Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 65: To ask the Minister for the Environment, Heritage and Local Government when the European Central Bank interest rate cut of 0.25%, announced on 7 May 2009, will be passed on in full to local authority mortgage holders; and if he will make a statement on the matter. [23435/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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As stated in replies to Questions Nos. 53 of 8 April and 223 of 13 May 2009, in general, following consideration by the Board of the Housing Finance Agency (HFA), the rates charged to local authority borrowers are normally adjusted 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.

I understand that the Board of the HFA is due to meet shortly and will consider the appropriate response to the most recent ECB rate change at that meeting. In the meantime, rates charged to local authority borrowers offer exceptional value by comparison to rates charged by commercial lenders, with the local authority rate currently running at over .85% lower than the market average variable rate. Historically, this differential has been narrower, with the rate charged to local authority borrowers more typically running at around .5% lower than the market average.