Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 191: To ask the Minister for the Environment, Heritage and Local Government if he will ensure that the European Central Bank rate cut of 0.75% is passed on in full to local authority mortgage holders; and if he will make a statement on the matter. [45460/08]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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As stated in the reply to Question No 220 of 26 November, in general, following consideration by the Board, the rates charged to local authority borrowers are normally adjusted by the Board of the Housing Finance Agency (HFA) in line with movements in European Central Bank (ECB) rates. However, given that the correlation between ECB rates and interbank rates (i.e. the rates at which the Agency itself borrows) is atypical and volatile at present, the Agency, in responding to movements in ECB rates, must give careful consideration, on each occasion, to the fluctuating relationship between its lending rates and the cost of funds.

While it is hoped that it will be possible to pass on the most recent rate reduction announced by the ECB, it will be necessary to monitor the impact of the cut on interbank rates before a decision can be made. I anticipate that, in common with the situation following the previous two cuts in October and November, which are being passed on in full to local authority borrowers, the position in relation to possible movement in the HFA's lending rates should be clear within a number of weeks of the ECB announcement.

In the meantime, rates charged to local authority borrowers continue to offer very good value by comparison to rates charged by commercial lenders, and over the course of 2008 the local authority rate has been almost 0.6% lower than the market average variable rate.