Martin Ferris (Kerry North, Sinn Fein)
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Question 95: To ask the Minister for the Environment, Heritage and Local Government the reason the interest rate for local authority mortgage holders has been increased by 0.5% and if he will ensure that this decision is reversed in view of recent data showing that local authority mortgage holders are six times more likely than bank mortgage holders to be in arrears [39630/10]

Martin Ferris (Kerry North, Sinn Fein)
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Question 96: To ask the Minister for the Environment, Heritage and Local Government the way he expects local authority mortgage holders to be able to pay the 0.5% mortgage interest rate increase in view of the fact that one in three are already in arrears; and if he will make a statement on the matter. [39631/10]

Martin Ferris (Kerry North, Sinn Fein)
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Question 97: To ask the Minister for the Environment, Heritage and Local Government if the level of existing arrears is taken into consideration when a decision is made to increase the mortgage interest rate for local authority mortgage holders; and if he will make a statement on the matter. [39632/10]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I propose to take Questions Nos. 95 to 97, inclusive, together.

Interest rates charged to local authority borrowers are determined by the Board of the Housing Finance Agency (HFA). In determining these rates, the Board of the Agency gives careful consideration to the fluctuating relationship between the rates at which it can borrow and its lending rates. The HFA is required to operate on a break-even basis and continues to provide extremely good value to local authority customers. However, the unavoidable increases in the Agency's borrowing costs require the rate charged to local authority borrowers to increase by 0.5% as of 1 November 2010.

I am acutely conscious of the fact that a considerable number of local authority borrowers are already facing difficulties in meeting their mortgage payments. However, local authority borrowers have benefited from very significant easing of mortgage costs in recent months. The effective rate for local authority borrowers from 1 June 2009 has been 2.25% - a cumulative rate decrease since October 2008 of 3%. This has resulted in a differential of over 1% between the rate charged to local authority borrowers and the average variable rate available from private lending institutions. Even allowing for the increase of 0.5%, that differential will be around 0.6%.

Where any borrower, either from a local authority or from a private financial institution, is facing difficulties in meeting mortgage repayments, they should engage proactively and constructively with the lender to seek to achieve an agreed solution. The services of the Money Advice and Budgetary Service are also available to such borrowers and support is available through the Supplementary Welfare Allowance Scheme.

In addition, I issued comprehensive guidance earlier this year based on the Regulators Code of Practice, to ensure that cases of local authority mortgage arrears are handled in a manner that is sympathetic to the needs of the particular household, while also protecting the position of the local authority concerned.