Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 53: To ask the Minister for the Environment, Heritage and Local Government further to Parliamentary Question No. 893 of 24 March 2009, if a decision has been made to pass on in full the European Central Bank interest rate cut of 0.5%, announced on 5 March 2009, to local authority mortgage holders; when he anticipates a decision will be reached in relation to the 0.25% cut announced on 2 April 2009; and if he will make a statement on the matter. [14831/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I refer to the reply to Question No. 893 of 24 March 2009. In general, following consideration by the Board of the Housing Finance Agency (HFA) the rates charged to local authority borrowers are normally adjusted by the Board, 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.

The Agency notified local authorities last month of its decision to pass on, in full, the 0.5% decrease announced by the ECB on 5 March. The effective rate for local authority borrowers from 1 May 2009 is 2.5% - a cumulative rate decrease since October 2008 of 2.75%.

While it is hoped that it will be possible to pass on the further 0.25% cut announced by the ECB on 2 April, as with previous rate reductions, it will be necessary closely 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 cuts which were 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.