Mortgage interest rates
Deputy Doherty warned that ECB rate hikes are hitting tracker and vulture-fund mortgage holders, many of whom face sharp increases and no way to fix their rates. The Tánaiste said interest rates are rising across Europe, lenders will decide how to pass them on, and the issue will be kept under review.
Today, the European Central Bank is going to raise its interest rate again by another half a percentage point. This means there has been a 3% increase since June 2022, and it will have an immediate impact on those with tracker mortgages. Approximately 200,000 households are in this position. There are also tens of thousands of borrowers with other mortgages who have had their mortgages sold off to vulture funds. Many of these are now facing interest rates of 7.5%, and this will increase again in March to about 8%. These people have no option to fix their mortgage rates and to go on to one of the different options the banks have because the vulture funds do not offer this. Despite these people having been reassured time and again that vulture funds provided the same protections and safeguards as the banks, this is not the case. These increases since June, then, are going to add thousands of euro to these people's annual repayments and they are already under pressure as a result of the cost-of-living crisis.
I am, therefore, asking the Tánaiste to introduce a timely, temporary and targeted mortgage interest relief.
It can be done by introducing a relief that would absorb a portion of the interest costs that have been incurred since June. It is sensible. Will the Tánaiste commit to reviewing and looking at an interest relief?
Comment on this
Obviously, budgetary matters in the first instance will be considered by the Minister for Finance. Across Europe, interest rates have been rising. The ECB has hiked its key policy interest rates by 2.5% since last July. Individual lenders will respond as to whether they will pass on these increases. To date, retail banks have increased fixed rates for new or switching customers but have not increased their variable rates. Some non-bank lenders have raised variable interest rates. We will keep the issue under review. The average interest rate on new mortgages in Ireland is now 2.57%. The average across the eurozone is 2.84%. Ireland's rates are now the third lowest in the euro area, after Malta and France. That is poor consolation for those who have had increases in interest rates because of the inflationary macroeconomic environment we are currently experiencing.