Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move:

That Dáil Éireann: acknowledges the most recent Stability Programme Update 2023, which forecasts a general government surplus in excess of €10 billion this year;

agrees with:

— the Free Legal Advice Centre that "spikes in the cost of living and interest rates threaten an increase in new arrears cases"; and

— the Money Advice and Budgeting Service that "the interest rate hikes serve as a particularly alarming trend during a cost-of-living crisis and are having disastrous effects";

notes that:

— in March the European Central Bank (ECB) increased its main lending rate for the sixth time since July 2022, from 0 per cent to 3.5 per cent;

— the ECB is due to meet again in the next two weeks to consider further increases;

— over 250,000 tracker mortgage borrowers have seen immediate and significant increases in their mortgage repayments;

— more than 43,000 variable rate mortgage borrowers with loans held by non-banks and vulture funds have seen significant increases in their mortgage repayments, with interest rates reaching as high as 8 per cent; and

— a wider cohort of mortgage borrowers, including first-time buyers, face or are likely to face further increased mortgage repayments; and

calls on the Government to:

— introduce targeted and temporary mortgage interest relief to support homeowners facing significant increases in their mortgage costs;

— provide mortgage interest relief exclusive to principal private residences only, equivalent to 30 per cent of increased interest costs relative to June 2022, with a maximum relief to mortgage holders of €1,500 per annum;

— reverse its previous position and mandate the Minister for Finance, Michael McGrath TD, to commit to his previous position on the issue in 2018; and

— work with the Central Bank of Ireland to enhance the supervision of vulture funds in the interests of struggling borrowers.

Molaim an rún atá os comhair an Tí anocht. Níl dabht ar bith ach go bhfuil tionchar ag na rátaí ardaithe úis a chímid anois agus go bhfuil an tionchar seo ag brú síos go mór ar theaghlaigh atá ag streachailt leis an ardú ar chostais mhaireachtála. Do na mílte oibrithe agus teaghlaigh, tá tionchar láithreach agus tubaisteach ag na rátaí úis seo, atá ag dul in airde. Is arduithe de na céadta euro in aghaidh na míosa agus na mílte euro in aghaidh na bliana atá i gceist anseo do dhaoine atá ag díol a gcuid morgáistí. Níl dabht ar bith ach go bhfuil sé in am don Rialtas gníomhú, feidhmiú agus tacú agus cuidiú leis na teaghlaigh seo. Is féidir é seo a dhéanamh. Is féidir leis an Rialtas, agus, i mo thuairim, caithfidh an Rialtas, scéim tacaíochta úis mhorgáiste a thabhairt isteach chun tacaíocht, cuidiú agus faoiseamh a thabhairt do na teaghlaigh seo lena gcuid costas i leith a gcuid morgáistí, atá ardaithe mar gheall ar chúrsaí úis. Tá géarghá chun é seo a dhéanamh go sciobtha.

For more than a year, households have been dealing with high inflation and the impact of rising prices, and for mortgage holders, a new front has opened in the cost-of-living crisis, with mortgage costs having spiralled for tens of thousands of homeowners across the State. Since July, the European Central Bank has increased its main lending rates six times, by a total of three and a half percentage points. The ECB will meet again next Thursday and it is likely it will increase the rate once more. Retail banks have been slow to increase their fixed and variable rates, although it is expected rates increases will follow in the near future.

Tens of thousands of households have felt the full brunt of interest rate hikes. They have received letter after letter informing them of another interest rate hike and a higher mortgage repayment, with more pressure, anxiety and distress for these families involved. The more than 250,000 households on trackers have faced immediate hikes in their interest rates and immediate reductions in their disposable income. Then there are those whose mortgages were sold at discount to vulture funds. They were told by the Taoiseach they would be no worse off once their mortgages were sold on to the vultures, but Sinn Féin repeatedly warned the sale of mortgages to vulture funds would leave workers and families at the mercy of these funds and exposed to higher interest rates, and that is precisely what has to come to pass. More than 80,000 households and borrowers with mortgages held by non-banks and vulture funds are on variable interest rates. They are now being hit by spiralling rates, with some being charged as high as 8%. Their mortgage repayments have increased by hundreds of euro per month and thousands of euro per year. For a worker or family, the monthly mortgage repayment is no different from an energy bill or the weekly food shop. It is an essential outgoing that cannot be avoided without dire consequences such as arrears, increased debt, financial insecurity and anxiety.

I want to outline the real impact that rising mortgage costs are having on families and workers. A borrower whose mortgage had been sold to Pepper contacted me. Her interest rate has increased from 4.5% to 8% and her mortgage repayments have increased by €300 per month, or €3,500 per year. With the income shock this has caused, she is terrified of having to cut back her repayments or fall into arrears. Another borrower, whose mortgage was sold by Permanent TSB to a vulture fund, also contacted me. She has seen her mortgage repayments increase by €523 per month, or more than €6,000 per year.

This is the context in which we need to debate this Sinn Féin motion. In the past several months, the State has rolled out schemes to support businesses including large corporations with their energy costs, and schemes whose design is imperfect but whose objective is often justified. The question we must now ask, as we debate this motion and as borrowers face spiralling mortgage repayments, is whether we should stand back and do nothing or be proactive and do something. As so many have said in recent times, we cannot let the perfect be the enemy of the good. It is clear to me and Sinn Féin that households facing these spiralling mortgage costs in the midst of a cost-of-living crisis need support, and that is what the motion calls for. It calls for the introduction of a mortgage interest support scheme providing targeted and temporary relief to assist struggling households with rising interest costs. That should be done by introducing a scheme that absorbs a portion, 30%, of the increased interest costs compared with June 2022, before interest rates began to rise. It should be capped at a maximum benefit of €1,500 per household that qualifies over the course of the scheme. This would apply only to primary dwelling homes and would exclude second and rental properties, and it would be temporary, in place between now and the end of the year, for eight months. As an example of how this would work, for a household whose mortgage costs have risen by €400 since June 2022, the scheme would provide relief of €120 per month, or, between now and the end of the year, €960 over the course of its operation. It would not insulate households from the full impact of rising interest rates, but it would provide some relief. It would take the sharp edge off the shock.

This would not be a blanket relief, as existed previously, which the now Minister for Finance, Deputy Michael McGrath, championed in 2018 and which the now Tánaiste called for to be increased in 2015. The relief we are talking about would be temporary and targeted, providing much-needed support to households at the sharpest edge of rising rates and to struggling home-buyers. As has been said many times, we cannot let the perfect be the enemy of the good. We propose that an allocation of €400 million be made towards the scheme, taking into account standard variable rates potentially increasing by 2%, fixed rates increasing by 3% and tracker rates increasing further in the time ahead, and all with immediate effect on mortgage loans provided by retail banks. We have also engaged with the Parliamentary Budget Office regarding the costs associated with these scenarios.

It should be noted that in this period AIB has increased its standard variable rates by 0.35%. The assumptions are very high. It also assumes the maximum relief is applied to all standard, variable and tracker mortgages held by non-banks and vulture funds - an overestimation that is unlikely to materialise but, for the purpose of costings, reasonable assumptions are made.

This is a sensible and necessary proposal to bring forward mortgage interest relief is one that can be delivered and that can provide meaningful support to households at the sharp edge of the interest rate hikes and stave off the risk of rising arrears. I call on all Deputies to stand by those who have mortgages, to reintroduce targeted, tailored and time-bound mortgage interest relief and to support this motion.

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