petrol and diesel prices over the last six months, to be told they have to pay an extra €2,000 in mortgage repayments on a typical family home with an outstanding balance of €200,000 is a huge wallop. They are looking to the Government to support them.

There are ways in which it can be done. We are working with the Central Bank and the office of parliamentary costings to cost proposals. For example, we can look at the cost of the increased interest rate. The Minister is talking about the old measure brought in before the financial crash, which looked at all interest paid. What is needed is a targeted, tailored measure that deals with the shock households have faced.

The Minister can dismiss as this suggestion, as his Government has done, but he has form in this regard. He dismissed a renter's tax credit; now he is forced to introduced it. He dismissed an eviction ban; yet he has been forced to introduce it. I ask him to look at this in the interests not of who is bringing it forward but of those individuals impacted by these increases.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I understand hard-pressed households are looking to the Government for help, which we provided in budget 2023 and which we want to provide to make a difference.

However, those hard-pressed households, the citizens of Ireland who are experiencing such strain, also have an expectation that any proposals that will be brought forward will be affordable, will make sense and will not create new risks for our country. The Deputy's party is now advocating that the State pay a share of increasing mortgage bills in the time ahead. His party has said it wants the State to pay each renter a month's rent. It has advocated a proposal in respect of energy price caps, which the Government in the United Kingdom is committed to ending.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Germany has just introduced such a proposal.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Many of those proposals were contained in the Sinn Féin budget proposal, which is no longer available. It has disappeared from the party's website. If I want to find out about Sinn Féin's budget proposals for 2022, they are still available. If I want to find out about its proposals for the budget we are debating, they are gone. Why are they gone? The reason they are gone is that the proposals Sinn Féin brings forward will be a source of risk and undermine our public finances. By doing so, and by the party's pretending there is money available for everything, it runs the risk of making the problems I know our country has even worse. I therefore ask the Deputy again: why are the budget proposals Sinn Féin lauded so much in the run-up to this budget gone from its website?

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

First, what we put forward, and the things the Minister has-----

Pádraig O'Sullivan (Cork North Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Sorry, Deputy Doherty. We must move on to the next question.

Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

There are other Members here.