Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
Link to this: Individually | In context

Question 281: To ask the Minister for the Environment, Heritage and Local Government the reason persons availing of affordable housing schemes must purchase their mortgages from the local authority, whose interest rates are in most cases higher than those of private lending institutions, thereby creating an additional financial burden on the buyer; if he has been advised that this may be an uncompetitive practice; the steps he will take to ensure that local authorities can offer the lowest mortgage rates or at least remain competitive in relation to affordable housing mortgages; and if he will make a statement on the matter. [31468/07]

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

Mortgage finance for affordable housing has traditionally been provided by local authorities through funding by Housing Finance Agency borrowings and this continues to be the case. However, in recent times my Department has facilitated a number of the main financial institutions in also introducing mortgage finance for persons wishing to access affordable housing. It is, therefore, not obligatory for a purchaser of an affordable home to source their mortgage loan from a local authority.

Interest rates on local authority loans are determined by the Housing Finance Agency by reference to prevailing rates in the financial market. The current variable rate is 5%, which is approximately 0.15% below an average variable rate of the five largest mortgage lenders. Alternatively, a person may opt for a fixed rate for a period of five years from the date of the loan advance: the current fixed rate is 5.25%. At the end of the fixed rate period, a borrower may fix for a further five years or change to a variable rate. In addition, a mortgage protection charge of 0.598% is applied to all local authority loans. I am satisfied that local authorities offer competitive mortgage finance to those who require it.