Varadkar rules out mortgage interest rate relief for homeowners

The Tanaiste has ruled out bringing in mortgage interest rate relief for homeowners as the European Central Bank (ECB) raised interest rates again.

Leo Varadkar said there are no plans to introduce rate relief for homeowners, saying it would involve reopening the budget.

The ECB raised interest rates by 0.5% – its fourth hike – in a bid to slow down the rise in inflation.

Sinn Fein finance spokesman Pearse Doherty repeated his calls for the Government to bring in relief for struggling households.

He called on the Government to examine options for a “targeted, tailored and time-bound” mortgage interest relief.

The Donegal TD said that somebody on a mortgage of 200,000 euro would see their repayments increase by more than 3,000 euro per year.

“Today the European Central Bank (raised) interest rates by another half a percentage point,” Mr Doherty told the Dail.

“This will have an immediate impact on the 194,000 customers and households who have tracker mortgages, for those on variable rates or those whose fixed rates are due to expire, their fate lies with the banks and whether they decide in the coming months to pass this interest rate on there.

“We’ve repeatedly made our position here in Sinn Fein and I repeat it that the banks should absorb these interest rates in the interest of their customers.

“They are uniquely positioned to profit on the backdrop of raising interest rates and they shouldn’t, they should do the right thing and I would ask that you on behalf of Government would echo that call.

“I asked you and your Government to examine options to introduce a targeted, tailored and time-bound mortgage interest relief for struggling mortgage borrowers who are and will face sharp increases in terms of interest hikes.”

Mr Varadkar said he hoped the hike announced on Thursday will be the last one, “or the second last one”.

“The ECB is independent in its functions and it has a particular remit to bring inflation under control, to bring inflation down to something around 2%, and that is the reason why interest rates are being increased by the Central Bank,” Mr Varadkar added.

“But, obviously, this is going to be extremely unwelcome news for mortgage holders and indeed other borrowers, who will see the cost of the repayments rise.

“That’s coming at a time when the cost of everything is rising. I know it’s going to be very unwelcome news and very difficult for a lot of families and other borrowers in the period ahead.

“We don’t have any plans at present to reintroduce mortgage interest relief. It did exist in the past. What existed, generally speaking, at a time when interest rates were much higher than even they are now.”

He said the Government will not rule it out for the future, but added that there are no plans to bring in interest relief.

“It would involve reopening the budget and all of the consequences that would derive from that,” the Fine Gael leader added.

He also urged banks not to use rising interest rates as an opportunity to increase profit margins.

“That is the message that we will convey to the banks with regard to interest rates,” he added.

Mr Doherty said families and householders will receive a fourth letter since the summer telling them the interest rate on their mortgage will rise again.

“For people that is going to put an extra 4,000 euro on interest in the repayment of the mortgage. For many, many families that puts them over the edge,” he added.