Written answers
Wednesday, 19 March 2025
Department of Housing, Planning, and Local Government
Mortgage Interest Rates
Cathy Bennett (Cavan-Monaghan, Sinn Fein)
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946. To ask the Minister for Housing, Planning, and Local Government when the Housing Finance Agency reviewed its interest rates in the period 2022 to date; to provide details of any adjustments that arose from any such review; the criteria on which a decision to adjust rates are based; if there is any governmental oversight; and if he will make a statement on the matter. [12337/25]
James Browne (Wexford, Fianna Fail)
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The Housing Finance Agency (HFA) is an Agency under the aegis of my Department. The Department has responsibility for Corporate Governance of the HFA and performs this function in line with the Code of Practice for the Governance of State Bodies 2016.
Furthermore, under Statutory Instrument No. 583 of 2024, the Housing Finance Agency became a designated body to NewERA, who provide financial and advisory services to my Department to support the Corporate Governance oversight of the HFA.
The interest rate policy of the HFA is an operational matter for the management and Board of that organisation. The HFA has a dedicated email address to facilitate the provision of information directly to members of the Oireachtas, oireachtas.enquiries@hfa.ie. However, in response to the question, the HFA have (in this instance) provided my Department with the following information on this matter.
The HFA reviews its interest rates at least once per quarter. Between June 2022 and 1 March 2025, the interest rates for HFA customers have been amended on six occasions, as follows:
- June 2022: The first-rate increase since 2019 was in June 2022 when fixed rates for Approved Housing Bodies (AHBs) were increased by between 0.25% and 0.50%.
- July 2022: The following month the HFA’s long-term fixed rates for Local Authorities were increased by between 0.2% and 0.5%.
- November 2022: The HFA increased both its long-term rates and variable rates. For Local Authorities rates increased by between 0.5% and 0.75%, which applied to all rates except the LA Home Loan long-term rates. The HFA’s long-term fixed rates for AHBs increased by between 0.65% and 0.75%.
- January 2023: The HFA increased its long-term rates on the LA Home Loan by 0.75% to bring it in line with all other long-term rates.
- April 2023: The HFA increased its variable interest rates for Local Authorities by 1%.
- October 2023: The HFA increased all fixed and variable rates. For Local Authorities rates increased by between 0.5% and 0.85%. For AHBs, fixed rates were increased by between 0.6% and 0.7%.
For some customers, the variable rate is linked to six-month Euribor and therefore the interest rate on those loans changes in line with the movements in Euribor, when the interest rate is set at the beginning of each six-month interest period.
For all other HFA customers who have variable rate loans, the interest rate is determined by reference to the HFA’s cost of funds, which is the rate at which the HFA can borrow, at variable rates, under its Guaranteed Note Programme.
For fixed rate lending products, the interest rate is determined by reference to the HFA’s cost of funds for the relevant tenor.
As the HFA raises the majority of its funding on a fixed rate basis from the NTMA, its cost of funds is closely aligned to Irish Government Bond yields.
Irish government bond yields for 25 and 30 year tenors, increased from at or below 1% at the beginning of 2022 to over 3% by the end of 2022 and have remained in and around that level throughout 2023 and 2024. Currently 25 and 30 year bond yields are in excess of 3.5%, which is higher than some of the HFA’s lending rates.
In summary, over the course of 2022 and 2023, the HFA’s cost of both fixed and variable funds increased; however, the full extent of that increase was not passed on to customers for a significant period of time.
In relation to the HFA operational matters raised, it is worth noting that the HFA, as an independent State company, has its own Board of directors who are collectively responsible for leading and directing the HFA’s activities and are accountable for the proper management of the organisation. My Department does not have any direct involvement in the decision-making process regarding changes in interest rates that the HFA offers.
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