Pearse Doherty (Donegal, Sinn Fein)
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58. To ask the Minister for Finance if he will consider the introduction of targeted and temporary mortgage interest relief to absorb a portion of increased interest costs since June 2022 on primary dwelling home mortgages; and if he will make a statement on the matter. [11517/23]

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Cuirim fáilte roimh an Aire Airgeadais. Tá an chéad cheist ag an Teachta Ó Dochartaigh.

Pearse Doherty (Donegal, Sinn Fein)
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Tá a fhios ag an Aire - agus tá le tamall - go bhfuil an ECB ag cur rátaí morgáiste suas le 3%. The European Central Bank, ECB, has increased its key interest rate by 3% and it is expected to go up, on 16 March, another 0.5% with further increases flagged for later in the year. These increases have not worked fully through the Irish system uniformly. However, there are certain categories of borrowers who have already been impacted by these rate hikes. I again ask the Minister to consider the introduction of targeted, temporary mortgage interest relief to support these hard-pressed households.

Michael McGrath (Cork South Central, Fianna Fail)
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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 ECB. 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.

In relation to mortgage interest relief, and as the Deputy will be aware, the relief for principal private residences was phased out on a gradual basis over the period of 2009 to 2020. 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 conscious that there have been increases in certain mortgage rates by a number of lenders, it is important to point out that mortgage interest rates, in particular fixed interest rates, have fallen over the past number of years. For example, in December 2014, the average level of fixed interest rates for new lending was 4.11% compared with 2.61% in December 2022. The Irish average interest rate on new mortgages is now below the eurozone average. In December, Ireland had the third lowest mortgage rates in the eurozone. The differential between the Irish and average eurozone interest rates for new mortgages declined from 1.40%, at the end 2021, to -0.26% in December 2022. The data also indicate that a significant portion of new mortgages, over 93% in December 2022, are now fixed rate mortgages and 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.

Pearse Doherty (Donegal, Sinn Fein)
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The Minister talks about the interest rate in terms of new mortgages, and I do not dispute his facts, but will he acknowledge, when all outstanding Irish mortgages are taken into account, that they are significantly higher than the European average? In December, they were 2.88% while the European average was 1.89%. Ireland's mortgages are actually much higher than the European average. Some 251,000 borrowers with tracker mortgages have been directly exposed to the ECB rate hikes. A mortgage holder with an outstanding balance of €200,000 will see his or her interest cost increased by €3,500 over 12 months. A quarter of those on variable mortgage rates will likely see an increase in their interest cost in the month ahead. Households whose mortgages were sold to vulture funds this year, which the Minister is well aware of, are seeing their interest rates being hiked, suddenly and sharply, as high as 7.5%. Some of them are paying over €6,000 and €7,000 more per annum. Many others are paying between €4,000 or €5,000. They have no option to fix. They have no option to switch. They are effectively trapped. The Government has not brought forward-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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The Deputy's time is up.

Pearse Doherty (Donegal, Sinn Fein)
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This is my last point.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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No, Deputy. I am sorry, but your time is up.

Pearse Doherty (Donegal, Sinn Fein)
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The Government has not brought forward a single solution for these individuals. Does the Government plan to do so?

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Please, Deputy Doherty, your time is up.

Michael McGrath (Cork South Central, Fianna Fail)
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I acknowledge the work of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, of which the Deputy is a member, in examining this issue and engaging with those who have direct knowledge and experience of this very important issue. I am directly engaging with the Central Bank of Ireland on this. I know the Deputy met with Central Bank officials yesterday. They are working proactively with the non-bank sector. Later this week, they will publish some additional data. It is important we get a comprehensive assessment of the overall data on the non-bank sector. As the Deputy knows, overall, there are about 716,000 principal private residence mortgages in the Irish system, of which - according to the data the Central Bank will publish this week - about 115,000 accounts are-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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The Minister's time is up.

Pearse Doherty (Donegal, Sinn Fein)
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We have the data on that but let us deal with individuals. A person contacted me about mortgages sold to Pepper that have increased by €520. Another person's mortgage increased by €560. If that is multiplied over a year, it amounts to thousands more euro they have to pay. They were sold a lie. They were told they would be no worse off if their loans were sold to a vulture. They cannot fix. They cannot switch. They are now paying thousands more euro than they would with Permanent TSB. There are others who had a shock in terms of what they were paying before because of the increase in interest rates. These increases in interest rates are happening because of inflation, which is primarily driven by the war in Ukraine. The Government has not brought forward one single proposal to help these individuals. The Government needs to do something. The Central Bank is doing a piece of work in terms of the consumer protection code because it recognises there is a role for us. As a Minister, Deputy McGrath needs to step in-----

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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The Deputy's time is up.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputy. For many customers who are with the non-bank sector at the moment, there is a way back in terms of switching. Many of those customers are fully repaying their mortgages. Those are no longer non-performing loans and those customers should be in a position to switch their loans back to a main retail lender. Many of the loans were sold because they were in distress. Others were sold because the lender left the Irish market. The main retail banks in Ireland should be actively welcoming back those customers whose mortgage loans are no longer in distress.

The Deputy is correct, however, that there are people paying interest rates of 6% or 7%. In some cases, that is because there is a split mortgage with a high interest rate attached to the active part while no interest rate may be currently applying to the warehoused element. That is why it is important we get all of the data. I receive the same emails as the Deputy. They are helpful to know what is happening on the ground. I am engaging directly with the Central Bank on the issue. My officials are engaging with the wider sector to identify the nature of the issues here and what we can do to help.