Tanaiste Leo Varadkar has said introducing mortgage interest relief to counteract interest rate hikes has not been “ruled out”.
However, the proposal is not currently under consideration, the Dail heard yesterday. The European Central Bank announced it was increasing interest rates by 0.5%. It is the fourth time in a row the rates have increased.
The changes predominantly affect tracker and variable mortgage customers. Sinn Fein’s finance spokesperson Pearse Doherty said those on tracker mortgages or on fixed rates that are due to expire soon will be worst hit by the increases.
Read more: Permanent TSB becomes latest bank to raise interest on fixed rate mortgages
He said: “The banks should absorb these interest rates in the interest of their customers. They are uniquely positioned to profit on the backdrop of rising interest rates and they should do the right thing.
“I would ask that you on behalf of government would echo that call.” Mr Doherty also repeated calls from Sinn Fein 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”.
In response, Mr Varadkar accepted any rise in interest rates will negatively affect Irish customers. He said this will hopefully be the last or second last interest rate hike introduced in a bid to slow inflation.
While the hikes will be “unwelcome news” the Tanaiste added there were currently no plans in place to introduce mortgage interest relief. Mr Varadkar said: “It did exist in the past. It existed, generally speaking, at a time when interest rates were much higher than they are now.
“It’s not something we would rule out for the future. It would involve reopening the Budget and all of the consequences that would derive from that.
“When it comes to variable interest rates, it is a commercial decision of the banks and other lenders to set variable rates and they will take into account a number of factors. When interest rates go up, the cost of borrowing for banks goes up as well.
“But certainly, my message to the banks is they shouldn’t use rising interest rates as an opportunity to increase profit margins.”
Acknowledging the rate hike would be “very unwelcome for tens if not hundreds of thousands of families across the country” he also “did not want to raise false expectations.” He added: “We’ve only just signed off on the Finance bill and to reopen the question that public finances after only a few weeks, I think we would have other consequences that we’d have to consider.”
Mr Doherty told the Dail that this will be the fourth mortgage increase this year for many mortgage customers, particularly those on tracker mortgage rates.
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